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How Does COVID-19 Affect Life Insurance?

We are in the midst of an historic event. The global pandemic related to the COVID-19 virus seemingly overnight changed the world we live in and the way we do business.  What did it change for life insurance companies?

If you are already an existing policy owner the effect on that policy is likely to be minimal.  There are lots of infectious diseases that are around all the time and if you have an existing life insurance policy, a death from COVID-19 is treated the same as a death that resulted from influenza or any other natural cause.  Your beneficiary would complete the paperwork needed to make the claim on the policy and the death benefit will be paid.

Now consider if you are applying for a new life insurance policy. We have received hundreds of questions from clients inquiring for life insurance regarding COVID-19. As of right now, insurers are not excluding deaths that result from COVID-19 infection from their policies. What they are doing though is adjusting their application process to reflect the reality of the event that we are in the middle of right now.

Many life insurance companies have added a COVID-19 questionnaire to their applications which consists of questions very similiar to the following,

  • Are you, or have you been in close contact with anyone who has been quarantined or who has been diagnosed with novel coronavirus (SARS-CoV-2/COVID-19)?
  • Have you ever been quarantined due to a possible exposure to novel coronavirus (SARS-CoV-2/COVID-19)?
  • Have you been advised to be tested to rule in, or rule out, a diagnosis of noval coronavirus?
  • Are you awaiting the result of a test which has already been submitted for the novel coronavirus (SARS-CoV-2/COVID-19)?
  • Have you ever tested positive for the novel coronavirus (SARS-CoV-2/COVID-19)?
  • Have you experienced any of the following symptoms within the last 14 days? Fever, Cough, Shortness of breath, Malaise (flu-like tiredness), Rhinorrhea (mucus discharge from the nose), Sore throat, Gastro-intestinal symptoms such as nausea, vomiting and/or diarrhea

If you can answer NO to all of the COVID-19 questions required by the life insurance company then you will have an approved policy that has full coverage for the coronavirus.

Life insurance companies have also become much more lenient with applications because they want to continue to do business throughout the COVID-19 shutdown. Many life insurance applications require a medical examination from a nursing company (most life insurance companies use Dynacare of ExamOne) but these were postponed in March of 2020. As a result, the insurance companies have increased the amount of coverage that they will approve without requiring a medical. Most life insurance companies will approve a policy for up to $1,000,000 of coverage where as some companies (e.g. Manulife Insurance) are approving policies up to $2,000,000 without a medical- as long as you are in good health otherwise. In June of 2020, medical examinations have started again but there are longer than usual wait times to book an appointment due to the back log caused by COVID-19.

Life insurance companies in Canada have definitely adapted to the new world that we are now living in due to COVID-19. It helps put our clients at ease knowing that they can still get life insurance, regardless of the impact that COVID-19 has had on not only our country, but the entire world.

UPDATE : As of September 2020 COVID-19 deaths are still covered under all life insurance policies in Canada. If required, medical examinations are being completed and are no longer postponed. Please contact us if you have any additional questions.

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