What's the Story When it Comes to Coronavirus Canada (COVID-19) ?
Will My Life Insurance Cover Me?
Tons of people are Googling Coronavirus Canada or COVID-19 because this illness changed the way we live our lives in a matter of weeks.
We watched with shock and horror as the virus has hit China, Iran, Italy…
….and now North America is in its crosshairs. As we scramble to deal with a National quarantine, many of us (myself included) are thinking about or own mortality.
Consumers are especially worried about whether their existing life insurance policy covers them for the Coronavirus…or, what will happen if they buy a new policy today?
Will they be protected if God forbid, something happens to them as a result of the Coronavirus?
It's Not Just a One Sided Story
Of course, Life insurance companies are worried too. Can they expect a deluge of claims in the coming months and how that will that affect their solvency? Will the coronavirus pandemic cause a spike in life insurance rates moving forward?
I’ve been fielding a lot of questions recently from clients about the Coronavirus Canada and how it is affecting everything from underwriting to payouts.
So I thought I’d write a quick blog post to provide some up to date information for consumers who may be worried about coverage should they opt to take out a life insurance policy today.
This situation is very fluid so I’ll do my best to update this article as needed…but first things first.
Does My Current Life Insurance Policy Cover me for Death from the Coronavirus in Canada?
In a word, YES! If you have an existing life policy that’s been in force before the pandemic started, you have nothing to worry about. You’re absolutely covered for COVID-19.
What if you purchased a life insurance policy within the last 3 months? Not to worry, you’re most likely covered.
Most likely covered? That’s not very reassuring.
Ok, what I mean to say is, if you completed a life insurance application and answered all the questions truthfully, it’s almost certain any insurer will pay out the death benefit if it’s related to the Coronavirus.
There are nuances to this so let’s take a quick look at how the life insurance claim process works.
Two-Year Life Insurance Contestability Period
All life insurance contracts in North America are issued with a two-year contestability clause. This is standard practice across the board, regardless of the carrier, country or type of life insurance. Anytime a claim is made within 2 years of a policy being issued, insurance companies bring extra scrutiny to bear when investigating the claim.
Does this mean the insurance company won’t pay out the death benefit? Absolutely not. If you’ve worked with an experienced broker through the application process and answered all the questions truthfully, the claim will absolutely be paid out. It’s just a matter of when.
Ok, so what does that mean?
More information is Needed Which Takes Some Time
Well, when a claim is made within the contestability period, the life insurance company will definitely request Doctor’s records, Provincial or State health records and your Medical Information Bureau (MIB) file. Acquiring and examining all these files can take many months, thus delaying any payout to your family.
Let’s say, for example, you took out a life insurance policy and then died of a massive heart attack 14 months in. The insurance company is going to want to see if there’s any record of heart issues in your file which were not disclosed during the application process.
They will go over your records with a fine-tooth comb. If they find anything that indicates nondisclosure or misrepresentation, they will NOT out pay the claim.
Again, this is one of the reasons why you want to work with an experienced independent insurance agent who won’t step over anything during the application process. This ensures there won’t be any issues at claims time.
Life Insurance Fact: Each Year in Canada, insurance companies pay out 98 - 99% of the life claims they receive.
Life Insurance Fraud
The 2-year contestability period is one of the ways insurance companies protect themselves from fraud. It’s hard to believe people lie on life insurance applications but unfortunately, it happens.
Personally, I once did an application for a client who failed to disclose to me that they had heart bypass surgery. Of course this omission was discovered by the life insurance company during the underwriting process. Fortunately, we were able to pull the application before it affected the client’s insurability record.
Lying or omitting information on a life insurance application is a bad idea. Insurance companies are smart and they will catch you. Why jeopardize the safety net you’re creating for your loved ones.
If you are searching for life insurance for the Coronavirus Canada and believe you have may actually have it – please don’t leave this information out. It’s fraud and your family won’t benefit.
What if I Want To Buy Life Insurance Today, Will I be Covered for the Coronavirus if I get it in the Future?
Likely yes, but this is a question that cannot be answered definitively one way or the other. The coronavirus Canada situation is very fluid. As we speak, underwriting guidelines are evolving moment by moment, carrier by carrier. Every day brings new announcements and updates. For example, I got an email recently from one of Canada’s largest life insurance companies, Industrial Alliance:
“We wanted to address the risk associated with COVID-19 by revising our declaration of insurability. Rest assured that the new questions to be added on Monday, March 23, will neither affect the client and advisor experience nor the approval rate at the point of sale”
Post Coronavirus Canada: Life Insurance Screening Questions
Many Life insurance companies are introducing additional screening questions to applicants who may be a higher risk. These questions may include:
- Have you or anyone you’ve been in contact with, travelled to any regions with widespread Coronavirus outbreaks recently? (ie. China, Italy, Iran, South Korea, etc – this list will be expanding as the virus spreads – the US seems to be moving up quickly)
- Have you tested positive for Covid-19?
- Have you recently taken an international cruise?
- Are you experiencing any flu-like symptoms including cough, fever, sore throat, headaches, etc.?
- Have you been in contact with anyone who tested positive for COVID-19?
- Have you been in quarantine?
- Do you have plans to travel to any restricted areas within the near future?
Answering “yes” to any of these questions could result in your policy being issued with a waiting period, a postponement or a possible decline.
“Lincoln Financial Group on Monday imposed a 30-day waiting period before issuing policies to most applicants who have travelled to those regions” Suzanne Barlyn, Business News, Reuters
Exclusion for Coronavirus
If the situation gets really bad, it’s possible that Canadian Life Insurance Companies may begin adding exclusion riders to all new policies moving forward.
That means when your new policy arrives, it will come with a Coronavirus Exclusion Rider or Ammendment.
Quite simply, this means if you die from contracting the Coronavirus (COVID-19), your life insurance may not cover you. Not only that, but death due to complications arising from any illness that you contracted because of the Coronavirus also may not be covered.
My life insurance insiders tell me that this is very unlikely to happen.
Life Insurance Medical Exams: Delays and Cancellations
Depending on your age and the amount of coverage you’re applying for, you may be required to undergo a life insurance health exam. This is also known as a paramedical.
At no cost to you, a nurse or health practitioner visits you at home or work to test your blood, urine and vitals. The insurance company uses the results of these tests and the information on your application to assess your insurability. Insurers also pay for tests which are carried out by 3rd party providers like Dynacare and ExamOne.
As a result of quarantines and self-isolation, most paramedical service providers in Canada have now suspended their activities until further notice. Without these test results, it’s impossible for insurers to properly process all the life insurance applications.
Some paramedical providers, like ExamOne, continue to administer life insurance health exams but only once they’ve prescreened the applicant for possible exposure to Covid-19. This is to minimize the risk to their nurse practitioners.
Life Insurance Companies Relaxing Application Rules
In response to this, some traditional insurers are relaxing their underwriting standards so consumers can apply for coverage without undergoing a medical exam. As of March 20th, if you’re 50 years or younger, Industrial Alliance now makes it possible for you to apply for up to $1 million of term coverage WITHOUT A MEDICAL EXAM.
Likewise, Manulife has always had an option in place where healthy individuals can apply for up to $1 million of term coverage without a visit from the nurse. Obviously, there are exceptions.
Many other carriers are now following suit. As of April 8th, 2020, the following life insurance companies have waived underwriting requirements of blood/urine etc for policies up to $1 Million:
- Canada Life (to age 50)
- Empire Life (to age 50)
- Equitable Life (to age 50)
- Humania (to age 50)
- Industrial Alliance (to age 50)
- Ivari ($750k to age 50)
- Manulife (to age 55)
- RBC Life Insurance (to age 55)
- Sun Life (to age 50)
- SSQ ($750k to age 45)
- Wawanesa Life (to age 50)
NOTE* if you’re over the age of 55 or have moderate insurability issues, you may not be eligible for no medical life insurance with these carriers.
Some Good News: You Can Still Purchase No Exam Life Insurance
One of the fastest growing sectors in the Canadian insurance space within the past 10 years has been the No Medical life Insurance Niche. These policies are ideal for consumers with moderate to serious health issues who under normal circumstances would be rated or declined by traditional insurers.
They are also a viable option for healthy people in a hurry who don’t want to bother with the hassle of taking a life insurance health exam. These are totally legitimate policies with standard guarantees. To qualify, you need to answer about 30 specific health questions and once approved, a policy can be issued within 72 hours or less. An application can be completed with an agent over the phone from the comfort of your home.
The cost of no medical life insurance Canada has become very competitive in the past few years. Canada Protection Plan, one of the leading providers, offers up to $750,000 of term coverage to healthy individuals up to the age of 50. Consumers with moderate health issues are eligible for up to $500,000 of term coverage, up to age 70, without having to undergo any medical tests.
Coronavirus Canada: Will Insurers Stop Accepting Applications
Let’s take a step back and try to put this into perspective. There is no doubt, this pandemic is serious and there are many unknowns. So far, it seems to be most devastating to our elderly population and those who have underlying health conditions.
There is also data that suggests men are dying at double the rate of women. But it’s too early to say definitively. What we can agree on is this – with the scarcity of data around the coronavirus outbreak, there is no consensus among scientists or policymakers about what the best form of action to take is.
Life insurance companies don’t deal well with this type of uncertainty and depending on how the coronavirus Canada pandemic progresses, some insiders believe insurance companies may stop taking applications altogether.
COVID-19: A Life Insurance Wake-Up Call?
Whether you have existing life insurance or not, it’s normal to be afraid and concerned about your family’s vulnerability. This is the type of health crisis we only see once in a generation or two. But does it take a pandemic to make people realize how important life insurance is to protect families from financial ruin? Realistically, the chances you or I will die from COVID-19 are very small. There are many other factors which pose a much higher risk.
For those who have existing policies, now is a good time to review them to make sure they’re meeting your current needs. Most importantly, it’s a good idea to take a look at your beneficiary designations to make sure they’re up to date and in line with your wishes. Changing or adding a beneficiary is easy to do. You just fill out and sign a form from your insurance company.
If you don’t have any life insurance, now may be a good time to begin the process of putting some coverage in place. If you’re 55 or under, there are many traditional carriers who will underwrite you without any medical tests. There also are many simplified issue options available that make it possible for you to get life insurance in force within a few days. Given the fluidity of the situation with paramedical providers suspending service and short-staffed life insurance carriers, this may be a good option.
You can always apply for a full medically underwritten policy when things settle down.
“I’m vulnerable and I’m in that target age, and I knew I had to get this end-of-life stuff done,” she said. “This has put me face-to-face with my responsibility and what I need to do to make things easier for my son should anything bad happen.” Safia Samee Ali, NBC News
Coronavirus Canada: The Big Question
If I Get the Covid-19 Will I Be Covered?
Ok, you’re really putting me on the spot at a very difficult time. Things are changing everyday but I’ll go out on a limb and give it my best guess. Keep in mind, I’m not an insurance underwriter, this is my personal opinion as an independent life insurance agent.
If You Already Have an Existing Life Insurance Policy
If you have an active life insurance policy in force and you’re up to date with your premiums, sleep well at night, YOU’RE ABSOLUTELY COVERED!
The insurance company cannot cancel the policy because of any change in your health or because of a recent a trip you may have made overseas. In fact, If you decide now to travel to a country with a Covid-19 advisory and succumb to the pandemic, the insurance company cannot deny your family’s claim.
If You Apply For Life Insurance During the Pandemic
Let’s say you apply for life insurance today. You go through the application process and answer all the questions truthfully and to the best of your ability. This means, of course, answering “no” to any new, preliminary questions about unrestricted travel, contact or experiencing any flu-like coronavirus symptoms.
The insurance company vets you and congratulations, your life insurance application is successful. The policy is issued at standard rates, your first premium is drawn and your coverage begins immediately.
Four months from now, God forbid, you contract the coronavirus and die as a result. I believe most life insurers will pay out the full death benefit to your family.
If however, you were to pass away from a Covid-19 related condition within a few weeks of taking out a new policy, all bets are off. I can’t say for certain whether most carriers would pay out the claim or not.
Call Policy Architects Today For Some Honest to Goodness Advice
I’m like you – I have a family and in fact I fall into the “higher risk” category for the Coronavirus Canada. Frankly speaking, safety is of the utmost importance to me and business has taken a distant second place.
An event like this is difficult to comment on because of its changeable by nature. So I am hesitant to offer any absolutes.
If you are looking for life insurance coverage, I would absolutely recommend applying for a traditional term policy if you are in good health and age 55 or under. A No Medical Product may be a better option if you have any moderate to serious medical issues.
Life insurance companies have the resources to weather storms, so don’t count them out.
“life insurance companies are generally stable and well-capitalized, unlike those in many other industries” Kate McCaffery, insuranceportal.ca
While the coronavirus sucks, the good news is we are all in this together. Hanging on to our communities, friends and family is very important during this difficult time.
If you have any life insurance questions or want to chat about my thoughts regarding the coronavirus in Canada don’t hesitate to reach out. email@example.com