As mortgages look set to get cheaper, it appears it could be the opposite in the protection market, as the more people claim, and the more money insurers pay out, the higher premiums will become. So what Impacts will COVID-19 have on Insurance?
We have looked into what the providers are currently doing, and what the most frequently ask questions are for anyone who has already signed up, or are looking to take out a policy. These are as follows:
Can I claim on my existing Income Protection policy for coronavirus?
Being diagnosed with Coronavirus is something that would be covered by most insurers on an existing Income Protection plan. However some have recently put exclusions in place (for new policies) for Coronavirus such as Exeter, British Friendly, Cirencester Friendly, Holloway Friendly, The main consideration is the deferred (waiting) period on a policy, which is how long you would wait before the claim would start to pay-out. Interestingly, Most of the larger insures such as Avia, AIG, Aegon, L&G, Royal London, have not imposed an exclusions (yet) as long as the claim falls outside of the deferred period. If you have been diagnosed and recovered from Coronavirus within the deferred period, then the insurer will not pay out.
If I die from Coronavirus will my life insurance pay out?
Existing policy holders will be covered should they die from Coronavirus. For anyone looking to take out life cover, some insurers are changing the questions they ask to accommodate travel to the high risk countries, for some insurers it is not something they are asking about as statistically the death risk is so low (currently – 16th March 2020).
Would Coronavirus be excluded from my life cover?
No. Unlike other insurances such as Critical illness & Income Protection Cover, most insurers do not offer exclusions on a life plan (However, in most cases suicide is excluded in the first 12 months)
I don’t have any insurance in place, can I take out a policy that will cover me for Coronavirus?
Most providers application stance hasn’t changed since the Coronavirus outbreak (as of mid-March). If you have not sought medical advice or not had any symptoms of the virus, and they you answer the questions as honest & accurate as possible, then they’ll be covered once the policy is in place. However, as above, some have excluded Coronavirus already and more could follow.
What are the definitions of a successful claim on Income Protection?
Being signed off work due to an illness or injury would result in a successful claim. Remember Income Protection is designed to pay out in the event of becoming incapacitated. Self-Isolation with no symptoms or medical advice is likely to result in not being able to claim unless that is prolonged or develops into something more serious.
Will this affect my Critical Illness Cover?
There should be no reason why COVID-19 affects your Critical Illness Cover. As covered above, COVID-19 is most likely going to make you miss work so covering your income is the priority. If it develops further, then yes, you will be covered as normal under your existing (or new) plan.
As you can see from the above, if you have an existing plan, you can have peace of mind that you are in safe hands. If you are looking to take out cover, we would urge you to do so as quickly as possible to ensure your premiums are cheaper and breadth of your cover is greater.
Please do speak to us if you wish to discuss in more detail with regard to what impacts will COVID-19 have on Insurance?