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Coronavirus: What you need to know about life insurance
You can still take out life insurance during the coronavirus pandemic, as long as you've followed government travel advice.
The coronavirus (COVID-19) pandemic has had a huge impact on many aspects of our lives but some are more obvious than others. One area which is easily overlooked - despite being very important - is the impact COVID-19 could have on life insurance.
Here, we address some of the big questions around COVID-19 and how it's impacting life insurance, so you've got a better understanding of what's going on.
Does your life insurance cover COVID-19?
If you have life insurance, and you're one of the very unfortunate people who die as a result of COVID-19, your life insurance policy should pay out.
The Financial Services Council (FSC) confirmed this in March, when it released a statement as soon after the coronavirus outbreak was recognised as a global pandemic.
"There are no exclusions in existing life insurance policies that would prevent the policy paying out for a death claim related to coronavirus, if you follow government travel advice," said the FSC.
"No-one should be concerned about their existing life cover and you can ask your life insurer or superannuation trustee what you are covered for."
How does government travel advice impact life insurance?
The FSC has assured people with life insurance that their policies will pay out if they die due to COVID-19, as long as they followed government travel advice. But what does that mean?
Well, on March 18, for the first time in Australia's history, the government issued the highest level of travel alert, urging all citizens not to travel to any other country. Unfortunately, for people with loved ones overseas, international travel might still be a very real prospect.
However, if you do head overseas against government advice - for whatever reason - it's very likely your life insurance policy would no longer be valid. This is because, in the eyes of insurance companies, you're intentionally putting yourself in harm's way.
Unfortunately, this extends to income protection policies as well as total and permanent disability (TPD) policies. If you are planning on travelling overseas, contact your insurer immediately so you can find out how your coverage might be impacted in the present, and when you come back.
What if you got your life insurance after COVID-19 became a known event?
It doesn't matter. You'll still be covered, even if you bought your life insurance policy after COVID-19 became public knowledge.
This is different to travel insurance, where insurers typically won't pay out for claims associated with the coronavirus if you bought your policy after COVID-19 became a known event.
Can you still get life insurance to cover COVID-19?
Yes. You can still get life insurance which would cover you in the event you died from COVID-19. However, you'll probably have to let the insurance company know if you've been overseas recently, or if you've been in close contact with anyone diagnosed with COVID-19.
A statement released by life insurer NobleOak on 16 March confirmed the company is still offering coverage, but said each case would be assessed individually by its underwriting team.
"Our underwriting process requires clients to provide details of any past illness, during the application process," it said. "If they have COVID-19 like symptoms, their assessment may be deferred until they have been assessed and fully recovered."
Will coronavirus impact life insurance in the future?
There's no way of knowing the long-term impact coronavirus will have on Australia's insurance market. However, we do know that the SARS epidemic of 2003 hit insurance companies hard.
If you're thinking about buying life insurance, there's no harm in doing it now. It won't cost you more due to the coronavirus, but you will get cover if the worst happens.
Plus, there's a possibility that insurers will tighten underwriting criteria in the future, or even implement waiting periods for COVID-19.
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Other quick ways to save money
Are you worried about your finances during this time? Don't forget to review your bills - spending a little time on admin, could save you over the weeks and months to come.
Here are some guides on how to save some money on your daily expenses. There are plenty of things you could do, from checking your energy rates, switching to a low-interest credit card, or simply dropping parts of your insurance that you don't need.
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