If the coronavirus pandemic has shown us anything, it’s how financially fragile we are. With so many people seeing first-hand how quickly life circumstances can change, we have been reminded of the importance of having solid financial protection in place. If Covid-19 has motivated you to take out life insurance, you may have questions. We will try to answer some of those below, but we encourage you to speak to a life insurance planner in Virginia.
Life insurance pays a lump sum to your family, or beneficiary, in the event of your death. Life insurance provides many with peace of mind in knowing that loved ones will be taken care of financially. The funds can be used in any way your dependents wish, but typically it is used to pay off the mortgage and other outstanding debt, fund childcare and cover living costs.
Premiums for life insurance depend on factors such as your age, health, lifestyle, occupation, type of coverage and the length of the term.
Covid-19 has had large impacts on insurance as a whole, but so far the life insurance sector has not been significantly impacted. Premiums have remained steady, there is no evidence of life insurers pulling out of the market, and Covid-related claims are already being paid. Life insurance policies are still available and will cover coronavirus.
One change that has occurred, however, is the introduction of Covid-19 specific questions on life insurance application forms. Insurance companies are taking precautions, asking a few more questions and tightening underwriting in some areas. This includes some potential additional focus on people who have diabetes, asthma, or may be overweight.
If you are applying for life insurance, you will likely be asked questions such as:
- Have you tested positive for coronavirus in the last 30 days?
- Have you been advised to self-isolate in the last 30 days?
- Have you had any symptoms of coronavirus in the last 30 days?
- Have you been in contact with anyone who has been diagnosed with or who is suspected of having coronavirus?
If your answers to one or all of the above questions would be yes, you may need to consider postponing an application for new life insurance. While it depends on the insurance company, the postponement is often around a month. This may be longer however, if you suffered serious symptoms or were hospitalized. While we understand that some people may feel pressured to get a life insurance policy as soon as possible, it is crucial that you answer these, and all other questions honestly.
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Maybe you want life insurance but are worried that you will be denied due to pre-existing conditions. If your conditions put you at greater risk from Coronavirus, such as diabetes or asthma, or you’re older than 50, you may find it harder to find coverage. The insurers that do offer coverage will likely charge much higher premiums.
If your condition is a particularly high risk one, the insurer may ask for a report from your doctor or for a medical examination. This only takes about 20-30 minutes and involves answering questions about your lifestyle and health. You will also have your height, weight, and blood pressure checked and a blood sample taken. If you are concerned about finding coverage, please speak to a life insurance agent about your options.
Are life insurance companies still paying out? The short answer is yes. While many consumers have struggled to execute claims on policies such as travel and wedding insurance due to the pandemic, there have been no issues within the life insurance industry.
Critical Illness Coverage
For an additional cost, many life insurance policies allow you to add critical illness coverage to your policy. This additional coverage pays out a tax-free lump sum if you are diagnosed with a specific illness or medical condition listed on your policy. These funds can then be used to pay bills, mortgage, or debt. However, whether you have an existing policy or are thinking of a new policy, critical illness coverage will not include coronavirus as a condition. So, if you are diagnosed with Covid-19, there will be no pay out.
However, if you have contracted coronavirus and this leads to severe complications like stroke, heart attack, or kidney failure, critical illness coverage may pay out if these conditions are specified in your policy.
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Income Protection Insurance
What is it? Income protection insurance pays a monthly income if you are unable to work due to illness, accident or in some cases, redundancy. Short term policies pay out for a limited time, between 12-24 months usually. Long-term policies offer greater coverage and are therefore more expensive. Long-term policies usually provide more comprehensive coverage and allow you to process a claim more than once.
Long-term policies will not pay out if you are made redundant, whereas short-term policies often do. However, since spring, redundancy coverage hasn’t been available. While it is expected to return sometime this year, its impossible to say exactly when that will happen.
Funds received from an income protection insurance policy can be very beneficial if you are no longer able to earn a salary or wage. The main problem with this type of insurance, however, is that you can’t claim until an agreed deferred period has occurred. This could be between 4 weeks and 12 months. So, if you temporarily stop working due to coronavirus, you will likely be recovered before you can make a claim.
Newer policies may have a deferred period that is shorter, between 2-4 weeks. However, insurers have already introduced COVID-19-related exclusions to these policies. So, if you are looking for income protection from the virus, it is unlikely to benefit you much.
With that being said, if you are high risk, or concerned that you would be off work for a long period if you contract the virus, income protection may be worth considering.
Life Insurance Planner in Virginia
If you are interested in learning more about your options for life insurance and add on coverages, please contact Argent Bridge Advisors today!