I think we can all agree that things are weird right now. 2020 started with so much promise and quickly devolved into quarantines and scary news stories with conflicting information about COVID-19.
As we all adjust to the new normal of working from home and social distancing, we’ve noticed that a lot of life insurance companies aren’t covering how a COVID-19 diagnosis will impact your life insurance policies.
One thing you shouldn’t have to worry about is whether or not your life insurance policy covers death by coronavirus. We’re here to help dispel any myths about life insurance coverage with COVID-19. As with any life-insurance-related questions and clarifications, it’s always best to contact an independent agent who can review your policy and explain, in-depth, what your policy means and what other coverage is available to you.
Exceptions to Coronavirus Coverage
In our research, most traditional life insurance policies – including term life insurance policies and whole life insurance policies – most likely already cover any COVID-19-related deaths. It is rare that your claim won’t be paid out in the event of coronavirus-related passing, but a few instances that might cause claim denials are:
You’re behind on your insurance premiums.
If your policy lapses due to nonpayment and you pass away before the policy is reinstated, your family can expect to not receive a payout. A late payment is usually not cause concern (although we do not recommend tardiness), as most companies have a 30-day grace period. If your policy lapses, you will need to re-prove that you are not a risk to insure.
Pro Tip: If you cannot afford your insurance policy now, especially due to being out of work or laid off because of COVID-19, you should reach out to us so that we can review your policy. Most insurers will extend the grace period during this time, and some states are requiring this extension. If you think you are going to miss a payment, reach out to your insurer, and then give us a call so we can discuss your options.
Your application was incomplete or inaccurate.
Claims can be denied for a few reasons, including lying about your income, your health, your weight, or failure to disclose travel plans. Should you pass within the first two years of coverage, your claim will be examined thoroughly. This is standard and typically not cause for concern unless false information is found on the application.
Pro Tip: Take your time filling out your application, and any technical questions you may have should be directed to an agent.
You traveled internationally and did not disclose your travel.
Insurers will almost always ask about your travel history in order to assess your risk. This doesn’t mean that all of your vacation plans need to be disclosed to your insurer, rather it means that some travel histories are more high risk than others (this goes hand-in-hand with high-risk hobbies, which we will get into in another post). Traveling abroad during a pandemic can be seen as risky behavior, and may result in your beneficiaries being denied coverage.
Pro Tip: Try to avoid international travel during the time of COVID-19. If this is unavoidable, reach out to your insurance agent, who can provide you with the proper steps to ensure you won’t be denied benefits.
You bought the wrong policy.
If you’ve forgone a traditional life insurance policy and, instead, have bought accidental death and dismemberment insurance, you most likely will not receive benefits for coronavirus fatalities. These policies are designed to cover accidents, and disease is not covered under the parameters of these policies. This policy is sometimes added to life insurance coverage as a rider option, in which case your traditional policy will still payout for COVID-19-related deaths.
Pro Tip: review your policy carefully with your insurance agent! AD&D riders are great options, but should not be looked at as standalone policies.
Filing A Claim During Coronavirus
If someone you love has passed away due to COVID-19 or complications from COVID-19, filing a claim is not different than it would be outside of a pandemic. After a policyholder dies, the beneficiary will need to file a life insurance claim:
- Contact the insurance agent or the insurance company for the claim paperwork.
- Make sure you have medical records and several copies of the death certificate.
- Double-check that all required documents and a copy of the death certificate are sent to the insurer.
Ultimately, if you have a good agent on your side and are honest on your application, you won’t have to worry about your benefits being paid out, even due to coronavirus. During this time, it’s important to mitigate your risks and make sure you are engaging in safe and CDC-approved behaviors so you don’t get sick. This is particularly important if you have preexisting conditions. Give us a call today so we can review your existing life insurance policy or help you find another policy during COVID!