As the coronavirus pandemic continues to threaten the health of people in almost every community on the planet, it's natural for more people to consider the relevance of life insurance in the current situation. Does coverage apply to a death caused by COVID-19? Has life insurance gotten more expensive? Should I apply for life insurance now?
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At ValuePenguin, we took a closer look at these common questions regarding life insurance and the coronavirus.
Does life insurance cover COVID-19?
Yes. Unless you already had COVID-19 or recently traveled to affected areas and didn't disclose that when you applied, your policy will cover you if you pass away due to COVID-19. Life insurance companies cannot change the terms of coverage for active policies, so anyone who was covered remains covered.
Has COVID-19 made it harder to get a new life insurance policy?
If you've been infected with the coronavirus or have recently traveled to a region with a heavy outbreak, applying for life insurance could take longer and be much more expensive. More recently, some insurers have stopped selling policies to customers older than a certain age. Terms and rates may change as life insurance providers continue adjusting to the situation.
However, the situation has made life insurance easier to obtain in one respect: no exams. For example, Erie Insurance announced that it would remove the requirement for on-site medical exams because social distancing policies and business shutdowns have made such exams impractical.
Other insurers, like Haven Life, have extended the exam deadline for new customers while offering temporary coverage that starts right away in many cases. And plenty of online life insurance providers were already offering policies that required no medical exam even before the outbreak began. You can easily get a free quote from such providers and compare your options.
What steps have life insurance companies taken in response to the coronavirus?
If your income has been affected because of a layoff or furlough due to the impact of the pandemic on your employer's business, it may be worth calling your life insurance company to see what options it has made available to work with customers in your situation. Several companies have signaled that they are willing to defer premium payments for the time being, such as Northwestern Mutual, which offered a 90-day grace period for customers who couldn’t make premium payments at the time.
How major life insurance companies are responding
|MetLife/Brighthouse Financial||If you have group life coverage through your employer and get furloughed or temporarily laid off, then coverage will continue for 12 months as long as you keep paying premiums. MetLife group life policies have no limitations that would limit a claim payout related to COVID-19.|
|Northwestern Mutual||Offers a 90-day grace period ending July 1, 2020, during which customers may postpone their premium payments while still being able to make claims, and an additional 90 days afterwards to reinstate your policy. Applies to individual whole and term life policies, as well as group life insurance.|
|MassMutual||Free three-year term policies for frontline workers with a high risk of exposure, such as in-hospital personnel and first responders.|
|New York Life||Allows you to leverage your current life insurance benefits to help pay your monthly premium. Also allows a family member or loved one to make a payment in your place.|
|Prudential||No specific guarantees. Asks customers with COVID-19-related questions to call 800-556-8527 for support.|
|Lincoln||No specific guarantees regarding life insurance.|
If you're in Connecticut or Massachusetts and work for a hospital, urgent care center or emergency medical services provider, look up MassMutual's new HealthBridge program. This is a free three-year term life policy being offered as a thank-you by the company to those who have the greatest risk of exposure to the coronavirus as a result of their work in providing care for others.
This is a short list of major life insurance providers and what they've said about adjusting their policies to the current situation. These standards may change as insurers learn more about the risks of COVID-19.
Will COVID-19 have an impact on life insurance requirements in the long term?
It's too early to know for certain. Some recovered patients are said to have suffered lasting lung damage, but medical professionals will need more time to assess the true long-term impact of the coronavirus. If there are lasting consequences, life insurers may incorporate that information into their underwriting standards, which could affect the cost of coverage for COVID-19 survivors.
According to some researchers, it's also possible that COVID-19 could last beyond the current pandemic and join the established family of respiratory illnesses that we deal with every season. Depending on how quickly and effectively new treatments and vaccines are developed, the threat of a recurring COVID-19 season might mean higher costs in life insurance.
Does the current coronavirus pandemic make it more important to have life insurance?
We don't think that COVID-19 significantly changes the answer to whether you need a life insurance policy. Our recommendation has always been that life insurance is necessary for anyone whose death would result in financial strain for another person.
Anyone who provides care or financial support to their family members should have enough life insurance to replace that support for as long as it's needed. Married couples — even those without kids — can also use life insurance to ensure that each spouse can maintain their joint standard of living even if the other passes away.
If you aren't married and don't have any dependents, life insurance is probably not essential for you. However, consider that your situation may change in the near future. If you have a parent whom you expect to support in their old age or a significant other whom you plan to marry, those ties may justify obtaining coverage ahead of time.