Does Life Insurance Cover Death or Disability Due to Coronavirus (COVID-19)?

April 3, 2020

Does Life Insurance Cover Death or Disability Due to Coronavirus (COVID-19)?

Written by: Randy Larson, J.D., LL.M., CFP®

There is a rumor circulating among physician groups that if they die or become disabled due to COVID-19, they will not be eligible for life or disability (“DI”) benefits from their respective insurance carriers. While we cannot speak to every single policy, we compiled a list of questions and answers based on the policies that 25 puts in place for our clients. As detailed below, these answers will likely apply to most life and DI policies. If you have any questions about whether your policy is covered, contact one of our advisors today and we will be happy to help.

Will my life insurance policy pay the death benefit if I die from COVID-19?

Yes, as long as your policy is in good standing (premiums are paid current and not in an over loan situation). Your policy covers your death regardless of cause. There is an additional review if your death occurs within two years from the policy being issued. Insurance companies review and confirm the information you provided at the time the application was given.

Does my life insurance policy or disability insurance policy have a pandemic-specific exclusion?

No, insurance companies evaluate COVID-19 as they would any other cause of death or medical condition.

Do I qualify as disabled if I fall ill due to COVID-19?

Disability insurance claims for COVID-19 will be evaluated the same as any other illness. As with all claims, you must satisfy the definition of disability and all other provisions outlined in the policy.

Am I considered disabled if I am quarantined due to COVID-19?

If you are under quarantine for COVID-19, you do not automatically have a disabling medical condition to satisfy the definition of disability under most policies. As with all claim submissions, the definition of disability and all other provisions outlined in the policy must be met.

If my business or employer closes due to impacts from COVID-19, will I still have to pay premiums on my policies?

Yes, if you want to continue the coverage. Your life or disability insurance policy will remain in force if you continue paying the required premiums and any required loan payments, subject to the terms of the policy.

What happens to my insurance policy if the insurance company becomes insolvent?

The life insurance industry is highly regulated at the state level with consumer protection as the number 1 priority. State insurance regulators are responsible for monitoring the financial health of the insurance companies that are licensed to do business within their respective states. If an insurance company fails, the state’s guarantee fund will activate to protect policy holders. If possible, the guarantee fund will try to find a stable insurance company to take over the existing policies. If they are unable to find a stable company to take over the policies then the state guarantee fund will take over the insurance policy. In this scenario, the insurance coverage will be subject to limitations set by each respective state.

How do I know if my insurance company is healthy and financially stable?

It is important to review the financial ratings of your insurance company. A.M. Best, for example, is a financial rating organization that provides consumers with a reliable way to check the financial stability of their insurance company.

What is my insurance company rated and what does that mean?

A.M. Best defines an insurance company with an A+ rating as Superior. This rating is assigned to companies that have, in their opinion, a superior ability to meet their ongoing obligations to policy holders. Search A.M. Best ratings.

Is my company A+ rated?

Here is a list of a few A+ rated insurance companies:

Lincoln National

John Hancock

Nationwide

Prudential

Principal

Protective

Important Information:
Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our website and wish to rely upon, whether for the purposes of making an investment decision or otherwise. 25 and Arete Wealth Management are not tax professionals. You should consult with your tax professional before taking actions which affect your tax situation.

Securities offered through Arete Wealth Management, LLC, member FINRA, SIPC and NFA. Investment advisory services offered through Arete Wealth Advisors, LLC, an SEC Registered Investment Advisor.

Tags:

Coronavirus, COVID-19, disability insurance, life insurance