A Guide to Coronavirus and Life Insurance

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A Guide to Coronavirus and Life InsuranceCOVID-19 is a virus that began to be transmitted around the world at the start of 2020. Known as the coronavirus, it is a highly infectious virus that has quickly caused many countries to implement strict social distancing measures. The insurance industry is being highly reactive to this situation and the terms that are available are regularly being reviewed.

Things we need to know:

  • Have you had a positive test for coronavirus?
  • Have you been in contact with someone that is known to have COVID-19?
  • Have you recently travelled to any countries considered to be a higher risk of contracting COVID-19, such as Italy or China.
  • If you have had the virus, have you been left with any lasting complications?

When you apply for life insurance, insurers generally ask about a number of things: your health, the health of your immediate family, your travel history and plans for the future, what you do for a living and if you do anything crazy like jumping out of planes on a weekend. These are pretty standard.

With everything rapidly changing in the world, because of the coronavirus, there are some life insurance companies that are changing their approach to insurance applications.

Some life insurance applications are now changing and may now ask you about your exposure to coronavirus and if you have had it. Assuming that you have not been diagnosed with coronavirus and to the best of your knowledge have not come directly into contact with someone that has COVID-19, then your life insurance application could still be pretty straightforward.

It would seem that coronavirus can sometimes leave people with breathing difficulties for a while, even after they have been given the all clear. We are in such early stages of knowing about the coronavirus, that insurers are still adjusting to this new risk and we will need to chat to the insurers on a case by case basis, to find out what they can offer.

If you currently have coronavirus or are suspected to have it, some insurers will postpone your life insurance application, until you have made a full recovery or pass the isolation phase.

Some insurers however are still accepting people that have had symptoms of COVID-19 so long as you have not received a positive test for it, been hospitalised, etc. So, you may need to be selective over your insurer. Anyone that is outstanding a medical test e.g. COVID-19, generic blood test, urine test, or is suspected to have a condition eg. coronavirus, diabetes, cancer, has to wait until the tests/suspicions are completed before they can get life insurance with many insurers.

For anyone that has contracted coronavirus and now made a full recovery, life insurance should be available soon after recovery so long as there are no serious complications.

Unfortunately we know that coronavirus increases the risk of someone dying, which is why life insurers are being very cautious in offering new policies. There has been a clear increase in the amount of people wanting to buy life insurance, following the coronavirus outbreak, and insurance companies are trying to maintain a fine balance between supporting as many people as possible, whilst also ensuring that they have enough financial reserves to support their existing clients.

It is always worth double checking if your employer offers Death-In-Service cover, if you are wanting life insurance. It may be that you have life insurance already and just haven’t realised it yet. If you do, it’s a good idea to check if this is offered by an insurance company that offers any extras like access to on demand remote GP services, or specialist nurses, that you can access at any time (not just at a claim!).

Date of recording 25th of March and things are changing quickly, so please read the text for the most up to date information.

 Critical illness cover pays out a cash lump sum of money, if you are diagnosed with a medical condition that is listed in the insurer’s claims set e.g. cancer, heart attack, stroke.

As with life insurance, the insurance world is currently in a very confused time, when it comes to critical illness cover. For the most part things are running just as usual, but there are going to be extra things to consider if you have had coronavirus or are currently suspected of having it. People that have not had coronavirus and have not been in contact with someone that has had a positive coronavirus test, should be able to apply for critical illness cover.

The coronavirus is new to all of us and insurance companies make their decisions upon the terms that they offer, based upon known risk. They take years worth of data that they have collected on a certain ‘risk’ to determine how likely it will cause a certain situation to happen e.g. development of cancer, heart attack etc. At the moment it seems that COVID-19 does not necessarily increase the risk of developing a critical condition, but we simply do not know.

For the time being it is seeming, as with life cover, that many insurers will postpone any application for critical illness cover if you have had coronavirus or have been in contact with someone that has. We are monitoring insurers responses to this situation regularly and will update this page as further developments are made.  

 Income protection pays you a replacement of your monthly income, if you are unable to work due to ill health.

Income protection applications are probably the trickiest to arrange at the moment. When coronavirus started to become much more of a concern, during March 2020, some insurers started to introduce exclusions for COVID-19 and/or self isolation, for new policies (not existing). There are some income protection insurers that are offering their policies just like they do every other day.

For the companies who are applying exclusions, these are mainly for income protection policies with a 1 day or 1 week deferred period, but this is now being extended to longer deferment periods with some insurers. This is the time that you must wait until you are unable to work, before the insurer will consider the claim.

When coronavirus became a clear concern, many people flooded to get these policies and it started to become a concern to insurers that if everyone suddenly made a claim, they may not be able to fully financially support everyone.

More than ever before, if you are wanting income protection it is really important to speak with an adviser. They will know the most up-to-date options with insurers and discuss if the insurance is going to meet the needs of what you want right now.

It’s very important to understand that Income Protection covers you if you cannot work due to YOU being too ill to work. It does not cover loss of trade, being laid off/redundant or isolating because of a family member. 

After looking at the options for income protection, it is sometimes worthwhile looking at a policy called Accident, Sickness and Unemployment Cover. At the moment, in response to COVID-19 and significant numbers of people applying for the cover, many insurers have now stopped offering the unemployment part of this cover. There are still some options and we are monitoring this closely. 

With the current situation, some travel insurance companies are not currently offering new travel insurance policies. If you are currently abroad and trying to get home, we recommend that you speak with your travel agent and insurance company, to discuss ways of getting home. There are also dedicated support groups being set up to support people that are stranded outside of the UK, please contact the British embassy where you are and your local MP to provide you assistance.

What is Coronavirus

Coronavirus, or COVID-19, is a virus that caused a pandemic from the beginning of 2020. It is a condition that affects the breathing and airways, causing significant health problems and potentially death to those that are diagnosed with it. It is a highly infectious virus that typically causes a high fever and persistent cough.

Many people are being diagnosed with the virus, or have it and are unaware, as sometimes symptoms can be minimal, but it can be fatal to those in high risk groups e.g. people over 70, severe asthma, cystic fibrosis, undergoing some cancer treatments.

Common Questions

Arranging income protection right now needs a lot of care. Quite a lot of income protection policies now come with some form of a coronavirus exclusion. That’s not to say that all of them do! The best thing to do is speak with an experienced adviser who can let you know what the latest guidance is as these policies are changing on an almost hourly basis right now.

No! Existing life insurance, critical illness cover and income protection will not exclude coronavirus. It is very unlikely that new life and critical illness policies would have a coronavirus exclusion. Do be careful of income protection policies though, some insurers are adding on coronavirus exclusions and these are changing on a regular basis, it’s incredibly important that you seek advice when arranging this cover.

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A Guide to Coronavirus and Life Insurance

Dr Kathryn Knowles Phd

Author
This page was written by Dr Kathryn Knowles Phd, an award-winning insurance adviser. To read more about Kathryn please see her bio here

A Guide to Coronavirus and Life Insurance

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A Guide to Coronavirus and Life Insurance

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