Not all life insurance policies cover deaths from COVID-19
As deaths from COVID-19 continue to rise, more Americans are wondering if they should buy life insurance to protect their families in the event of death. In fact, according to the LIMRA 2021 Barometer study, one in three Americans said they were more likely to purchase life insurance due to the pandemic. However, whether their policy would cover a death related to COVID-19 depends on several factors.
Life insurance agents are essential in helping clients understand whether their beneficiaries will receive the death benefit. There are specific circumstances or certain policies where insurance companies can deny the claim if the policy owner has died of COVID-19. Applicants should be made aware of this so that they can make the choice that suits their family’s needs.
Several exceptions for Standard Life policies
If the policyholder has an active regular life insurance policy, the insurer will pay the beneficiary if the insured dies from complications related to COVID-19. There are, however, a few exceptions.
First, if the policy is less than two years old and the claimant has misrepresented important information about the claim, the claim will be denied regardless of the cause of death. Second, if the insured contracted COVID-19 and was too ill to pay their life insurance premiums, which allowed the policy to expire, the claim may be denied (depending on the state in which the insured lived). Third, if an employee covered by a group life insurance plan contracts COVID-19, becomes too ill to return to work, and is terminated without converting their group coverage to a private policy, their beneficiary’s claim may be denied.
Accidental Death Policies Do Not Cover COVID-19 Deaths
Accidental death policies generally cover deaths related to an unforeseen and sudden accident such as a car accident or drowning. They generally do not cover COVID-19 related deaths as they are considered to be due to natural causes. If the insured died in an accident while suffering from COVID-19, the claim will be paid provided none of the exclusions apply and COVID-19 did not contribute to the claim. accident.
COVID-19 is not listed as a serious illness
Likewise, many critical illness insurance policies deny coverage for COVID-19 because those policies may not list COVID-19 as a covered illness. Critical illness insurance policies list the illnesses for which coverage would be available. If COVID-19 is not listed in a critical illness insurance policy, the claim will likely be denied.
However, if a person has a covered illness and contracts COVID-19, the claim must be paid.
Another exception is where COVID-19 results in covered conditions, such as organ failure. It is a good practice for applicants who wish to purchase a critical illness insurance policy to read the contract and discuss it with their advisor to better understand which illnesses it would cover.
Fast Track Death Rider May Require Doctor Certification
Accelerated death policies pay a certain amount of death benefit to an insured who is living but terminally ill and has a short life expectancy. Each accelerated death policy has a list of requirements that must be met in order for the claim to be payable.
For example, many require that an attending physician sign a life expectancy letter certifying that the insured is terminally ill and has a life expectancy of 12 months or less. If all the conditions of the contract are not met, the claim will be refused. Thus, if the insured has COVID-19 and is very ill, unless they have a letter from their doctor confirming their short life expectancy, their application for the accelerated death benefit will most likely be refused.
One step in getting a policy that matches the financial needs of the applicant’s family is to work closely with a life insurance agent to understand the type of coverage they are purchasing. Life insurance agents should discuss all possible scenarios involving COVID-19-related deaths. At the same time, it is in the applicant’s interest to read the policy and analyze the possible scenarios in which life insurance will not pay.
Tatiana Kadetskaya, Esq. is a life insurance lawyer at Kadetskaya Law Firm. Tatiana can be contacted at [email protected].
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