Life Insurance and COVID-19: all you need to know

Life Insurance and COVID-19: all you need to know

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Due to COVID-19, we are now living in a world characterized by extreme uncertainty. We try to cope with the circumstances, but it is hard, as human beings, to deal with such a lack of security. The economy, employment, relationships, and of course, physical and mental health are in a dangerous spot. We are losing our sense of control over our lives and starting to fear what might be ahead. Many worst-case scenarios spin in our heads, leaving us wondering what could ease such fear and instability. For many, the answer seems to lie in life insurance.

Since Spring, Canadians have been buying insurance in high numbers, as thousands began getting ill and fearing the financial impacts of COVID-19. In fact, according to CNBC, Google Search traffic for “life insurance” jumped 50% between March and May this year compared with the same period in 2019. The reason is quite understandable: what would happen to a family if the breadwinner dies unexpectedly from COVID-19?

Given also the uncertainties regarding the job market, many people fear that the impact on their household could be tremendous. As it becomes more noticeable how important it is to have proper financial protection in place, life insurance comes into play.

Searching for financial security 

If you are feeling financially vulnerable, you may have been debating whether or not to invest in life insurance. Regardless of your circumstances, it is safe to say that life insurance is always a good financial move, especially if you have a family or people who depend on you. It is one of the easiest and most reliable ways of guaranteeing that your loved ones will be protected, no matter what life throws at them.

Amid a global pandemic, the need for financial security is more significant than ever. That is why getting insured is, conceivably, the best thing you can do now to guarantee your family’s protection. But if getting an insurance policy in normal circumstances can be challenging, doing so during a pandemic might seem even worse.
We understand that you may have a lot of questions and that committing to such an important purchase relies on the answers you receive.

First, it is important to understand that each insurance provider has unique approaches for individuals who were or are at risk of becoming infected by COVID-19. In this article, we will cover general concerns and explain how TermLite is managing the situation.

What is life insurance?

Life insurance is a financial product that pays out a lump sum to your family (or other dependents) if you pass away during the length determined in the policy. The benefit can be used by your loved ones however they wish, but most often the money is used to cover living costs, clear the mortgage, or pay for outstanding debts.

In Canada, there are two main types of life insurance: permanent life insurance and term life insurance. As the name suggests, permanent life insurance plans provide lifelong protection, usually with the option to accumulate cash value. As long as you continue to pay your premiums, the plan will always remain in force. On the other hand, term life policies aim to give protection for a limited time frame (typically 5-, 10-, 20-, or 30-years). Once the term expires, you are no longer covered.

What is the best plan for me?

The right plan for you depends on your family/work circumstances and financial goals. Term life insurance is best for those who only need coverage during a certain period of time, like while paying off a mortgage. It is also a favorable plan for people who want cheaper premiums. Permanent coverage (encompassing universal life insurance and whole life insurance) is ideal for those who want to cover any kind of inheritance or estate taxes or guarantee protection to lifelong dependents. It is also a good option for people that want to build cash value over time.

Whether you are interested in buying term or permanent insurance, you will find that most companies will ask you to fill out a health and lifestyle questionnaire and/or complete a medical exam to qualify. TermLite, on the other hand, doesn’t require medical exams or doctor visits to complete the application process. In its essence, our plan gathers the characteristics of a traditional term life insurance policy with the ease and speed of a no medical life insurance plan.

Can I still apply for a life insurance policy during the pandemic?

Now that Canada heads into the second wave of this health emergency, many families are debating if it is possible to buy an insurance plan in such circumstances. The simple answer is yes. Most insurance companies continue to offer whole life and term life policies during the pandemic. However, getting insurance could take longer and be more expensive than before the outbreak. Furthermore, most insurers are likely to make coronavirus-related questions in the application process or even demand medical exams. These steps are necessary to determine how risky you are to insure. Likewise, if you had COVID-19 and suffered particularly serious symptoms, or if you were hospitalized, your application could be postponed for a longer period.

If you are thinking about applying for a life insurance plan, it is advisable that you don’t leave the country or travel to an area where there is a high COVID-19 infection rate. Likewise, if you have recently traveled to an area with a high COVID-19 infection rate, you should let your prospective life insurance provider know.

Like we have already mentioned, every insurance company deals with the COVID-19 situation differently. For that reason, while you are shopping for the best rates and products, you must assess if there are any limitations or special requirements due to the pandemic. In short, be open and honest in your application, and clear all your doubts before committing to a product.

Can I benefit from a Term Life Insurance policy during the pandemic? 

Term life insurance, which covers you for a set period of time, is always a great investment, especially for younger families. It is an extremely paramount product, that acts as an assurance from unexpected events, such as terminal illness or deadly accident. Now, in the mindset of a global pandemic, this type of protection can seem more necessary than ever, as we realize how uncertain life can suddenly become. After all, the pandemic isn’t only a health emergency - it is also a financially challenging time.

Suppose that your family’s breadwinner gets ill and the worst happens. Can your family take care of the mortgage payments? Can it still ensure that the little ones will have access to college? Will everyone be able to maintain their normal lifestyle? These are relevant questions that make you understand the importance of life insurance.
During the last few months, many Canadian families are realizing how necessary it is for them to guarantee their financial protection. In fact, since Spring, term life insurance has seen a pronounced sales spike. For young couples, who have recently bought a house or started a family, this protection can mean a lot.

Can I apply for life insurance if I had Covid-19?

Yes. But be ready to face some limitations and delays in your application process. As many insurance companies are adapting their processes to the new reality, it is hard to determine exactly how challenging it might be for you. In any case, our take is simple: if asked, be honest about your health history and ask how it could affect your eligibility. Remember: an insurer might deny a claim for a coronavirus death if the policyholder lies in the application.

As for us, if you contracted COVID-19 in the past and have recuperated, you can still apply for a term life insurance plan with TermLite. As long as you are a Canadian resident between the ages of 18 to 70 you are eligible to apply, regardless of your health history. However, like we mentioned before, it is advisable that you let your agent know of your circumstances. Likewise, if you are already in the process of purchasing a plan from us and are currently exhibiting symptoms of COVID-19, you must notify your agent as soon as possible.

Can I apply for Life Insurance if I have a pre-existing condition that puts me at greater risk for COVID-19? 

As data from all over the world shows, there are certain pre-existing conditions that can put you at higher risk of getting COVID-19. Asthma, diabetes, and high blood pressure are some health issues that can result in severe illness from the virus.
For most insurance companies, applying for a policy requires health questions and/or medical exams, which determines how risky a candidate is to insure. If you have a pre-existing condition that puts you at higher risk for COVID-19, some insurance companies can make you pay higher premiums, or even deny you coverage.
At TermLite, we don’t require medical exams for the application process, which means that we don't deny coverage for pre-existing conditions. However, they might affect your rates.

Does my present insurance plan cover me for COVID-19? Will I have to pay higher premiums for that?

If you are already insured, with a whole or term plan, your policy likely covers deaths from COVID-19. However, there are a few exceptions you should keep in mind. For instance, if your insurance plan lapses for nonpayment and you pass away before the policy is reinstated, your beneficiary might not receive the payout. So never assume you can let a payment slide - that can be enough to prevent your loved ones from making a successful claim.

Likewise, if the insurance provider finds that you lied on your application, the insurance company has the power to deny the claim. As we have already mentioned, that includes failing to disclose that you had coronavirus or traveled to affected areas.
Lastly, it is also essential that you understand the product you purchased and how it works. With an accidental death and dismemberment insurance plan (often referred to as AD&D), your beneficiary won’t receive any benefit if you die of illness or disease, including COVID-19.

If you have questions on this matter, the best you can do is contact your insurance provider and clarify how they are responding to claims related to COVID-19.

Regarding the premiums, if you already have an active life insurance policy with fixed premiums, they won’t increase because of COVID-19.
Nonetheless, studies show that due to the pandemic, premium prices are likely to increase in the future. This is why you should lock in a policy that can protect your family for many years as soon as possible.

Here is the bottom line…

The COVID-19 pandemic has opened people's minds about the need to protect loved ones in case of an emergency. But the truth is that, during the last few months, the application process for getting insured has changed a bit. Many insurance companies are adapting to the COVID-19 reality, which means that, at this point, there are no straight or global answers. That is why gathering information on every option and alteration is extremely important.

If you are starting to shop for life insurance, you should assess the requirements and policies that each company has in place. As for your role, it is essential that you are honest and clear about travel plans and health status - especially if you are currently showcasing symptoms or diagnosed with COVID-19.

These are unprecedented times, and everyone is doing the best they can to adapt, and that includes insurance companies. Now more than ever, honesty, responsibility, and reliable information are key to make smart decisions. So before you commit to any product, it is essential that you clear all your doubts and understand how COVID-19 might impact your application process. If you are interested in our term life insurance plans and wish to know more about how we are dealing with the pandemic, feel free to get in touch with us. Our team of experts will be happy to walk you through the process and answer all your questions.


Written by Raquel Dias

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