There’s no doubt that the coronavirus pandemic has taught us a number of valuable lessons – one of which is how financially vulnerable we are.
Many have witnessed first-hand how quickly life can change and perhaps been reminded of the importance of having financial protection in place.
If you’ve been motivated to take out life insurance since COVID-19, here’s what you need to know.
What is life insurance?
Life insurance pays out a lump sum to your family or other dependants if you pass away during the term (length) of the policy. It offers peace of mind that your loved ones would be financially protected if you were no longer around to provide for them.
The funds received can be used by your dependants however they wish, but most often the money is used to clear the mortgage and other outstanding debts, cover living costs and fund childcare.
Life insurance premiums can start from as little as £5 a month, but the exact price you pay will depend on factors such as your age, health and lifestyle, occupation, the type of cover you take out and the length of term.
Effect of COVID-19 on life insurance
While coronavirus has had a huge impact on the insurance industry as a whole, the life insurance sector has been left relatively unscathed. There has been no evidence of life insurers pulling out of the market, premiums have remained steady and COVID-related claims are already being paid, according to Emma Walker at broker LifeSearch.
Life insurance is still readily available to buy and – whether new or existing – policies will cover coronavirus.
And, while applying for life insurance often could take longer at the start of the pandemic as insurers updated their underwriting processes, these issues have been largely resolved and application times have improved.
One undeniable change however, is the introduction of COVID-19-specific questions on life insurance application forms. “Insurers are of course asking a few more questions and underwriting has tightened in some areas, especially for those with diabetes, asthma or who might be overweight,” says Walker.
This means that when you run a life insurance quote, you’ll need to answer questions such as:
Within the last 30 days have you:
- tested positive for coronavirus?
- been advised to self-isolate?
- had any symptoms of coronavirus?
- been in direct contact with anyone who has been diagnosed with or who is suspected of having coronavirus?’
If you answer yes one or more of these questions, your life insurance application is likely to be postponed – how long for will depend on the insurer but it’s often around a month (after the point of recovery if you actually contracted the virus).
And if you have suffered particularly serious symptoms, for example if you were hospitalised, your application could be postponed for longer.
It’s crucial you answer these and all other questions honestly however, and don’t fail to disclose pre-existing conditions. If you ever make a claim and your insurer discovers you were dishonest, it may well be rejected.