With COVID-19 a global pandemic and the death count increasing up, many people are starting to ask whether their life insurance policy covers COVID-19. The U.S. government estimates that roughly 100,000 Americans will die from COVID-19 by the end of 2020.
I gave my life insurance carrier a call, USAA, to check if COVID-19 / coronavirus is covered under my policy and they said yes. I'v called other major life insurance providers and thy have also said yes.
During the time of a global pandemic, getting life insurance is now more important than ever. Make sure you wear a mask when outside, wash your hands, and go through your estate planning sooner, rather than later. You just never know.
The easiest way to get affordable life insurance quotes is through PolicyGenius, online. Instead of applying for life insurance one-by-one with each carrier, apply on PolicyGenius and have multiple affordable life insurance quotes all in one place. I have met the founders multiple times and they are truly an impressive company.
Life Insurance To Cover For COVID-19 / Coronavirus
COVID-19 is a type of coronavirus in the family of viruses that includes the common cold. We've seen pandemics before with MERS (Middle East Respiratory Syndrome), and SARS (Severe Acute Respiratory Syndrome).
Unfortunately, COVID-19 has a higher mortality rate than SARS, the latest coronavirus, and seems to be more highly contagious.
Roughly 80% of the population who get COVID-19 will experienced cold or flu-like symptoms. Those who are 60 and old are more at risk of experience more severe systems.
The mortality rate for elderly people who get COVID-19 is much higher. Please see the fatality rates for COVID-19 vs. the U.S. seasonal flu. As you can see from the chart, for those over age 50, COVID is 4 – 21 times more fatal than the US seasonal flu.
Life Insurance Coverage Of Pandemics
Every life insurance company is different, however, most reputable life insurance companies DO include pandemics for their coverage. After all, why is dying from COVID-19 any different from dying in a car accident or from cancer? Few people desire to die on purpose. The whole point of getting life insurance is to cover yourself and your family from an untimely death.
When deciding on a life insurance policy, make sure you specifically ask the company before signing up whether the policy includes COVID-19 and pandemics. Some insurance companies may have started to include exclusion riders that exclude death due to COVID-19, so be aware.
If you have group life insurance at your place of employment, check with HR if coronavirus-related illnesses are covered by the policy. Bottom line: always ask if you are not sure. There is no downside!
Will Life Insurance Companies Be Able To Pay?
Thankfully, the number of deaths due to COVID-19 is relatively small compared to other leading causes of death in America. Even if the U.S. does experienced 100,000 – 240,000 deaths, as the government has modeled before, the death count comes nowhere close to being in the top 5 for the leading causes of death. As a result, life insurance companies should have no problem paying out for a COVID-19 death.
Take a look at the 10 leading causes of death in America in 2016 and 2017. Heart disease and cancer are the top two leading causes by far. Unintentional injuries, including car deaths, is number three. Influenza and pneumonia deaths are towards the bottom.
When you get your life insurance policy, it's best to go with a reputable firm that has been around for a long time. The longer the life insurance company that has been around, the better. Firms such as USAA, Prudential, Northwestern Mutual, New York Life, Mass Mutual, John Hancock, and TransAmerica are some of the biggest and oldest.
Beware Of The Contestability Period
One of the reasons why some people are wary of life insurance companies and insurance companies in general is due to stories of insurance companies NOT paying out when a claim is made. A family is already suffering from a family loss, the last thing they want to do is fight with their life insurance company to get paid.
So long as you are truthful in filling out your life insurance questionnaire, you should be fine. Further, if you get a $1+ million plus policy, you will more than likely need to do a medical exam with bloodwork. After the results are produced, it's up to the insurance company to analyze and come up with an appropriate premium offer.
The stories you may hear about life insurance companies not paying out likely have some shady elements do them, such as a person faking his death, a person faking an injury, a person in bankruptcy looking for a way to get out, and so forth. This is mostly the stuff of movies, but these things certainly happen, especially during difficult times in the economy.
COVID-19 Is A Wake Up Call To Get Life Insurance
COVID-19 is a wake up call to get life insurance, especially if you have dependents and debt. If you are in your prime earning years and die with children and a non-working spouse, life is going to be very difficult for them.
Further, you want to get life insurance BEFORE you get COVID-19. Therefore, if you haven't gotten COVID-19 yet, you should apply online for life insurance to get some quotes. Get a policy under $1 million so you can bypass the medical exam.
If you have tested positive for coronavirus in the past your application may be postponed. It takes 2-6 weeks to recover from COVID-19. Once you recover, you should apply again. If you don't go to the doctor to get treated for COVID-19, which most people don't (80%+), then your life insurance company has no way of knowing you have COVID-19, and won't increase your life insurance premiums due to COVID-19.
Again, some insurance companies have started to add exclusion riders for coronavirus-related deaths. Therefore, you must specifically ASK what the life insurance terms are for COVID-19.
HOW TO GET LIFE INSURANCE
There are different ways to get life insurance, which fall into two categories – direct or through an agent. As the pandemic continues to progress, it might become hard to find a physical office to go to. This means that your best bet is to find a life insurance policy online.
The important thing here is to make sure you get multiple quotes from different providers and compare prices as well as the coverage you get for the price being quoted. If you decide to go through the direct route, you will need to shop around yourself. If you go through an agent or use an online comparison site, the work will be cut out for you.
You might also want to consider applying for temporary coverage. A number of life insurance companies offer this type of coverage so that beneficiaries can still get something should something happen to you during the application process. This can be a wise choice now more than ever as we are seeing longer waiting times for approval.
Best Type Of Life Insurance To Get
You can basically get two types of life insurance: term life insurance or whole life insurance. Let's look at both in more detail.
- Term Life Insurance: Think about term life insurance like an apartment rental. When you leave your rental, you're done. You get no equity. Term life covers you for a specific period of time — usually 5, 10, 20, or 30 years. When the term expires, your coverage ends and you’d need to renew your policy at a higher rate, convert your coverage to whole life, or get a new policy. If you outlive your term — and here’s hoping you do — the insurer keeps the money you’d paid in premiums.
- Whole Life/Permanent Life Insurance: Think about a whole life insurance like buying a home with a mortgage. Over time, you build equity, which is equivalent to “cash value” in your life insurance policy. Later in life you could borrow against your policy’s cash value or surrender your policy and claim the money.
Besides these two types of life insurance, of which I FAR PREFER getting term life insurance because it's cheaper and does its purpose, here are other types of life insurance to get:
- Last Resort Insurance: These are pretty easy life insurance policies that are used to pay for funeral and burial expenses. The average cost of funeral and burial expenses can range between $5,000 – $15,000.
- Employer-Provided Life Insurance: If you work for a decent employer, you should automatically get employer-provided life insurance. You can get more, usually up to 5X your base salary, if you want to pay more. Usually, if an employer does provide life insurance, it will provide 1-2X base salary. As someone who hasn't had an employer since 2012, having a good term life insurance policy is even more valuable.
Medical Exams And Life Insurance
The majority of life insurance carriers do not require a medical exam if you take out a $500,000 or under life insurance policy. Demand is high for life insurance and these carriers are competing for your business.
However, once you hit the $1 million life insurance coverage mark, practically ALL life insurance carriers will require a medical exam, which mainly consists of:
- Drawing blood, analyzing blood
- Checking heart rate, blood pressure
- Weighing you
- Visiting you, asking questions and analyzing you visually
However, given the shelter-in-place orders for most parts of the country, having a medical examiner visit you might be skipped this time around.
Life Insurance If You've Tested Positive for COVID-19
If you have tested positive for coronavirus, you can expect your application to be put on hold. Some insurance providers are delaying the processing of life insurance for those who have tested positive for coronavirus by as much as a minimum of three months.
Even if you have made a full recovery, failing to disclose this information when asked may see your policy invalidated during the contestability period, which can last up to two years.
Get Life Insurance During A Coronavirus Pandemic
As the coronavirus pandemic continues to spread, getting life insurance BEFORE you get COVID-19 is a good idea. If you get COVID-19, you could get very ill, require hospitalization, or die. If you require hospitalization, your future life insurance premiums will surely go up.
Remember, life insurance is not for you, it's for your loved ones. Life insurance is an act of kindness. Search for affordable life insurance through PolicyGenius, my favorite life insurance marketplace that gives you multiple real life insurance quotes all in one place. Applying is quick, easy, and free. Below is a sample screenshot of what you'll find.
As a father to a three-year-old and a 4-month-old, I rest easier knowing that I have a $1 million term policy that will wipe out all my mortgage debt and add a little extra in financial cushion, tax-free to my family. In fact, I was able to renew and get affordable life insurance for the next 20 years until 2042 thanks to Policygenius!