Coronavirus and Life Insurance: What Is the Impact?

As of March 2nd, 2021

Concerns around health, mortality, and keeping your loved ones safe remain top of mind for Canadians as they plan for continued uncertainty ahead. 

With COVID-19 regulations frequently in flux, our team continues to receive questions about how the virus has affected the life insurance process. In this piece, we answer your pressing questions.

Summary: Coronavirus & Life Insurance

  • The actual application requirements remain mostly unchanged, but the execution has adapted for COVID-19 restrictions  (e.g. more steps are online, the level of protection for nurses visits)
  • There have been more instances of applicants having the results of their application delayed or temporarily declined due to a COVID-19 diagnosis. 
  • Some products allow you to get fully new underwritten policies without a medical, even during the pandemic
  • Your existing or new policy, once approved, will cover deaths related to COVID-19
  • The price of life insurance has remained relatively unchanged, even as cases are on the rise

Receiving the death benefit when somebody dies of COVID-19 or complications from it are common concerns both for current life insurance policyholders and people looking for coverage now. 

For policyholders, you can rest easy knowing you’re covered, even if you happen to pass away due to complications from COVID-19. For people applying now, you will also be fully covered if you pass away due to COVID-19 complications once your application is in place – once you’re approved, there is no waiting period for this coverage to come into effect,

The only exceptions for coverage today are standard ones that were put in place before the pandemic:

  • Death by suicide in the first two years 
  • Additional clauses in your policy excluding specific causes of death – like a skydiving accident if you’re a pro skydiver (uncommon)

These exclusions apply to people entering the pandemic with an insurance plan in place or new policyholders. 

The Application Process for Life Insurance Remains Largely Unchanged

For the most part, the actual steps of the process remain relatively unchanged. Just like before, you go through the same health checks and nurse visits. Your health questionnaire is done online or over the phone. 

For any areas of the industry that cannot be done online or over the phone, extra precautions are being taken. For nurse visits, additional PPE is being worn, and it’s recommended that you wear a mask and any home visits. If your nurse visit is being done in a lab, it will likely be mandatory for you to wear a mask.

The only addition to the actual application process is a short COVID questionnaire at the very end. This survey asks about your current health concerning coronavirus, similar to questions you may be requested before going to any medical appointments. This can include:

  • Have you travelled within the last 14 days?
  • Have you been in contact with any confirmed cases of COVID-19?
  • Do you have any of the typical coronavirus symptoms (sore throat, cough, lack of taste or smell, fever, etc.)?

Remember to answer all questions throughout the application process, both general health and coronavirus specific, 100% honestly. If it is revealed that you were intentionally untruthful in your application, your life insurance provider can deny future claims. 

You May Not Be Able to Apply for Life Insurance if You Currently Have COVID-19

You can apply today, but if you’re currently sick with COVID-19, there’s a chance that the insurance company will opt to delay your application until you have made a full recovery.

As the pandemic has continued, there have been more and more instances of these delays taking place.

These delays due to COVID-19 happen at a few different stages throughout the application process:

  • While the application is still being processed, you have to disclose to your life insurance provider if you’ve been diagnosed, even if they are still working on your application, as it is a fairly significant change to your health. 
  • When you start your application, if you flag that you have COVID-19 right at the start, providers will likely ask you to apply once you’re healthy due to the risk of long-term health impacts. 

There have been cases where applications are entirely declined due to contracting the coronavirus during the application process.

Why? There isn’t much knowledge around the long-term implications of COVID-19 yet and some life insurance companies aren’t comfortable taking on the risk of people who develop ongoing health issues as a result of contracting the virus. It’s estimated that around 20% of Canadians who contract COVID-19 are ‘long haulers’ with symptoms well beyond the two-week mark. Some life insurance companies aren’t prepared to take on the risks associated with these unknowns.

With these coronavirus application delays in mind, it’s essential to apply sooner rather than later. Once you have your policy in place, you can put all these delays – and concerns about being covered – to rest!

Your Travel History is Unlikely to Affect Your Life Insurance Application

The only way past travel would impact your life insurance application is if you ended up catching coronavirus on your travels. If you apply after travelling but are sick, the delays mentioned above may impact your application. 

However, any travel scheduled for upcoming months may have an impact. Your potential insurer will likely want to know the specifics related to any planned trip over the next 12 months. If you are applying, it would be beneficial to record planned travel location details, like cities, regions, and timing, before starting the application process. Since non-essential travel remains recommended against, this could result in a delay to your application, as mentioned above.

So while it won't impact your premiums, given you don’t contract COVID-19 throughout your travels, it may affect the length of your application process. 

Life Insurance Prices Are Not Increasing as a Result of COVID-19, As of Now

As life insurance applications continue to rise, so does the concern around the price. It’s supply and demand – as more people demand life insurance, are prices going up?

If you already have a policy, then no! The rate you secured will remain the same, even during the coronavirus pandemic. This is why signing earlier is so important. You get to lock in that lower rate.

If you’re shopping for a new plan, prices have stayed stable until this point, despite the additional risks associated with COVID-19.  Prices for term life insurance across the board haven’t seen this increase. 

It’s important to note that this isn’t a blanket statement. Some companies have hiked prices for certain permanent life insurance policies up to 27% for new applicants.

However, Andrew Ostro, co-founder and CEO of PolicyMe, has said premiums in the future could increase by 20% – it’s important to lock in the cheapest possible rate now to avoid this inflation. 

You Can Shop for Life Insurance Today 

Yes! If anything, it’s easier to shop from home now than it was at the start of the pandemic. 

In March 2020, everybody was trying to figure out how to move their practices online and the best safety measures for anything that had to happen in person. Application processes are still not fully online, but with more knowledge on COVID-19, the industry is able to serve you with even better safety measures in place. 

To make your application process even easier, keep an eye out for policies that have instant approvals in place. Depending on your age and current health, you can find providers that will give you a fully underwritten policy based on questions you answer yourself – no nurse visits required!

Final Thoughts of Life Insurance and COVID-19

As COVID-19 evolves, the industry may shift as well. Policies can vary widely across companies for the same type of policy, and each policy should take into account your individual needs and budget. You want coverage to get coverage safely from home without breaking the bank.