Life Insurance in the Age of Covid-19

People are panic buying everything from toilet paper to white rice as the COVID-19 pandemic spreads, with one of the most surprising “panic purchases” being life insurance.

Individuals who have always assumed they would be there for their families are now eager to put life insurance plans in place. The possibility of dying from a new virus combined with millions of people losing their jobs due to work restrictions has caused a 30-50% jump in life insurance applications since January 2020. But people have questions about how to apply, whether they will be covered for COVID-19 and myriad other concerns. We want to clear up some of these questions.

Is Corona Virus Covered by My Current Life Insurance?

The short answer to this is yes if you already have life insurance. Death benefits generally pay to any beneficiaries for any type of death associated with illness or complications of disease if you didn’t know you were sick when you applied for the insurance. This holds true for any life insurance, including term and whole life. While some policies have exclusions for specific illnesses, since COVID-19 wasn’t on anyone’s radar before late 2019, it wasn’t excluded from any policies up to that point. If you already have life insurance coverage, your family will be provided for in the event you pass away from the Coronavirus.

Will Corona Virus Be Covered If I Apply for Life Insurance Now?

COVID-19, like many other illnesses such as Influenza, will be covered if you pass away from the Coronavirus provided you are honest on your application. This means being completely honest about several issues about your current state of health. While the questions vary from one insurance provider to the next, you might be asked questions such as:

  • Are you currently experiencing symptoms of COVID-19?
  • Have you been diagnosed with Coronavirus?
  • Have you traveled outside of the United States recently? If so, when and where?

Answer these questions honestly, as lying now will void your policy later if you die from complications of the Coronavirus. On most life insurance policies, it stipulates that misinformation on the application can result in non-payment of the death benefits.

If you are diagnosed with COVID-19 or fall ill during the application process, you must let the insurance company know. The insurance underwriter may postpone your application until after you’ve fully recovered from your illness. If you don’t disclose this information and later die from Coronavirus, the insurer may deny your beneficiary’s claim. Failing to disclose your illness can be construed as fraud.

When you review the life insurance policy, take the time to read the small print and any add-ons or addendums to the policy. Some companies will not pay claims for a critical illness death if the individual covered ignored medical advice or took unacceptable risks with his or her health.

Is It a Good Idea to Apply for Life Insurance Coverage Now?

Yes, it is almost always a good idea to apply for life insurance. With a pandemic raging around the world, the sooner you apply for coverage, the better off you will be. Most importantly, you want to apply before you are sick. Once you’ve been diagnosed, you may have more difficulty getting coverage or death from complications due to COVID-19 may be excluded from your policy. Fortunately, most people can still get approved for coverage. Life insurance companies are also making it easier to apply for coverage in a variety of ways. The takeaway?  Now is a good time to apply for life insurance, and companies are responding by making it easier than ever!

Finding the Right Life Insurance During the Pandemic

It’s always a good idea to shop around when you’re purchasing life insurance, but never more so than during a pandemic. Look at each company’s policies and application process, as to how each company will respond to your application will vary.

Some life insurance companies may put any life insurance applications on hold if the person applying has traveled outside the United States or have had contact with someone who has a confirmed case of COVID-19. Some insurance companies are requiring a statement from your doctor declaring you are in good health. If you want to apply for life insurance coverage, be sure to follow all shelter in place, social distancing, and travel restrictions for your area to make sure you will continue to qualify for coverage.

Speedier Life Insurance Applications

In response to the increased interest in buying policies, some life insurance providers are making it easier and quicker to apply for life insurance. They are temporarily waiving the need for a medical exam in light of shelter in place guidelines and making online applications easier. In most situations, these “accelerated underwriting” applications are limited in some way. For instance, policies under $500,000 or policies for individuals under 60 years of age. The underwriting and approval process, since they don’t have to wait for medical records upfront, is dramatically reduced.

By asking specific personal questions that are plugged into an algorithm or formula, they can quickly calculate your premium rate and decide on whether to provide coverage. If you are young and healthy, you are likely to qualify for this type of life insurance. In some cases, you can get approved for a life insurance policy in as little as fifteen minutes.

If you are willing to wait a bit longer, you can still apply using a more traditional application. These may not require a medical examination due to current social distancing restrictions, but may request that your recent medical records be sent to the underwriter. These applications can result in lower premiums but aren’t approved as quickly as accelerated applications.

Temporary Life Insurance Options

For those who don’t want to  wait for a more traditional policy application to be processed but who want immediate coverage, a temporary life insurance policy can be purchased. This covers the individual only while they are waiting for their other application to be processed. This way, if you pass away while waiting for the application to be processed, your beneficiaries will still receive your death benefits. If you are interested in getting life insurance that requires a medical exam but can’t get one currently, this is an option to consider. Then, when you are again able to see your doctor,  you can finish your application. This type of coverage is not yet commonly available, but a few companies do offer the option.

What You Can Do To Get Life Insurance During the Coronavirus Pandemic

The most important thing you can do to protect your family’s future – aside from social distancing, washing your hands, and paying attention to your health – is to apply for life insurance coverage now. Apply while you are still in good health and before you get any older or develop health problems. Once you have it in place, you can rest easy knowing they will have financial resources no matter when you pass away in the future.

Take the time to comparison shop. Research various types of policies and insurance companies online, then compare their coverage and rates. Check out any exclusions and determine what kind of policy you need and can afford. Keep in mind that the right death benefit amount is vital to protect your family now and in the future, regardless of how you pass away.

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