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Coronavirus & Life Insurance, Are We Covered?
- Jody
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The Coronavirus is a health pandemic that has reached an unprecedented scale and has affected almost every country around the globe. Indeed, the only location without a recorded case is now believed to be Antarctica. In the UK, a lockdown is now in place to help reduce the spread and flatten the curve. However, some experts have suggested that 50% of the UK may already be infected. You might be wondering how you can still protect your family or dependents financially. You could be asking: does my life insurance cover Coronavirus if I pass away? Or, does critical illness payout for Coronavirus? In this guide, we’re going to answer these key questions.
Will Life Insurance, Income Protection, And Critical Illness Cover Payout?
There are numerous insurance options that can help you protect your finances. Life insurance will provide a payout for your family when they make a claim if you die. Critical illness cover pays if you develop one of the predetermined critical illnesses included in your policy. Income protection provides financial relief if you are unable to work due to issues with your health. But how is the Coronavirus impacting these insurance options?
Life Insurance
As mentioned, life insurance will provide a payout to family members if you pass away. The good news is that life insurance policies will still payout if you have an existing cover in place. Major insurance companies including LV, Aviva, and Zurich have all confirmed that they will pay claims based on their previous terms and conditions if you die due to the Coronavirus. As such, you just need to make sure that you are aware of the current terms of your existing policy.
Critical illness Insurance
Does critical illness payout for Coronavirus? It’s worth noting that the Coronavirus is not a covered condition on a critical illness policy. This is due to the fact that the majority of individuals are expected to recover from this illness. Indeed, according to the WHO, the mortality rate is approximately 3% and potentially even lower than this. However, insurance providers also note that Coronavirus can cause complications and lead to conditions that are covered by a life & critical illness policy. This includes:
- Kidney failure
- Respiratory failure
- Severe lung disease
In cases like this, a claim would payout, again in line with the current policy terms and conditions that are offered by the company.
Income Protection
Income protection is where things start to become more complicated. Income protection will provide financial support if you are unable to work due to your health. That’s important because one report suggests that ⅕ of UK workers could be off sick at the peak of this crisis. However, it will not provide protection if you are unable to work due to other reasons. This includes ordered self-isolation by your employer or the government which is the case during the nationwide lockdown.
You will only be able to claim if you are experiencing symptoms of the Coronavirus that have left you unable to earn an income. This will be the case once you are past the deferred period on your policy. The good news is that the deferred period will begin from the start of your 14-day self-isolation initiated due to symptoms of the Coronavirus.
So will income protection payout for Coronavirus? Yes, but only if you actually have symptoms. If you do not have symptoms, most insurance providers will ask you for proof that you have been told to self-isolate by a medical professional such as a GP.
Will A New Policy Cover Me?
Due to current levels of uncertainty surrounding the Coronavirus, you might be keen to apply for a new life insurance policy. Keep in mind that in the worst-case scenario, the prediction is that 80% of the UK population is expected to be infected.
The first question you need to ask is whether you can still access and apply for life insurance. Insurance providers are accepting new clients and processing applications. There is also evidence that prices have not changed at all in the wake of this crisis, particularly if you are young and in good health. Most companies like Aviva are simply asking more questions during the application process. These questions are based on determining whether you have already been impacted by the Coronavirus.
The extra questions include whether you have tested positive for the Coronavirus or you are self-isolating after experiencing symptoms. You might also be asked whether you have been asked to self-isolate due to other reasons including coming into contact with someone who has tested positive for COVID-19. It is important to answer these questions honestly and state whether you are experiencing any symptoms.
You will then be passed to a team member and applications will be considered on a case by case basis. Currently, there are no exclusions related to the Coronavirus by major insurance providers although this could change.
Some providers such as Zurich are taking more measures, particularly for new income protection applications. In this case, the company will postpone an application if you are experiencing symptoms related to the Coronavirus or if you have travelled to a Category 1 country recently. You could also be asked whether you plan to travel and go against the Foreign and Commonwealth Office (FCO) guidance. In the case of Zurich, if you have or had COVID-19 offering terms will be postponed for typically 3 months. This is to ensure that you have made a full recovery before coverage is offered.
For those with medical history or for those taking out high sum assured cover it’s normally the case that a provider would want to carry out a mini screening to help with the underwriting process. Currently, these have been put on hold, but this doesn’t mean to say you can’t take out any cover. Speaking to Zurich we were advised that underwriters are now looking at each case individually and are taking other measures in order to try and process an application and offer terms.
We hope this helps you understand everything you need to know about the Coronavirus and how it could impact life insurance, income protection or critical illness coverage. In most cases, existing policies will not change and new policies are still available. The most significant issue is income protection with some customers likely surprised that their coverage does not include ordered isolation without symptoms.
As you can imagine these things are changing daily, so it could be that this info is out of date by the time you read it. So feel free to call and speak to one of our advisors, we are all still here and available to help.
Jody is the Managing Director and founder of My Key Finance Ltd. He has over 22 years of experience as a mortgage & protection adviser. He is an authority within the UK business protection market & specialises in key man insurance, relevant life cover and shareholder protection. Jody has written articles for Business Matters, Business Directory and has been featured in Forbes. He is Authorised & Regulated by the Financial Conduct Authority and is CeMAP qualified.
As editor and author of our blog, Jody hopes to educate and advise people with more in-depth information & guidance on life insurance and business protection.
Jody & his wife Lori featured in the BBC programme “The House £100k Built” He is also a keen Arsenal fan and loves nothing more than watching his son & nephews play football at the weekend.
