The world is having to adapt to a new way of life as we battle to control the outbreak of Coronavirus. While governments work hard into the night modelling possible scenarios and checking coping mechanisms it has afforded the time for many to check their own coping mechanisms, such as checking insurance policies, understanding how to access savings and knowing what government help is available to them.
If we needed proof that this is the case we only need to look at Farewill, an online will writing specialist that has reported a 300% increase in demand in the wake of the Coronavirus outbreak and we are seeing similar increases in demand for protection products such as life insurance and critical illness cover.
Those that have existing life insurance, critical illness and income protection insurance are understandably wondering where they stand and so we have written this article that definitively answers the following questions:
- Will my existing life insurance policy cover me if I get Coronavirus?
- Will a new life insurance policy cover me for Coronavirus?
- Will my existing critical illness policy cover me if I get Coronavirus?
- Will a new critical illness policy cover me for coronavirus?
- Will my existing income protection policy cover me if I get Coronavirus?
- Will a new income protection policy cover me for Coronavirus?
Will my existing life insurance policy cover me if I get Coronavirus?
Yes, the good news is that all insurers have confirmed that they will pay out on life insurance if you die from an illness as a result of contracting Coronavirus. Life insurance is risk assessed at the time that you apply (a process known as underwriting) and so once your policy starts, it is guaranteed to pay out in any event.
Many life insurance companies have made their stance explicitly clear, saying that COVID-19 will not impact any future claims, with LV= saying 'Sadly, some people die directly or indirectly as a result of contracting Coronavirus. In such circumstances, our Life Insurance policies would pay out'.
Will a new life insurance policy cover me for Coronavirus?
Yes, new applications for life insurance will automatically cover you for death arising from Coronavirus, however the application process may take a little longer due to increased demand and fewer staff and premiums could be more expensive now than they were before the pandemic. Insurance companies price their premiums based on the risk of paying out and if there is likely to be an increased risk going forward, then it stands to reason that policies may become more expensive. It is why your car insurance premiums go up if you have had an accident, as they deem you to be a higher risk.
One of the benefits of most life insurance policies (and how it differs from annually renewable policies like car insurance) is that the premium is fixed from the day you take it out. That means that if the pandemic gets worse or if your health deteriorates, you won't have to pay increased premiums in the future. The exceptions are index-linked policies and investment-linked policies such as 'Whole of life' cover. Check out our article 'Types of life insurance explained' for more information.
If you are considering taking out life insurance then make sure you speak to an independent specialist as they will be able to search the whole market on your behalf. We have personally vetted the services of one of the UK's leading independent insurance broker's, who can provide free advice to ensure you are buying the best policy for your needs as well as helping to complete the application forms. They will even chase the insurance company on your behalf and help you to put the policy into trust, meaning your family is not liable for any future inheritance tax on the policy. Additionally, if you decide to take a policy through them you will qualify for £50 cashback and you will receive free cover while your application is being underwritten.
Will my existing critical illness policy cover me if I get Coronavirus?
Coronavirus or COVID-19 is not considered a 'critical illness' as it doesn't fit any of the listed definitions on a critical illness policy. While a critical illness policy would not pay out on the specific diagnosis of Coronavirus, it could conceivably pay out if your condition became more serious and you developed other medical complications that did then fall under a specified definition. If your critical illness insurance policy has life insurance attached to it (as many policies do) and you were to die as a result of Coronavirus, then, of course, your policy would pay out on the life insurance benefit.
Critical Illness provider Zurich explains more:
Coronavirus is not a specified ‘Critical Illness’ on Zurich’s policy. In some cases, people do die as a result, and in such circumstances, the life insurance attached to our plans would pay out.
Under our “Respiratory Failure – Of Specified Severity” definition, it is possible a claim might be presented but the opinion of our Claims and Medical Officer is that the coronavirus is unlikely to produce the permanent symptoms or impairment to lung function required to meet this definition. We will consider any such claims presented on the basis of the individual circumstances.
Will a new critical illness policy cover me for coronavirus?
No, much like an existing critical illness policy, Coronavirus is not one of the listed conditions that are covered by a critical illness policy. Again, while Coronavirus isn't specifically covered, your policy may still pay out if you developed complications which led to other definitions being met. Additionally, most critical illness policies are taken out with combined life insurance and so if you were to go on to die from an illness linked to Coronavirus (and you had combined life and critical illness cover), then the policy would pay out on the life benefit. For more information on critical illness, check out our article 'Critical illness - what is it and is it worth having?'
Will my existing income protection policy cover me if I get Coronavirus?
Yes, existing income protection policies that were taken out prior to the Coronavirus outbreak would pay out if you were unable to work due to coronavirus. Income protection is designed to pay a guaranteed income in the event that you are unable to work due to any illness or injury, so long as your chosen 'deferred period' has been met and you remain medically unfit for work.
Does Income Protection pay out if I have had to Self-Isolate?
No, income protection is not designed to cover your income in the event that you cannot work due to self-isolation on government advice. Your income protection policy may, however, pay out if you proceed to have symptoms and become medically unable to work for longer than your chosen deferred period.
Will a new income protection policy cover me for Coronavirus?
It depends. Most new income protection policies would still cover you for Coronavirus, however the application process may require you to complete extra questions and you may find that you would have to select a deferred period of 2 months or more. To clarify, policies with a 1 month deferred period or less are likely to have a Coronavirus exclusion applied. Our article 'What is a deferred period on an income protection policy? explains more about how deferred period's work.
What is clear at this stage is that income protection providers are closely monitoring the situation and regularly reviewing their stance. If you are considering purchasing a new income protection policy then you should speak to an independent specialist as they will have the latest information to hand and can provide a tailored quote based on your own personal circumstances. By using our specialist income protection partner you'll receive a personalised quote, help with the application forms and they will even chase the insurer on your behalf. Additionally, you'll qualify for £50 cashback should you decide to take a policy out.
Here are our summarised answers to the most popular questions relating to Coronavirus (COVID-19) and life insurance, critical illness insurance and income protection:
- Existing life insurance policy - Yes, an existing life insurance policy will pay out if you die as a result of coronavirus
- New life insurance policy - Yes, a new life insurance policy should pay out if you die as a result of Coronavirus, however, the application process is likely to take longer (and premiums may be more expensive)
- Existing critical illness policy - No, an existing critical illness policy will not pay out specifically for Coronavirus however if you develop further complications that result in you meeting the definition of an illness that is covered, then you could receive a pay out. If you die as a result of Coronavirus and your policy has a life insurance policy attached then the life insurance will pay out.
- New critical illness policy - No, a new critical illness policy would not pay out specifically for Coronavirus however if you develop further complications that result in you meeting the definition of an illness that is covered, then you could receive a pay out. If you die as a result of Coronavirus and your policy has a life insurance policy attached then the life insurance will pay out.
- Existing income protection policy - Yes, existing income protection policies that were taken out prior to the Coronavirus outbreak would pay out if you were unable to work due to coronavirus and you have met the required 'deferred period'.
- New income protection policy - Yes, a new income protection policy would potentially pay out for being unable to work due to coronavirus, however due to insurers applying exclusions to policies with shorter deferred periods, it is likely that you would only be able to claim if you became seriously ill from the effects of Coronavirus.
- Best way to buy cover - If you are thinking about taking out a new life, critical illness or income protection policy then consider speaking to our specialist insurance provider. They have extensive knowledge, over 10,000 reviews on independent review site Trustpilot and you'll qualify for £50 cashback if you take out a policy with them.
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