Not All Life Insurance Policies Cover COVID-19 Deaths

By Tatiana Kadetskaya

With COVID-19 deaths continuing to rise, more Americans ask themselves whether they should buy life insurance to protect their families in case of death. In fact, according to LIMRA’s 2021 Barometer Study, one in three Americans said they are more likely to buy life insurance because of the pandemic. However, whether their policy would cover a COVID-19 related death depends on several factors.

Life insurance agents are key in helping clients understand whether their beneficiaries will receive the death benefit. There are specific circumstances or certain policies where insurance companies may deny the claim if the policy owner died of COVID-19. Applicants should be made aware of these so that they can make the choice that suits the needs of their families.

Several Exceptions For Standard Life Policies

If the policyholder has a regular life insurance policy that is active, the insurer will pay the beneficiary if the insured died of complications related to COVID-19. There are a few exceptions, however.

First, if the policy is less than two years old and the applicant misrepresented material information on the application, the claim will be denied regardless of the cause of death. Second, if the insured contracted COVID-19 and was too ill to pay his life insurance premiums, allowing the policy to lapse, the claim may be denied (depending on what state the insured lived in). Third, if an employee who is covered under a group life insurance plan contracts COVID-19, becomes too ill to return to work and gets terminated without converting his group coverage into a private policy, his beneficiary’s claim may be denied.

Accidental Death Policies Do Not Cover COVID-19 Deaths

Accidental death policies usually cover deaths related to an unforeseen, sudden accident such as a car crash or drowning. They usually do not cover COVID-19-related deaths as they are considered to be due to natural causes. If the insured died in an accident while he had COVID-19, the claim will be paid provided none of the exclusions apply and COVID-19 did not contribute to the accident.

COVID-19 Is Not Listed As A Critical Illness

Similarly, many critical illness policies deny coverage for COVID-19 as such policies may not list COVID-19 as a covered illness. Critical illness policies list illnesses for which coverage would be available. If COVID-19 is not listed in a critical illness policy, the claim is likely to be denied.

If a person suffers from a covered illness and contracts COVID-19, however, the claim should be paid.

Another exception is for cases when COVID-19 leads to covered conditions, such as organ failure. It is a good practice for applicants looking to buy a critical illness policy to read the contract and discuss it with their advisor to better understand what illnesses it would cover.

Accelerated Death Rider May Require Physician Certification

Accelerated death policies pay a certain amount of death benefit to the insured who is alive but terminally ill and has a short life expectancy. Every accelerated death policy has a list of requirements that need to be met in order for the claim to be payable.

For example, many require that a treating physician sign a life expectancy letter certifying that the insured is terminally ill and has a life expectancy of 12 months or less. Unless all the requirements under the contract are met, the claim will be denied. Thus, if the insured has COVID-19 and is very ill, unless they have a letter from his physician confirming his short life expectancy, their claim for accelerated death benefit will most likely be denied.

One step in securing a policy that fits the applicant’s family’s financial needs is to work closely with a life insurance agent to understand the type of coverage they are purchasing. Life insurance agents should discuss all possible scenarios involving COVID-19-related deaths. At the same time, it is in the applicant’s best interest to read the policy and analyze possible scenarios when life insurance will not pay.

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