The extent to which the coronavirus pandemic has tested the world’s collective resilience is unprecedented in living memory.
Against the backdrop of the alarming scale of illness and death attributable to the disease and the catastrophic economic contraction sparked multiple waves of government stimulus efforts, uncertainty pervades. Even in good times, no one knows what the future holds — and these are not good times.
One of the many sources of uncertainty for Americans these days involves a form of financial protection people usually regard as a sure bet: life insurance. Millions of us are wondering — some idly, some urgently — whether life insurance covers deaths attributable to the novel coronavirus (COVID-19).
Does Life Insurance Cover Coronavirus?
First, the good news. With possible exceptions, your permanent or term life insurance policy is very likely to pay full death benefits should you succumb to the disease. This assumes that you have one currently, and you remain current on your premium payments.
The not-so-good news is the impact of the COVID-19 pandemic on would-be policyholders in the process of applying for life insurance right now and into the future.
Those approved for coverage during the pandemic are still likely to be covered if they die of the disease. But the pandemic altered the application process itself, lengthening approval times and changing underwriting standards for the worse.
Life insurance companies are likely to scrutinize medical records and self-reported personal information more closely to ensure they’re not missing any medical conditions or behaviors that could contribute to premature death, whether from COVID-19 or anything else. This is especially likely to be the case for applicants who aren’t vaccinated against COVID-19.
Moving forward, it’s likely insurers will factor past COVID-19 diagnoses and vaccination status into their underwriting processes.
The result is that recovered coronavirus patients who subsequently apply for life insurance may face higher life insurance premiums than those who never had the disease, as may applicants who can’t prove they’ve received a vaccine proven to be effective in preventing serious COVID-19 disease and death — as the Pfizer, Moderna, and Johnson & Johnson vaccines authorized for use in the U.S. all are.
What to Know If You Already Have Life Insurance
If your life insurance policy predates the pandemic and remains in good stead, it’s doubtful your insurer would refuse to honor its commitment to your beneficiaries simply because you died of the disease. You can be reasonably sure your policy is set up to cover coronavirus death.
To be clear, “very unlikely” is not “impossible,” so be sure to review your life insurance policy documents or contact your insurer directly if there’s any doubt in your mind. But insurers generally don’t treat deaths attributable to pandemic diseases any differently from those that aren’t.
That’s likely to be true even in cases where high-risk travel patterns, behaviors, or occupational hazards could plausibly have contributed to your infection and death.
Your life insurance coverage should still result in a payout even if you traveled to a known COVID-19 hotspot or continued employment at a long-term care facility experiencing a COVID-19 outbreak in the weeks before your demise.
When Could Dying From COVID-19 Jeopardize Your Death Benefit?
Your permanent or term life insurance policy is not guaranteed to pay a death benefit, no matter what. Every policy features exclusions under which the insurer can legally refuse to compensate the beneficiaries upon the policyholder’s death.
Some exclusions are more common than others. Those that could jeopardize your policy’s death benefit if you die from COVID-19 include:
Your Premium Payments Lapsed
If you fail to make timely life insurance premium payments, don’t pay balances owed within the policy’s grace period, and cannot use your policy’s cash value (if any) to cover the shortfall, your insurer could cancel your policy and void its death benefit.
Policy lapses are some of the most common circumstances under which beneficiaries miss out on death benefits to which they’re otherwise entitled.
Life insurance policies lapse more frequently during periods of economic hardship, so if you’re experiencing a cash crunch due to the pandemic, talk to your insurer about your options.
You Weren’t Truthful About Your Occupation or Lifestyle
Any lack of candor on your life insurance application could justify withholding your policy’s death benefit.
Your insurer will scrutinize your application more closely if you die during the two-year “contestability period” at the outset of its term. If you lied about an occupation or a lifestyle choice that could increase your risk of COVID-19 exposure, such as working in a hospital or frequently traveling overseas, your insurer could refuse to pay your beneficiaries.
You Weren’t Truthful or Omitted Information on Your Medical Questionnaire
Failure to disclose any preexisting conditions, abnormal test results, or red flags in your family history could void your policy’s death benefit.
You Were Awaiting the Results of a COVID-19 Test as Your Policy Went Into Effect
Though unlikely, this situation — if not disclosed during the application process — could constitute a medical omission, especially if your test came back positive and you subsequently died of COVID-19-related complications.
You Only Have Accidental Death & Dismemberment Coverage
Accidental death and dismemberment coverage (AD&D) is a low-cost policy intended specifically to cover death or permanent injury attributable to certain covered accidents.
AD&D is often included in broader travel insurance policies, where it compensates for injuries and fatalities in the course of common carrier travel.
AD&D never covers deaths attributable to acute or chronic illness, even when acquired by travel.
What to Know If Your Application Is Pending or You Haven’t Applied Yet
If your life insurance application is pending or you have yet to apply at all, the question of whether life insurance will cover COVID-19 is more fraught, in part because your insurer has the discretion to delay or halt the application process.
If you haven’t yet applied, your first step is to shop around. Source multiple quotes using an online broker like PolicyGenius — which should increase your chances of finding the life insurance policy that’s right for you from an insurer that’s still getting applications underwritten quickly during the pandemic.
But there are a few things you still need to keep in mind.
Avoid Insurers That Tell You Premiums Have Increased Due to the Pandemic
Although the COVID-19 pandemic caused a short-term increase in deaths and temporarily confounded insurers’ well-oiled actuarial tables, the long-term impact is likely to be manageable.
Any adjustment to insurers’ underwriting equations in response to an increase of chronic disease in COVID-19 survivors would affect survivors who subsequently apply for life insurance but likely wouldn’t affect applicants who never had a documented infection.
Be very skeptical of any claims by insurance brokers or underwriters that life insurance premiums have increased across the board due to the pandemic. There’s no evidence that’s the case.
Expect Longer Processing Times & Closer Scrutiny
Life insurance application processing times vary widely in the best of times. In the throes of the worst outbreak of a viral respiratory disease in a century and despite continued variation among insurers, underwriters understandably pumped the brakes on rapid approvals.
That could mean a longer wait for final approval and much closer scrutiny of your application. Medical exam results, questionnaire answers, or existing health conditions that might have marginally increased your premium in the past could now be grounds for outright denial.
Coverage limits could be stingier, forcing you to rethink how much life insurance you really need. And if you’re older, your application could be denied due to your age.
The best defense is to shop around and get your broker or underwriter on the record about what to expect from the application process.
Answer Questions About Your Occupation & Lifestyle Honestly & Completely
When applying for life insurance, honesty is the best policy, if only to spare your beneficiaries from a financially devastating surprise after your death.
Answer all questions about your lifestyle and occupation wholly and honestly, and don’t — under any circumstances — pretend you’re in a line of work you presume is less risky than your actual job.
Be Truthful About Recent Travel & Potential Exposure or Infection
Likewise, if your would-be insurer asks, be truthful about any travel during the pandemic or specific situations in which you could have been exposed to COVID-19.
It’s not certain they’ll ask those questions or that your answers will factor directly into the insurer’s decision to approve or deny your application. But it’s best to leave nothing to chance.
Separately, if you’re asked directly about a past COVID-19 diagnosis, be truthful. If you’ve had a confirmed case of the disease and since recovered, your insurer will probably learn about it during a routine inspection of your medical records.
By calling your honesty into question and potentially jeopardizing your application, your refusal to disclose a diagnosis could do more harm than good.
And remember that being vaccinated may inoculate you — in this case, figuratively — against the negative impact of recent COVID-19 exposure, as severe disease is far less likely in vaccinated individuals.
Consider No-Medical-Exam Coverage
For applicants in good health, consenting to medical underwriting is a reliable route to lower premiums that could add up to thousands of dollars in savings over a multidecade policy term.
However, if you’re uneasy about visiting an exam facility or even interacting with a technician in your home for any reason — or because you have reason to believe a medical exam could turn up an unwanted result that threatens your application or results in a higher monthly premium — you have the option to bear the additional cost of a no-exam policy through low-friction term life providers like Haven Life or Ladder.
Forgoing the medical exam is likely to shorten your application processing time as well.
Respond Promptly to Communication From Your Underwriting Contact & Press Them for Status Updates
Be the squeaky wheel. Whenever your application seems to be stuck in limbo, ask your underwriter or company contact for a status update.
And avoid holding the process up yourself by promptly responding to communications and document requests from the insurer.
Life insurance is the rare investment on which the investor — usually the insured party, who is typically also the policyholder — hopes not to realize a return for a long time to come.
The real point of life insurance — whether term or whole life — is to provide peace of mind that in the unfortunate event of the insured party’s premature death, their heirs are protected from financial hardship and able to maintain the standard of living to which they’ve become accustomed.
Anything that jeopardizes that also undermines the value of life insurance itself. Why bother paying premiums for many years only for your heirs to learn they’re not entitled to the benefit they believed was a sure thing?
Fortunately, law and custom permit life insurers to withhold death benefits only in specific situations that policyholders can (and should) easily understand in advance.
In itself, death attributable to COVID-19 does not justify the withholding of death benefits. That means policyholders who don’t lie on their life insurance applications and remain current on their premium payments are quite likely to make good on their policy’s promise.