Does your life insurance policy cover you for COVID-19?

By Mark Copsey, Director of Allworths Wealth Management

Lately I’ve been seeing alarming reports in the media concerning people with the idea that their life insurance policy will not cover them in the case of coronavirus. First and foremost, I’d like to point out that (in all cases I am aware of) this is not correct.

The insurance industry seems to be unanimous in saying there will be NO exclusions placed on existing and new policies. This also includes policies for doctors, nurses and medical professionals on the front lines dealing with COVID-19. In fact, insurers are making a point of saying that healthcare workers are covered, which I think is a great thing.

In relation to the question: “does my insurance cover me if I get coronavirus,” the AIA website says that COVID-19 has no impact on existing insurance coverage with them. To make a claim (even if it is COVID-19 related), customers will need to follow the same process as usual and meet the eligibility requirements for their type of cover.

New policies

Quite sensibly, there will be new questions for anyone wishing to take out a new policy in the age of COVID-19.

As an example, on 18 March 2020, TAL made a change to its underwriting guidelines for customers purchasing a new policy. This change requires anyone who; is exhibiting symptoms of COVID-19 at the time of applying for cover, has recently travelled abroad, or forms part of a high risk group; to be individually assessed with the potential for those new customers to be offered modified terms.

MLC has said that, for customers who undergo underwriting, they’re following current market practice, which is to postpone consideration of applications from any permanent resident returning to Australia for 30 days from their return date or until they’ve obtained clearance from a medical practitioner.

In other circumstances, MLC says:

If you have been diagnosed with COVID-19 and have been advised to self-isolate, you won’t be given cover until medically cleared.
If you have been treated, discharged from hospital and/or given a medical all-clear, all standard benefits for the relevant policy will apply.

Thinking of travelling?

One thing to bear in mind when things start to go back to a level of normality is travelling. If DFAT has a ‘Do not travel’ warning on your destination, it’s quite possible your policy does not cover you. Previously this mostly covered war zones but, because of coronavirus, this list could be greatly expanded; at the time of writing, every single country has a ‘Do not travel’ warning.

If you already had a travel itinerary booked, it’s possible your travel insurance specifically excludes cases like pandemics. However, many airlines have implemented special cancellation/credit policies and you should consult with each airline or your agent. You may also be able to refund your insurance.

Protect your family

I’ve always been passionate about my clients being protected with life insurance (which covers Death, Total and Permanent Disability, Trauma/Critical Illness and Income Protection), especially when they have dependents and mortgages.

The idea of leaving your family in financial difficulty on top of the obvious emotional distress is hard for me to even comprehend. Especially when you’re young and healthy, precisely when you feel like this isn’t for you, is a great time to get on board and lock in a premium for a period of many years, just like a super low interest rate (except you can fix your premium for decades)!

The important takeaway from this article is that COVID-19 is no excuse to be without cover. The insurers have come to the table with very reasonable terms.

In an April study of 2,500 residents in Australia, Singapore, Hong Kong, and China, Swiss Re found that only 14% of respondents in Australia reported that they had engaged with their insurer or researched new policies due to coronavirus. That’s up against 75% in China (which may not be surprising) but – here’s the important part – 55% of those discovered new benefits they might have missed out on! You can read more here.

Another finding was that Australians would sooner dispense with their life insurance over their car insurance in the event of financial hardship, which is simply mind-boggling to me.

I’ve been banging on about insurance and estate planning for a while, so you can always visit some of my prior posts on these topics here:

Better still, feel free to contact me directly for a no-obligation chat on 0413 009 425 or mtcopsey@allworths.com.au

I would be very happy to help you with this, now more than ever.

Stay safe (and not just by staying home and socially distant),

Mark

The content of this post is general in nature. Any general advice has been prepared by Allworths Wealth Management Pty Limited AFSL 457 155 without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant product disclosure statement before making any decision.