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WILL MY LIFE INSURANCE POLICY COVER DEATH FROM CORONAVIRUS?
As the virus continues to threaten the health of people in every community, it's natural to wonder if you have adequate life insurance to provide for your loved ones in the event of the unthinkable. You might be wondering if you will be covered for a death caused by COVID-19? Should I apply for life insurance now? Has insurance gotten more expensive?
Does my current policy cover a coronavirus related death?
Unless you already had coronavirus or recently traveled to affected areas and didn't disclose that information when you applied, you likely will be covered if you pass away due to COVID-19. Life insurance companies cannot change the terms of coverage for active policies, so anyone who was covered remains covered during the pandemic.   Of course, there are a few exceptions. For example, an insurer could deny a claim for a if the policyholder:
  • Purchased only an accidental death policy. Accidental death and dismemberment insurance ( AD&D), covers only accidents. It doesn’t pay out if you die of illness or disease including COVID-19.
  • Failed to provide an accurate or complete application. When applying for insurance, you must tell the truth! Ask questions if you don’t understand what is being asked.  Do not be tempted to leave out important details like a family or personal medical history.  The insurer will likely still write the policy if you are truthful, although the premiums may be higher.   It may seem tempting to try to save a few dollars but it won’t be worth it if your family’s claim is denied because you left out some information.  Claims can also be denied for reasons like failing to disclose travel plans, your engagement in certain “extreme” sports such as scuba diving or lying about weight and even income. If you pass away within the first two years of coverage, an insurer is very likely to examine the claim and initial application more thoroughly. Even after the two-year life insurance contestability period ends, an insurance carrier can still deny coverage for misrepresentation.
  • You let your policy lapse by failing to pay premiums. When a premium payment is late, life insurance companies often offer a grace period of 30 or 31 days. Your coverage will continue as long as you pay the insurer during this time. BUT DO NOT ASSUME YOU ARE NOT COVERED IF YOUR PAYMENT WAS LATE! Insurers may extend this grace period during the coronavirus pandemic and some state regulators are requiring it. Legislation recently passed in New York provides that consumers experiencing financial hardship due to COVID-19 may defer life insurance premiums for up to 90 days.  However, do not assume you can let the payment slide.  If you’re having trouble making payments, it is best to contact your insurance company before your premium is late. Get confirmation IN WRITING that you can defer your payment.  Otherwise, your insurance coverage may end until you apply for reinstatement and your insurer agrees. To qualify for reinstatement, you may need to prove that you aren’t a risk to insure.  If you have additional questions, visit the New York Department of Financial Services website at https://www.dfs.ny.gov/consumers/coronavirus.
How to file a life insurance claim
Should the unthinkable happen, the beneficiary will need to file a claim by taking these steps:
  • Obtain several certified copies of the death certificate.
  • Contact the policyholder’s insurance company directly for claim paperwork.  While an agent or broker can be helpful in processing your claim, many policies require direct, written notice to the company itself. Read the policy to determine exactly what you are required to do.
  • Send in the required documents with a certified copy of the death certificate.
  • Cooperate with the insurance company. The insurance carrier may require you to submit additional documentation or even require you to testify under oath. Most people do not realize that they need to cooperate in any investigation that the insurance carrier deems necessary. Failure to cooperate can result in a denial of the claim. You are entitled to be represented by an attorney during this process. In the event that the insurance carrier wishes to take your testimony, it is a good idea to consult with an attorney.
People who are employed when they die may have a group life insurance policy through their employer. Usually, the employer will contact the beneficiary upon the policyholder’s death, but don’t wait for the employer to contact you.  Call the employer to determine if there was a policy.  Get a copy of the policy if possible or  the insurance company name, address and policy number. Use the process above to submit a claim to make certain that it is done properly and timely.
Is it harder to get a new life insurance policy during the pandemic?
Not necessarily.  Although it is not yet clear how insurance carriers will respond to the pandemic, you should not wait to apply for something you need.  Don’t wait until the crisis is over to protect your family.  If you are at high risk for contracting the virus, applying for life insurance could take longer and be more expensive. This will vary from company to company.  Some insurers have stopped selling policies to customers above a certain age. Terms and rates may change as life insurance providers continue adjusting to the situation.  Shop around- the answer you get from one company may not be the answer from all.
The quarantine situation has one silver lining – many carriers are waiving the physical exam requirement during the pandemic.  For example, Erie Insurance announced that they would remove the requirement for on-site medical exams due to the fact that social distancing policies and business shutdowns have made such exams impractical. Now could be the perfect time to apply. Some companies have even dropped their rates. Again, be sure to be honest about all questions posed, especially those related to future travel plans.
Does the pandemic make it more important to have life insurance?
Although COVID-19 likely has you thinking about the issue now more than ever before, whether or not you need life insurance is a question that should be answered regardless of the pandemic.  To assess your life insurance needs you should consider whether your death would result in financial strain for another person.  Anyone who provides care or financial support to other family members should ideally have sufficient life insurance to replace that support for as long as it's needed.  Think about who relies upon you and for how long they will rely upon you.   Term life insurance , which pays for a set time period, may be more appropriate for your needs than a whole life policy which pays regardless of how old you are when you die.  Do you really need life insurance if you die at age 85? Think about the needs of your children and how old you expect them to become self sufficient.   Married couples, even those without children, can use life insurance to ensure that each spouse can maintain their joint standard of living even if the other passes away.  Think about factors such as long term debt, like your mortgage, and when they are expected to end.
If you are single with no dependents, life insurance is probably not essential for you. However, consider that your situation may change in the near future and premiums may be cheaper now. If you have a parent whom you expect to support in their old age or a partner whom you plan to marry, it may make sense to obtain coverage now. 
What if my life insurance claim is denied?
If your life insurance claim is denied, you should contact an attorney immediately. The attorneys at Lacy Katzen LLP are experienced in addressing insurance coverage issues.

Written by Jacqueline Thomas, Esq.
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