Does my life insurance cover Coronavirus (COVID-19)?
Yes, if you already have life insurance and are one of the unfortunate people that goes on to die as a result of Coronavirus, then your life insurance policy will pay out.
Below we have provided some responses from some of the top life insurance providers:
Aviva - 'We're continuing to pay all valid claims and committed to giving you access to valuable protection insurance. Death claims arising from the coronavirus infection will be paid, subject to the usual policy terms and conditions'
Legal & General - 'Our claims philosophy has not changed in light of Coronavirus. We will always pay all valid claims'
LV= - 'Sadly, some people die directly or indirectly as a result of contracting Coronavirus. In such circumstances, our Life Insurance policies would pay out'
Some insurers are however changing their stance with regards to new applications and so make sure you read on to find out how Coronavirus may affect new life insurance applications.
Does a life insurance policy exclude claims as a result of Coronavirus (or will it in the future)?
No, life insurance is a very simple insurance policy and is not sold with any exclusions. If you die during the term (for any reason) then it will pay out. To explain how life insurance applications are assessed, rather than exclude a condition or illness, a life insurance company may decide instead to increase the premium (sometimes referred to as a 'rating' or a 'loading'). A common reason for applying a rating to a life insurance application could be a history of high blood pressure (referred to a Hypertension) or perhaps if a client is overweight. By charging higher-risk customers a higher premium, the insurer can afford to cover the higher chance of paying out upon death. This is what makes life insurance so straight forward; if you die during the policy term, then the policy will pay out. The only time a policy may not pay out is if you were not honest on the application form and omitted key medical information (something referred to as 'non-disclosure').
What impact will Coronavirus have on future life insurance applications?
It is possible that as the Coronavirus pandemic worsens, policies get more expensive. Life insurance premiums are set by a team of actuaries, a team of people whose job it is to assess risk. Most existing life insurance policies have fixed premiums and so a way to increase revenues (in order to afford the potential rise in future claims) is to increase the overall cost of life insurance for new applications. This is not to say that it definitely will happen, but it is possible and so if you have been putting off getting life insurance, you should probably act sooner rather than later. We explain the best way to buy life insurance later in this article, including how to get £50 cashback.
Is it harder to get life insurance now?
No, not necessarily, although some insurance companies have added additional questions to their application forms relating to recent travel, symptoms of the virus as well as exposure to someone who has tested positive for the virus. So your application may be postponed for 14 days or more dependent on what you answer. Applications may, however, take longer to be assessed by the insurer, due to a combination of increased demand and lower staff numbers. Some applications will require a report from your doctor, known as a General Practitioner's Report or GPR. It stands to reason that these will take longer to complete as GP's prioritise their workload.
Insurance companies have switched to virtual medical checks where these are required as part of the application process and electronic GPRs too. If your application is delayed due to the insurance company using the conventional methods, it might be worth your while to seek an insurer that is able to progress your application by more efficient means. Speaking to a specialist life insurance adviser will help you find those that are positioned well for this.
What is the best way to buy life insurance now?
While the delay in processing life insurance applications is inevitable, you should start the process of applying for life insurance as soon as you can. Firstly, the sooner you apply, the sooner the cover will be in place, but secondly, most insurers will cover you in full during the application process and so applying now means you are covered straight away.
We have personally vetted the services of one of the UK's leading independent insurance broker's*, which specialises in finding the best and cheapest life insurance. They will be able to provide independent advice to ensure you are buying the best policy for your needs as well as providing help with the application forms, chasing the insurance company on your behalf and even help with placing your policy into trust (meaning your beneficiaries will not be liable for inheritance tax). Additionally, if you decide to take a policy through them you will qualify for £50 cashback.
To speak to an adviser, with no obligation to take things further, simply complete the form via the link above. The firm employs strong ethics and will only ever offer a policy if it is the best policy to suit your personal needs.
What if I struggle financially and cannot afford my life insurance premiums?
A lot of families are experiencing financial hardship and are rightly looking for ways to replace lost income and cut down on expenditure. A word of warning, you should only consider cancelling your life insurance as a last resort. Firstly, speak to your insurer as they may be able to offer a payment holiday. A life insurance policy should be the very last expense that you cut as it provides a financial lifeline for your family should the worse happen.
Some insurers are allowing their customers to scale down the amount of insurance that they have in order to reduce their premiums, with a view to increasing it when it becomes affordable again. Importantly, customers won't be required to answer the medical questions again when it comes to increasing the cover back to the original amount. This is particularly important if their health has changed since they first arranged your policy.
Consider using a budgeting app so that you can see the bigger picture and understand where you can make some savings. Check out our article 'The best budgeting apps in the UK - how to budget without trying'. You should also take a look at Damien's money MOT, a simple tool that in just two minutes will give you a detailed breakdown of how your finances shape up.
If you have already cancelled your direct debit then it is likely that your cover has lapsed. All is not lost and you may be lucky, as some life insurance companies will allow you to miss up to three premiums before cancelling your cover. Don't leave things to chance though and get in contact with them straight away as not all insurance companies will cover you while your policy is lapsed. Check out our article 'Can you cancel life insurance (and what happens if you do?)'.
Summary
Existing policies (taken out prior to the first known cases of Coronavirus) will pay out if you die as a result of contracting Coronavirus.
A new life insurance policy (taken out after the first known case of Coronavirus) should also pay out if you die as a result of contracting coronavirus, but remember the following:
- Applications may take longer to process due to increased demand and fewer staff
- Premiums could become more expensive and so applying sooner rather than later may be wise
- Application forms may be altered and have additional questions added as we learn more about COVID-19
- Insurers will cover you while they are processing applications, so apply as soon as you can
- If you apply through LifeSearch* then you qualify for £50 cashback when you take out the cover
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article - LifeSearch
