Life insurance and coronavirus

Reassessing what's important

Few of us were expecting the events of 2020-21. There’s not a part of society that has not felt the impact of the coronavirus pandemic, and for many of us, the results have been challenging. 

It’s only natural that events of the gravity and scale of the coronavirus pandemic have led to reflection about the more unpleasant elements of life. It is regrettable, but many Brits will have found that they are less able to cope financially as a result of the pandemic. Many have lost jobs and businesses, and are contemplating the road to recovery. 

And, of course, there is the primary concern: becoming unwell. Most will be aware that coronavirus can compound existing health concerns, and that there are conditions and states of health that can place individuals at more serious risk. 

But, in contrast to the difficulties posed, many of us have assessed our options to provide security in an uncertain time. There are immediate ways to do this: following government guidelines, following the advice of your healthcare advisors such as doctors, nurses and care home staff, and avoiding unnecessary risks. Then there are long-term actions you can take to give your loved ones peace of mind that they will be secure. 

One of these options is life insurance.

Can I get life insurance for coronavirus?

Yes. When you apply for a life insurance policy, you’ll answer questions about your health, medical history and lifestyle – including tobacco and alcohol consumption. The answers to these questions help determine whether the insurer can accept your application and provide you with life cover.  

The life insurance application will likely include specific questions about whether you are currently suffering from symptoms of coronavirus or recently tested positive for it – and if so, you won’t be able to take out a new policy and you’ll likely have to wait a while until you’ve recovered to be able to re-apply. 

Remember that your policy will only pay out if you have answered all questions in the application truthfully. If you omit information or report it falsely, this may invalidate your policy.  

If you have already started your life insurance policy and then test positive for coronavirus, you do not need to inform your insurer of this. 

Once your policy is in force, the policy will pay out if you die during the term of the policy – whatever the cause, including death by natural causes as a result of Covid-19. There are a very small number of significant exceptions to this rule, such as death as a result of suicide in the first year of the term.

What’s the difference between coronavirus and Covid-19?

Coronavirus is the virus that causes Covid-19.

Most of the time, the two words are used interchangeably by insurers. So if you are completing applications for two different life insurers and one uses the term ‘coronavirus’ and the other ‘Covid-19’, don’t fret – they are usually talking about the same thing.

Will my life insurance pay out if I die from Covid-19?

Yes. If you have an existing policy in force, and you were honest when answering the health questions in the application form, then your insurer will pay out should you die from Covid-19 during the term of the policy – just like they would for death by any other natural cause. 

Why is life insurance important?

Life insurance can provide peace of mind and a lifeline for your loved ones should you no longer be there to help them. 

It’s important if you have significant financial obligations and dependents to whom this debt would pass on. Ask yourself whether those you’d leave behind would be able to cope financially if you were no longer able to support them. If you feel that this might be difficult, or that they would have to compromise their lifestyle to an extent you’re uncomfortable with, life insurance might be something you consider. 

For more guidance on life insurance and your other options for providing financial security, we have many life cover resources. 

Why get life insurance?

Life insurance provides a payout to your loved ones after you die to assist them with the financial implications of your passing. For instance, it could help towards covering the cost of mortgage on your home, so your family can remain there if you’re no longer around. It could also cover other family lifestyle costs, such as your children’s’ education through school and university.

There are a number of different options available, designed to suit the different needs of policy holders’ beneficiaries. We’ve got numerous guides available to help you decide which could be right for you, but in a nutshell, the main types are term life insurance and whole of life insurance.

Term life insurance

Term life insurance policies are active for a specific, pre-agreed period of time, known as the ‘term’. You choose the term as part of your application. Each insurer will have its own maximum and minimum, but people typically choose terms of 15 to 30 years, depending on what the cover is intended for.

When your policy is agreed, the size of your payout will be agreed. But what happens to this payout over time will depend on what type of term life policy you’ve chosen.  

Decreasing term policies

Typically used to pay off a repayment mortgage if you die. Decreasing cover's often called mortgage life insurance for that reason. 

People often choose these to protect their loved ones from debts that reduce over time, such as a repayment mortgage, credit cards and loans. 

Level term policies

Level cover is a life insurance policy that pays out a fixed amount if you die. It is designed to pay a fixed sum that could help your loved ones pay off an interest-only mortgage, clear other debts and maintain their lifestyle. 

Increasing term policies

Designed to provide a lump sum for your loved ones and reducing the impact of inflation on the money you leave if you die during the term of the policy. 

As time goes by inflation can make the cost of living go up. Increasing cover is a way to reduce the impact of inflation on the money you leave behind for your loved ones. The cash sum paid out if you die increases each year you have the policy in place.

Whole of life insurance

The alternative to a term life policy, whereby you are covered for a specific period of time, is a whole life policy. This covers you from the point at which you take out the policy until the end of your life. 

Over 50s life cover

One popular type of whole-of-life insurance is a guaranteed over 50s life cover policy.

As its name implies, it’s specifically for people aged at least 50 at the time of taking the policy out (typically between 50 and 80, although this does vary slightly from one insurer to another). As long as the applicant meets the eligibility criteria (eg UK resident aged 50-80) they’re guaranteed to be accepted - without having to answer any health, medical history or lifestyle questions.

These policies are for smaller cover amounts than term life insurance (eg Between £3,000 and £10,000). They’re typically used to cover the costs of funeral expenses, to leave a small gift– or simply to throw a great shindig.