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Life insurance is one way to provide financial stability for your loved ones after you die. Understanding your policy and how COVID-19 affects your coverage is important for both you and your family.
To that end, NerdWallet has put together a guide on what you should know about life insurance and the current global pandemic. We have answers on:
Does life insurance cover deaths from COVID-19?
Life insurance policies will pay out in the event of a death from COVID-19. Although a life insurance company may change guidelines for future applicants, insurers aren’t able to alter any policies that have already been sold. This means if you already have life insurance, your company won’t be able to suddenly change the policy and deny your beneficiary a payout if you die from the coronavirus. However, an insurer may reject any life insurance claim if the policyholder submitted an inaccurate life insurance application or didn’t pay insurance premiums.
Right now, insurers are asking people to wait until they have recovered from the coronavirus to apply for life insurance. When applying for a policy, you’ll be asked to disclose your medical history, including whether you are currently ill. Some companies are specifically asking applicants if they have been treated for COVID-19. Because the coronavirus can make someone terminally ill so quickly, you likely won’t even be able to purchase a guaranteed issue policy, a type of life insurance that doesn’t require a medical exam or extensive health questions and offers a relatively small death benefit.
How has COVID-19 affected the life insurance application process?
Insurance companies are responding to the pandemic in different ways. Prudential, for instance, has suspended applications for 30-year term life insurance at least through June. Other companies are restricting applications based on the applicant's recent travel history. And while most insurers continue to issue life insurance policies, this could change as the situation evolves.
For now, buying life insurance has changed in a few key ways in the wake of the coronavirus pandemic, including:
Delays in getting life insurance if you’ve recently traveled internationally, plan to, if you currently have the coronavirus or your insurer needs your medical records (see more below).
Medical exams and records are required for most types of life insurance applications. Americans are being instructed to follow social distancing guidelines that include avoiding unnecessary travel and human interaction. With some nonessential medical offices still closed, it might be difficult to get patient records. Some insurers are offering a virtual application process that allows approved applicants to receive life insurance without a medical exam.
Past travel history and future travel plans to high-risk areas for the coronavirus may affect whether you can apply for a policy immediately before and after travel.
Life insurance rates have remained the same as before the pandemic, but this could change in the future.
Will travel history affect your rates or application process?
Applicants are usually asked to disclose any international travel plans when applying for life insurance. While this information is still usually required, now there also are waiting periods for anyone who has traveled anywhere overseas. However, this guidance could change and insurers may place additional restrictions.
Will medical exams be delayed?
Some companies are extending medical exam time frames. Certain companies are still offering in-person exams, but availability may be limited and depend on your location. In addition, insurers may ask you to postpone the exam if you're sick or have recently traveled internationally. Some insurance companies are offering coverage — both term and permanent insurance — without a medical exam through a virtual application for healthy applicants. Customers can receive life insurance by answering questions online or through a phone interview.
Contact your insurer if you don’t think you will be able to pay your premium. There is usually a grace period to pay an insurance bill, around 30 days. If the bill is paid during this time, your policy will remain in force. Some companies are extending grace periods, and state regulators are requiring it in certain states. Outside of a coronavirus-related financial hardship, if a premium isn’t paid after the grace period, the policy is typically voided. Most insurers let customers apply for reinstatement three to five years after insurance is lost, as long as they prove they aren’t too risky to insure. To determine how healthy they are, policyholders might have to answer medical questions or take another life insurance medical exam. Other options to help with costs include changing how often you pay your bill (monthly, quarterly) or reducing your coverage.