Frequently Asked Questions About Coronavirus & Life Insurance
The COVID-19 outbreak has changed much of our daily lives the past few months and may lead some people to wonder about the state of their life insurance. The coronavirus spread has also caused many who don't yet have life insurance to think about their coverage needs.
According to an April 2020 LIMRA survey of 47 U.S. life insurers and 12 Canadian life insurers, more than 25% of U.S. life insurers have made automated underwriting for life insurance more available. 1 Some companies have added questions about COVID-19 exposure and travel to the underwriting process.
You may have some questions about how COVID-19 is affecting life insurance. We're here to help.
How Does Coronavirus Affect an Existing Life Insurance Policy?
If you already have a life insurance policy and have locked in a rate, there are currently no life insurance payout exclusions for a pandemic. You'll retain the health classification you received upon approval. As long as you were truthful in your application, your dependents should receive death benefits if you pass on due to coronavirus.
There are some issues that could result in non-payment of death benefits should a policyholder die from coronavirus.
- The policyholder was not honest on the application. If the insurer discovers a policyholder omitted facts or lied on their application, death benefits may not be paid out.
- The policyholder didn't pay their premiums. If you neglect to pay your premiums, you may lose out on your benefits. Learn what to do if you're experiencing financial hardship below.
- The life insurance policy is for accidental death insurance (AD&D insurance). Accidental Death Insurance does not cover death from disease or illness, so it won't cover you for COVID-19.
Can I Get Life Insurance Now Despite the Emergence of COVID-19?
Yes. Many insurers are still granting life insurance approval during the pandemic. Always be honest when applying for life insurance so your loved ones don't lose out on death benefits.
There are some cases where you may be denied a life insurance application, or where an insurer will delay your approval. The following factors may affect a life insurance application during COVID-19.
- You have international travel plans. If you have international travel plans, an insurer may deny your application or wait to approve it until you come back to the U.S. and have been deemed free of coronavirus for at least 30 days after returning. Also, if someone in your household has international travel plans, that could affect your life insurance application. If you're interested in getting life insurance, it can help to cancel unnecessary travel plans before you apply.
- You've recently returned from another country. If you have recently come back to the U.S. from another country, that may affect your application, as well – especially if the country was a place with a high level of COVID-19 cases. If someone in your household has recently returned from a country with a high amount of coronavirus cases, that may also affect your application. In cases like those, life insurance approval may be delayed.
- You may have been exposed to coronavirus or you're living with someone who may have been exposed to coronavirus. Cases like these may delay your application approval.
- Your age and/or medical conditions could affect your application. Some life insurers may have changed the maximum applicant age or restrictions regarding certain medical conditions for life insurance. Also, some insurers will now require applicants to provide a statement of good health to get approved for a life insurance application. Generally, the younger you are and the better health you're in, the lower the premium you can secure.
Is a Medical Exam a Requirement for Life Insurance?
It depends on what type you get. According to the LIMRA study, around 20% of U.S. companies have postponed or eliminated paramedical requirements. Some insurers are allowing historical exam and lab data to take the place of an exam.
Some life insurance policies will require a medical exam. Know that scheduling capacity will likely decrease, which can delay how soon you can complete an exam.
There are no-medical exam life insurance policies available, like guaranteed issue whole life insurance. The LIMRA survey revealed some insurers are accepting electronic health records.
Many medical exams have been extended for 120 days due to COVID-19, so applicants have more time to get one. If you're concerned about going to a medical facility where other people might be around, you might look into getting screened by a paramedical examiner who comes to your home.
Can You Get Life Insurance If You Have Coronavirus?
If you have coronavirus or another pre-existing medical condition, you may be interested in applying for life insurance and may be able to secure a policy. In some cases, the insurer may deny your application or postpone giving you life insurance until after you've made a full recovery. Contact a life insurance agent to find out your options.
If you've already applied for life insurance and contract coronavirus during the application process, be honest about this with your insurer. You don't want to jeopardize death benefits because you didn't disclose this information. The insurer may choose to delay approval for your application until you've recovered.
What Happens If I'm Unable to Pay My Life Insurance Premium?
Be aware that due to financial hardships many are facing due to unemployment and business closures because of COVID-19, your life insurance carrier may be offering an extended grace period for late payments. Talk with your life insurer if you're having problems paying your premiums because of coronavirus. You may be able to secure a grace period to make a delayed payment.
I Have Life Insurance Through Work – Is That Enough?
You may be wondering if the group life insurance policy you have through work is enough. While life insurance through work can provide supplemental benefits, there are risks if that's your only life insurance policy. If you lose your job, you also lose life insurance coverage. If you have to apply for life insurance later, you could face a higher rate or denial of an application compared to if you applied now.
Consider adding on a personal life insurance plan while you're still employed to lock in better rates, since rates tend to be lower the younger and healthier you are.
Can I Get Life Insurance If I'm Unemployed?
If you're recently unemployed because of coronavirus, it's best to apply for life insurance as soon as possible. Part of the life insurance application process may involve looking at your financial assets. The sooner you apply, the less of a risk a life insurance company may consider you.
Do I Really Need Life Insurance?
When you have people who depend on you financially or you have outstanding debts, you should consider getting life insurance to protect your loved ones in case you die unexpectedly. If you become sick and it causes long-term health impacts before you apply for life insurance, you may receive a lower health classification and a more expensive life insurance policy. You may also be denied coverage altogether.
If you want life insurance, the best time to get a policy is when you are healthy. Due to an increase in application volume and longer review times, it may take longer to get approved for life insurance during the coronavirus pandemic. It's best to start the application process as early as possible to avoid complications from a sickness.
Protect Your Loved Ones with Life Insurance
Times are uncertain, but one thing you can count on is life insurance to offer protection for your dependents. Get a free life insurance quote today. Contact AIG Direct online or call 800-294-4544.
AIG, its distributors and representatives are not authorized to give legal, tax or accounting advice. Applicable laws and regulations are complex and subject to change. Clients should consult their attorney, tax advisor or accountant regarding their particular situation.