How COVID-19 Could Affect Your Life Insurance Coverage
It's mostly good news.
Opinions expressed by Entrepreneur contributors are their own.
The coronavirus pandemic has many of us thinking about worst case scenarios. It's only natural that people are considering whether, in the event of their absence, their loved ones would be financially protected. If you're reading this, you've probably given it some thought yourself.
Here's the good news:
If you have an active life insurance policy and you were to die of a pandemic illness such as COVID-19, your family would receive the death benefit — even if you had traveled to an area with a known outbreak of the coronavirus.
The only situation in which that might not be true is if you were just recently approved and you failed to disclose certain information on your application about your travel plans and/or exposure to the coronavirus.
Also, if you keep your active life insurance policy current by paying your premiums on time, the insurance company can't raise your premiums if you get sick with COVID-19.
And here's some more good news:
If you don't have life insurance coverage now, you can still apply. It just might take a little longer to get approved, depending on where you live and what your circumstances are. If you're in good health, there shouldn't be any other concerns.
If you're planning to travel to a country where a significant number of COVID-19 cases have been reported, you should probably wait to complete your application until after you've returned.
If you've recently traveled to a country with a high concentration of COVID-19 cases, the insurance company you're applying to might suspend your application for up to 30 days, or possibly longer in some cases. The insurer might also ask for a statement of good health.
Related: Why Life Insurance Is Vital for Entrepreneurs
If you test positive for the coronavirus, there's still good news:
You can still apply for coverage, although you can expect the insurance company to postpone any decisions on your application for 30 days or so, until you've made a complete recovery.
It's possible that some insurers could decide to reject applications for people who are infected with the coronavirus, even if they have no symptoms. We are closely monitoring that possibility.
We don't yet know how insurers will determine the premiums on new policies for people who contract the coronavirus. Naturally, those who develop a severe case of COVID-19 and experience long-term effects from the illness can expect to pay a higher premium because they will receive a lower health classification. But for those who have only a mild case and make a complete recovery, we anticipate that the increase in premiums would be relatively minimal.
We can't emphasize enough how important it is to be 100 percent honest on your application. Otherwise, your beneficiaries may not receive the death benefit — and that's the whole point of getting a life insurance policy.
Related: Why Life Insurance Has to Be Part of Your Wealth-Building Plan ...