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.
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……Read More>>