What to Know About Life Insurance and COVID-19

Life insurance is a valuable resource for anyone, as it pays out a lump sum to family and/or other dependents in the event you pass away during the term of the policy. A life insurance policy affords the peace of mind that loved ones will be financially protected in the event of your death, and that the money provided will be able to pay for expenses such as a mortgage, outstanding debts, living costs, and other expenditures.

Being aware of your life insurance policy and its coverage is important, especially right now with a global pandemic leading to much loss of life. The insurance lawyers of Millin & Millin want to provide you with some critical information that can help you to better understand life insurance at this point in time.   

COVID-19 & Your Life Insurance Policy

While COVID-19 has presented challenges across industries, the life insurance sector has largely been unaffected. Life insurers are not pulling out of the market, and as premiums remain steady, industry watchers are seeing COVID-related claims already being paid out, less than one year from the outset of the pandemic. 

In most instances, traditional life insurance policies, including whole and term life, cover COVID-19 related deaths. There are, however, exceptions where a policyholder may have their claim denied by their insurance provider. 

Reasons claims are denied frequently include:

  • An inaccurate or incomplete application;
  • failure to pay your insurance premium;
  • an accidental death policy was the only policy purchased. 

An inaccurate or incomplete application may result in claim denial for reasons including not disclosing travel plans, not providing truthful information regarding income or even failing to accurately provide information about your health, such as your weight.

In the event that a policyholder loses their life within the first two years of coverage, an insurer will closely examine the claim and thoroughly review the initial application. It is important to be truthful and transparent throughout the application process, and policyholders are encouraged to ask questions should they not understand aspects of the application. 

Should a policy lapse as a result of non-payment, it’s likely a beneficiary will not receive a payout if the policy isn’t reinstated prior to the policyholder’s death. While most companies extend a 30 or 31-day grace period for late premium payments, you will remain covered as long as your insurance provider is paid within the allotted time. 

In the midst of the pandemic, insurers may extend this grace period, with some state regulators already making these extensions a requirement. Insurance companies are willing to work with policyholders, and if you’re experiencing financial difficulties in making payments, it’s important to reach out to your insurer to discuss your options to avoid a lapse in coverage. 

In the event of an accident, accidental death and dismemberment insurance (AD&D) is another form of coverage that can provide a payout. However, if a person dies as a result of illness or disease, an AD&D policy will not be paid out. AD&D coverage is sometimes added to a standard life insurance policy as a rider, and in those instances, the primary policy will payout in the event of a COVID-19 related death.

Life Insurance Policy Denied? Millin & Millin Can Protect Your Rights!

It’s important to understand your insurance coverage and your rights. 

In the unfortunate event that you should lose a loved one and have a viable insurance claim denied, the insurance lawyer of Millin & Millin can help to right the wrongs done against you. We have years of experience handling bad faith insurers and can make sure you get what is owed to you.

 

Need legal support for your denied life insurance claim? We are here to help!

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