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Does Life Insurance Cover Coronavirus (COVID-19)?

The extent to which the COVID-19 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 that has already 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.

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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 COVID-19.

First, the good news. With possible exceptions, your life insurance policy is very likely to pay full death benefits should you succumb to the disease. That only applies if 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. Those approved for coverage during the pandemic are still likely to be covered if they die of the disease. But the pandemic could delay or halt the application process itself. Insurers 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.

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.

To be clear, “very unlikely” is not “impossible,” so you should absolutely 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 travel patterns, behaviors, or occupational hazards could plausibly have contributed to your infection and death. Your policy should still pay out 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 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, do not 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 redresses 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.

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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. This way, you’re more likely to find the life insurance policy that’s right for you from an insurer that’s still expediting applications 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 has 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 viral respiratory disease in a century and despite continued variation among insurers, underwriters are understandably pumping the brakes on rapid approvals.

That means a longer wait for final approval and much closer scrutiny of your application. Medical exam results or questionnaire answers 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

Likewise, if asked, 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.

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 during the pandemic, you have the option to bear the additional cost of a no-exam policy through a company like Bestow 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. Avoid holding the process up yourself by promptly responding to communications and document requests from the insurer.


Final Word

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 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.

Are you worried that your life insurance policy won’t cover complications of COVID-19? Are you prioritizing your life insurance application now as a result of the pandemic?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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