Life Insurance and COVID-19: What You Need to Know
The COVID-19 pandemic has millions of people looking carefully at life insurance. Policy sales were up almost 11% in the first quarter of 2021, compared to the same period a year ago.
Nearly one in three consumers nationwide say COVID-19 has made them more likely to buy life insurance in the next 12 months. But because it’s a new disease, many people have concerns and wonder if life insurance will cover a coronavirus-related death and whether they can get coverage if they have or have had COVID-19.
Here are the answers to those questions and more.
Does life insurance cover COVID-19-related death?
Yes, standard life insurance policies generally do cover deaths related to COVID-19 — as long as you did not misrepresent your health status on the application.
Furthermore, life insurance provides protection regardless of your vaccination status.
If you have an active positive test, you are symptomatic for COVID-19 or you have been exposed to the virus, you may have a hard time getting immediate coverage. Your carrier will probably delay coverage by two to three weeks, or until you have recovered.
So don’t wait until after you have a suspected exposure or a positive COVID-19 test to apply.
Rise in ‘no-exam’ applications
Before the pandemic, it was routine for carriers to require applicants to take an in-person medical exam.
But because applicants were concerned about social distancing, insurers now rely more on medical records and other alternative underwriting techniques. Except for very large policies, you may not have to take a medical exam at all.
Can I rely on workplace life insurance?
It’s important to have your own life insurance coverage, separate from your employer-sponsored policy. The group life insurance from your employer or trade union may be inadequate. Here’s why:
- Coverage may be limited. Most financial experts recommend that young family breadwinners maintain about 10-15 times their annual income in life insurance. But many employer-paid life insurance policies cap out at just $50,000 — just a fraction of the total protection needed for most families.
- You can’t take it with you. Your employer’s group life policy may not be portable. That is, you may not be able to take it with you if you leave the company, or the company shuts its doors.
What if I can’t pay premiums?
State insurance commissioners have generally encouraged insurers to work with struggling policyholders by extending due dates, waiving late fees, allowing “catch-up” payment plans, extending reinstatement periods, and other measures.
Some major carriers allow 90-day payment plans to allow policyholders to bring policies current without lapsing
Some states have mandated insurance companies to allow a forbearance period for those unable to pay premiums because of the COVID-19 pandemic. New York, for instance, requires insurers to allow policyholders experiencing financial hardship to delay premiums for up to 90 days on life policies.
If you have cash value life insurance, you can use the cash value to pay premiums to keep your policy in force. Note that this may reduce your death benefit, until you can replace your cash value in the policy.
Every situation is different, but you can get a rough estimate by using the Life Insurance Needs Calculator at www.lifehappens.com.
BGES Group’s office, located in Larchmont, NY is a full service insurance agency offering, Property, Liability, Umbrella Liability, Business Auto, Bid & Performance Bonds, Inland Marine, Worker’s Compensation, New York State Disability, Group Health, Life insurance, Personal lines and Identity Theft.
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BGES Group are Worker’s Compensation Specialists for the States of New York, New Jersey and Connecticut – Issues we address: 1) Lowering pricing – we have specialty programs that can save you up to 40%; 2) Finding a new company; 3) Replacing policies that are being cancelled or non renewed; 4) Audit disputes; 5) Company creating fictitious payroll at audit time; 6) Lowering high experience modifications factors; 7) Misclassification of payrolls; 8) Lowering or eliminating renewal deposits; 9) Getting coverage when you’ve been without for a few months; 10) Covering multiple states under one policy; 11) Eliminating 10% service or policy fees; 12) Timely issuance of certificates; 13) Always being able to get someone on the phone or by email when you need to.
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