Coronavirus hasn’t completely ended life as we knew it, but it has certainly caused changes, some of which are likely to be with us for a very long time.
For some, the coronavirus is literally a matter of life and death, and it raises an important question: How does coronavirus affect life insurance?
Nobody likes to think about the possibility of losing their life or that of a loved one to this virus, but for over 150,000 families here in the US it has been found to be a reality.
Let’s examine what impact this can have on your existing policies and, perhaps more importantly, how it can affect applications for new life insurance coverage.
How does coronavirus affect your existing life insurance?
There is good news if you already have life insurance. Generally, the insurance company pays a death benefit even if you die from the coronavirus. With a few exceptions, life insurers pay for any cause of death once the policy is in place. There are very few exceptions to this rule, such as acts of war or terrorism. Pandemics are not a known exception.
If you are not at all comfortable with how the coronavirus could affect your existing life insurance policies, contact the company for clarification. Alternatively, you can review your life insurance with special attention to the exclusions. If there isn’t anything that looks like death like a pandemic, you should be ready.
Once the policy is finalized, there are few reasons why the insurance company can refuse a claim:
- Failure to pay premiums – If you exceed the grace period for payment, which is usually 30 or 31 days, your policy will expire. But even if they do, you may still be able to apply for reinstatement. After a period of time, however, you are only insured after receipt of payment.
- Providing incorrect information about an application If you fail to disclose certain health conditions that lead to your death, the company may refuse to pay for insurance fraud. For example, if you are a smoker but are considering the non-smoking application, death benefit payment may be denied if smoking is found to be a cause of death.
- Death within the first two years, the policy is in effect – often referred to as the Period of contestabilitythe insurance company may investigate the specific causes of death for any reason within the first two years. If the death is found to be caused by a pre-existing condition, the claim may be denied.
Neither of these factors is a serious factor for the coronavirus unless you tested positive for the virus before using it and did not disclose it. However, because coronavirus can come on suddenly, if it does happen once your policy is in place, it shouldn’t affect your death benefit benefits.
How does coronavirus affect the life insurance you are applying for?
This is just a guess on my part, but I think people may be thinking more about buying life insurance than they have at any point in the past. Coronavirus has proven to be a real threat to life and health, which is why it is natural to consider the worst.
But whatever you do, don’t let your fear of the unknown stop you from applying for coverage. Although you may wish you had bought a policy or had extra coverage before the virus hit, now is still the best time to apply. And this is not a sales pitch!
No matter what is going on in the world, the best time to apply for life insurance is now. That’s because you’re younger now, and probably healthier than ever before. Both of these conditions are major advantages when purchasing life insurance. If you delay applying, you will pay a higher premium by applying later when you are a little older. However, if you develop serious health by then, not only will your premium be higher, but you may even be denied full coverage.
Don’t let coronavirus fears get in the way. If you think you need life insurance or more, apply now.
However, the impact of the coronavirus on new life insurance applications is more significant than it is for existing policies.
The deaths of more than 100,000 people in the US naturally impacts claims payment by life insurance companies. While the general evaluation of most new life insurance companies has not changed significantly with new applications, the situation is evolving rapidly. How exactly this will work in the future is currently unclear.
What to Expect When Applying for Life Insurance in the Age of Coronavirus
If you are under 60 and in good or excellent health and are not currently showing any signs of the virus, the chances of getting approved for life insurance are higher than ever. You can submit a request and not deal with the virus.
However, it can be more difficult to get life insurance if you have conditions that put you at risk for the coronavirus, as set out by the Centers for Disease Control (CDC).
- From 65 years.
- Obesity, defined as a body mass index of 40 or more.
- Certain health conditions, including asthma, chronic kidney disease, and treatment with dialysis, lung disease, diabetes, hemoglobin disorders, immunocompromised diseases, liver disease, and serious heart disease.
- People in nursing homes or long-term care facilities.
To be fair, any of the above conditions would require special consideration, even except for the coronavirus. However, since these are known coronavirus risk factors, the impact of each factor has become more important in the life insurance application process.
If any of these conditions apply to you, your best strategy is to work with insurance companies who already specialize in these categories.
There are insurance companies that rate people more favorably with any of the following conditions:
More specific application factors
But even with insurance companies that specialize in covering people with certain health conditions, some have put new restrictions in place in the face of the coronavirus.
For example, if you have a severe health condition and you are over 65, you may find fewer companies willing to offer insurance coverage.
The insurance company can also review your records for previous coronavirus episodes or exposures. Expect additional testing to see if you are currently infected. Most likely, the application process will be delayed until the condition improves, unless this has resulted in long-term complications.
Travel is another factor that is being carefully studied. The CDC maintains an updated list of travel recommendations by country. If you have recently traveled to a high risk country or are planning to do so in the near future, you may be at greater risk for the coronavirus. How every insurance company deals with this situation is different. However, your application may be delayed until you have completed a recommended quarantine period.
Other financial areas to consider may be affected
With the coronavirus still very active in the US and around the world, financial considerations are constantly changing. If you are concerned about the impact of the virus on other types of insurance, contact your provider for more information.
Other insurance policies that I should pay special attention to are:
- Employer sponsored life insurance. There isn’t much to worry about here as these are group plans. Your acceptance is guaranteed upon employment. The policy will almost certainly pay the death benefit, even if your cause of death is related to the virus.
- Health insurance. There is no media coverage of health insurers refusing to pay medical claims due to the coronavirus. However, if you have any concerns, please contact your health insurance company for clarification.
Action steps in the age of the coronavirus
Many have been gripped by fear in the face of the coronavirus, which is largely the unknown. However, the best way to overcome fear is to act positively.
I recommend the following:
1. Be proactive about your health.
Since there is a link between poor health and the virus, make a commitment to improve your health. Eat a proper diet, exercise regularly, and follow CDC coronavirus guidelines on how to protect yourself.
2. If you need life insurance, buy it now.
Don’t wait for a battle with the virus to complete this step. It’s important for a number of reasons, and the consequences of not having it can be dire. Compare the best life insurance companies to get started.
3. Don’t consider life insurance for medical exams.
Unless you have the virus and want to get a policy ASAP, having no medical exam life insurance is a way to get coverage almost immediately.
4. Look for the most cost-effective life insurers.
Low cost means you can buy a larger policy. Given the uncertainty caused by the coronavirus, having adequate life insurance is almost as important as having a policy. Check out cheap term life insurance to find out more about what you can afford.
5. Maintain a healthy credit score.
Did you know that your creditworthiness is a factor in determining the premium for your life insurance policy? If so, you still have a reason to maintain a healthy credit score. One of the best ways is to regularly monitor your credit and credit history. There are numerous services available to help you monitor your balance.
6. Make paying your life insurance premiums a priority
This action step evaluates a specific discussion. When times get tough and money is tight, people often cancel or reduce their insurance coverage. This also includes life insurance. But that can be a huge mistake in the middle of a pandemic. The coronavirus means maintaining your current life insurance policies must be a high priority.
The virus and the uncertainty it creates in the economy and in the labor market are making finances less stable than in recent years. You must purposely maintain financial buffers.
7. Start an emergency fund.
If you don’t already have the space, build one today. If you already have one, plan to increase it regularly.
You should also do everything possible to maximize interest in your emergency fund. You should park your fund in a high-interest savings account, some of which pay interest that is more than 20 times the national bank average.
8. Get better control of your debt
In another direction, you should pay off your debts in a targeted manner. Lower debt levels result in lower monthly payments, which improves your cash flow.
If you don’t have the funds to pay off your debts, there are several ways you can manage them.
For example, if you have high-yield credit card debt, there are prepaid credit cards that offer an introductory APR of 0% for up to 21 months. If you eliminate the interest for this period, you can use more of each payment for the capital reduction.
Another strategy for lowering your debt is to go for a debt consolidation with a low interest personal loan. Personal loans are unsecured loans with a fixed rate, monthly payment and a fixed repayment term. You can combine multiple loans and credit cards for up to $ 40,000 into a single personal loan, with interest rates starting at 5.99%.
We’ve covered a lot in this article. But that’s because the coronavirus is almost a major crisis. It has been said that the coronavirus is a health crisis and an economic crisis at the same time. It requires strategies on multiple fronts, including protecting your health, your finances, and the finances of your family when you are no longer around to care for them.
This is where life insurance comes in. The basic process hasn’t changed much from the coronavirus, at least not until now. This is why it is so important to apply for coverage now before any major changes go into effect.