Many Canadians worry about the spread and impact of COVID-19. The numbers in Canada are lower than many other countries but recent events in Canada and down South have caused some people to contemplate the worst-case scenario. Many are wondering: does life insurance cover for COVID-19? What about recent travel; how does it affect my life insurance? And what if I didn’t have life insurance. Would it be a good idea to get life insurance coverage at this time?
We aim to give you the best advice concerning life insurance. Read on and understand how COVID-19 has affected life insurance.
Does Life Insurance Cover Death Due to COVID-19?
This is by far the most asked question by those who already have life insurance.
There’s no need to worry if ramifications from this virus are covered or apply for additional life insurance, unless you need more coverage anyway. Most life insurance policies do not have disease-specific exclusions. This includes pandemic situations like COVID-19.
Life insurance companies, led by Manulife Financial, have also sent clear messages about COVID-19 related claims. They will assess each claim based on the terms of the agreement of the client’s life insurance policy. More importantly, the insurers assert that they will process claims due to COVID-19 deaths just as any other cause of death.
That should settle your nerves, right?
But such a strong assurance by major insurers does not mean that they will process claims blindly. There are situations where the life insurance company can deny a claim; including COVID-19-related.
When Can Life Insurance Companies Deny a Claim?
Ordinarily, a life insurance company might deny a claim (check your policy for your specific situation) if:
- There was a fraud, and misrepresentation or concealment of material facts in the application.
- Death was a result of suicide, within a certain period as stated in the contract.
- Death resulted from an act of war.
- Death was due to involvement in hazardous activities like extreme sports.
- Death was due to smoking-related ailments, yet the applicant had declared to be a non-smoker.
- Death was due to the involvement in illegal activities.
If everything is in order the insurer will process the claim. Death due to the COVID-19 cannot be a reason to deny a claim. But, you must come clean about other issues at the time of application. Otherwise, the insurer would have grounds to contest your claim and possibly deny it.
Does Travel Affect an Existing Life Insurance?
Your present activities, depending on what they are, may affect your life insurance. For instance, it is standard procedure to inform your insurer about recent travel and future plans. That is during the application process and if you are within the contestability period.
Since there’s been a surge of COVID-19 cases in the United States, Canadians should be careful to observe this requirement.
The contestability period is a sensitive phase and generally lasts 2 years. The insurer may review your application during this time if there’s a claim or to ensure the application is straight up. Any discrepancies could lead to a denial of claim, hiked premiums or cancellation of the policy.
What if you were planning to get life insurance, or you were in the process of getting life insurance. Does the COVID-19 pandemic affect your application?
Impact of COVID-19 on On-going and New Life Insurance Applications
Each life insurance provider has a unique way of assessing applications. COVID-19 should not deter you from applying for life insurance. In fact, it’s a wakeup call to those who don’t have life insurance.
Reach out to an advisor and pick out a policy that suits your lifestyle and income.
But you should let the prospective insurer know of possible exposure to infection. For instance, if you traveled to a high-risk zone like China, Italy, Spain or New York in the recent past. Generally, insurers want to manage their risks. They will check if you fit a high-risk profile. According to the CDC, this includes but is not limited to:
- Older individuals
- People who have underlying health issues such as cancer, or a cancer survivor.
- Immunocompromised individuals.
If you are in the high-risk cluster, it does not mean automatic disqualification. You could qualify for life insurance but be prepared to pay a higher premium rate and for certain exemptions.
A trusted advisor can take you through different insurers’ products and help you compare against your interests.
If you are yet to apply but intend to travel. Speak to your advisor to establish when the best time to apply would be.With so many travel restrictions across the world, it’s unlikely that your travel plans will sail through.
On the other hand, if you are waiting for approval on your life insurance application, alert the insurer about future travel plans. You should also let the insurer know if you recently traveled to a high-risk region.
What are the Signs of COVID-19 Infection and What Should You Do?
Many people wouldn’t know if they have COVID-19 infection. The symptoms are similar to the flu. Furthermore, some people may be carriers of the coronavirus but not show symptoms. Some people may develop symptoms later (pre-symptomatic). Other people may never develop symptoms (asymptomatic).
The most important indicator of infection is recent exposure. Again, honesty is the best policy.
The Department of Health Services advises anyone who suspects to have COVID-19 to take preventative measures. These include self-isolation for at least 14 days and to call the nearest public health authority.
Here’s the Bottom Line
If you have an existing life insurance policy that’s not within the contestability period, the coronavirus pandemic shouldn’t affect you. But you should inform the insurer about recent travel and future travel plans.
On the other hand, if your life insurance is still within the contestability period, or you are in the application process, honesty is the best policy. Due to the coronavirus pandemic, disclosing your travel history and plans is a crucial part of the risk assessment. Reach out to a professional for help on comparing different life insurance policies against your priorities.
If you have any question or would like a second option please reach out to attingo.ca or call us at 1-877-302-5425
This information provided in this article is general in nature, and is intended for informational purposes only. For specific situations you should consult the appropriate medical, legal, accounting or tax advisor.