Due to COVID-19 and the volatility in the financial markets, I thought it would be appropriate to bring up a topic that most Canadians don’t like talking about, and that’s life insurance.
A few people have been asking me if their policies would pay out in the event they passed away from COVID-19. The short answer is yes, all the policies I write will. The next answer is – it will depend on the life insurance policy.
Here are some key pieces of information:
1. In-force life insurance policies cover claims arising from Coronavirus-related deaths
2. No COVID-19 related exclusions currently in the new life insurance applications
3. Providers may consider adding exclusions on future policies if the current pandemic evolves adversely. If you have a policy written today, that exclusion will never exist on your policy if providers decide to add this exclusion later
4. If a covered condition is triggered due to COVID-19, Critical Illness Insurance policies will cover claims, as long as survival period is complete
5. Disability insurance will pay out for COVID related illnesses, if the waiting period is met
6. Several of my insurance company partners have introduced flexible parameters to allow faster life insurance purchases without requiring in-person medical exams
When would it not pay out?
An overwhelming number of people purchase the life insurance coverage offered by their mortgage provider, and nothing else. There is fine print that no one reads when it comes to these types of policies, and even though this type of coverage is often highlighted in the news about the downfalls and drawbacks, people still buy it.
This type of life insurance is underwritten at death. At that time the company will determine whether they will pay out or not. If they discover that there was an underlying condition, they won’t pay out.
Because the deaths related to COVID have typically been because of a pre-existing condition or age, this could leave room for these types of policies to not pay out.
What should you do?
In 2019 Policy Advisor magazine had conducted its first State of the Nation: Canadian Life Insurance Trends to determine consumer trends and attitudes towards life insurance. Not surprisingly, the poll revealed how unprepared Canadians are if a life-altering event occurred.
1. Forty-nine percent of Canadians who have dependents said they’ve never purchased life insurance.
2. Almost 80% failed to review their life insurance coverage.
3. Nearly half of those surveyed think life insurance is a prohibitive expense.
Well, one of the world’s most successful insurance advisors said it best.
“There’s a price tag on doing nothing, and there’s a price tag of doing something. But the price tag of doing nothing is far greater than the price tag of doing something.”
The critical take away from this survey…, Don’t put off something that can be done today. Perhaps now is the time to address the “financial gaps” that exist in your personal situation.
Without going into the intricacies of how life insurance premiums are determined, there are a few things that I do know once this pandemic is over.
1. Life insurance premiums will be going up. Today is the best time to get a policy that fits better within your budget.
2. Policies could exclude pandemics in the future because this won’t be the last one. Policies written today still cover for that type of death.
3. Reviewing your coverage is of utmost importance to make sure you don’t have gaps that you weren’t even aware of. The majority of people don’t know what they are or aren’t covered for.
Application process made easier (NON-Face-to-Face Option)
Since our health is of paramount importance, NON-Face-to-Face applications can be conducted on the phone and through the internet. Paramedical service providers have temporarily stopped doing medical exams and are not accepting home visits. However, there are insurance companies that have relaxed their underwriting standards, offering life insurance coverage WITHOUT MEDICAL EXAMS (within established limits), while using an accelerated underwriting approach.
If you would like a quotation please don’t hesitate to email or call. I’d welcome the opportunity to be of personal assistance.
Let’s all stay safe and I look forward to talking you.