Protection Through a Pandemic

by Ande Frazier

Financial Frequency. mySecurity

March 27, 2020 . 3 min read

There’s never been a better time to get your finances in order then right now. All that planning we did for “the unknown” seems to finally be here. The coronavirus is not only affecting our health but also our ability to earn income and our global economy. 

With this in mind, many people are now shopping for life insurance or reevaluating their policies. So, we wanted to make sure we provided some answers to all your questions about COVID-19 and Life Insurance.

Q:  If I die due to COVID-19, will my policy still pay benefits to my beneficiaries?

A:  Yes,  in the event you already have life insurance, you should be covered due to death from COVID-19.  But if you are concerned, read through your policy and pay attention to the exclusion language stated there. And as always, consult with your insurance company about any concerns you may have.

Q:  Does the two year contestability period impact if I am covered from death due to COVID-19?

A:  Remember, your life insurance policy is a contract between you and your insurance company.  The two-year contestability clause generally protects against fraud or false information. Claims may still be paid during this contestability period, however, those claims will be reviewed more strictly to make sure the application was completed with honest and truthful information.

Q:  Can I apply for life insurance now?

A:  The answer is yes, you can absolutely still apply for life insurance. But there are some impacts due to the coronavirus.

Q:  I am seeing a lot of advertisements to get life insurance with new companies.  Should I get my insurance through one of these?

A:  It is always a good idea to purchase insurance through a highly rated established insurer. Generally, top rated companies will have the financial resources available to meet their financial obligations. To find out if the company you are considering is a highly rated company, check out A.M Best Co., Fitch Ratings, Moody’s Investor Service, Inc., Standard & Poors, and Weiss Ratings.  You can also check out the Comdex Ranking of the company in question. The Comdex ranking is a composite score averaging the ratings of the major insurance rating organizations.

Q:  How will COVID-19 affect your life insurance application?

First, expect some delays in the application process. Many providers still use dated practices, so look for places that have online applications where you may not need a doctor’s visit to complete the process. If you do need a doctor’s visit to complete your application, many providers offer 90 days to complete that while still giving you some form of coverage. 

If you’ve traveled recently, expect a delay as well. New guidelines are saying that any applicants who have traveled outside the US within the last 30 days will have their applications postponed. 

Staying healthy throughout your application process will also have an impact. Even in normal circumstances, if your health changes between application and approval it will cause a delay. Be honest about your health during the whole process, or it will have major impacts on your ability to be insured.

Insurers are aware that life insurance applications are increasing during this crisis.  Therefore, review all the terms of your policy and ask questions to get clarity.

Q:  Are premiums going up as a result of COVID-19?

A:  As of now, life insurance rates are not increasing due to COVID-19, however, if you contract an illness during the application process this could affect your rates and eligibility.

Q:  What should I look for in a policy?

A:  If you are applying for term insurance, look for convertible options. You will want the option to convert this coverage to permanent coverage at some in the future.  Even if you don’t convert, it is better to have the option.  

Also, at the end of the period under which you are covered, you will want to see if you can continue coverage at the end of the period and at what cost.  If you get sick during the period that you have coverage, you will want to continue that coverage as you may not be able to obtain it with another company due to the illness you have.  

Now would be a great time to get in touch with your financial adviser to go through not just your insurance, but your finances in general.  Review the decisions you have made, along with evaluating decisions you should be making next. The more aware you are of what is happening with your own money, the better prepared you will be to take action if needed.