If you have life insurance and are concerned if it will pay out in case you pass from COVID-19, you can rest assured your loved ones will receive a payout, but if you have not yet purchased coverage, it’s not too late.
The good news: Life insurance is still very much available and, according to trade publication reports, there was a noticeable increase in policy applications in March.
You will have to move quickly though, as some experts think life insurance companies may impose stricter underwriting standards as they see higher losses in addition to losses in their investment portfolios, which they use to fund claims payouts.
While life insurers are not excluding claims related to a pandemic, they may start including exclusionary riders on new policies as well as increasing premiums.
And if the pandemic worsens, some insurers may opt to put a hold on writing new policies, particularly for older individuals, and resuming once a vaccine has been developed.
As for pricing, insurers have not yet been raising rates in response to the coronavirus, but they may later, particularly for permanent – or whole life – policies. That said, pricing for term life policies is not expected to see any changes.
New policies
Many life insurers that are writing new policies now are asking applicants if they’ve been tested or treated for the virus. After the underwriting is complete, they are asking them again to sign a statement saying their health status has remained unchanged.
If someone buys a life insurance policy today and finds out later they have COVID-19, and then dies from it, their beneficiaries will receive a payout as long as the policyholder didn’t lie about their health status (like knowing they had COVID-19 when buying the policy).
Also, people who contracted COVID-19, were hospitalized and later discharged after recovering may have difficulties in purchasing a life insurance policy now. That’s because most insurers will ask on their applications if you have been hospitalized in the past year.
Another new question that insurers are asking new life policy applicants is whether they have traveled overseas recently or been on a cruise. While the possibility that you did this recently are now quite slim, if you did, some insurers are asking that you wait 30 days since you returned before applying for coverage.
Medical exams
You will often be asked to undergo a medical exam when applying for life insurance. If the life coverage you’re applying for requires a physical, chances are that it will still go on as planned, unless you’re uncomfortable with it or are sick.
Some people may be nervous about going in for an exam, particularly if they are under orders by authorities to stay home. With that in mind, many insurers are offering an extension of up to 90 days on the medical exam. In the meantime, they will offer immediate coverage to those applicants up to $1 million.
One workaround for this is to first secure a no-exam life insurance policy, which does not require a physical to qualify for coverage. You can apply online and typically get approved the same or next day. This way, you can at least get some coverage in place if you have not been diagnosed with COVID-19.
One thing about no-exam policies is that they will typically have lower limits than standard policies. They may also cost more than life insurance that requires a medical exam.
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Charlie Fellous Broker/Principal at HALO Insurance & Benefits Group Contact us at 314-351-HALO (4256) email: cfellous@haloibg.com