As we all work to adjust our lives and routines to more time at home than we would have ever expected, there are some frequently asked questions regarding life insurance that may be on your mind, too.
I have life insurance coverage now. What happens if I can’t pay my premiums?
Like other lines of insurance business, life insurance companies are working to come up with solutions for late payments above and beyond what’s already available. The contract that you already have likely allows for a grace period of some sort. These can vary by company, but there would be a period of time that your policy would still be in effect even if you are behind on payments.
Depending on the type of policy that you have, it may be possible to have the policy pay for itself for a period of time. If you have a policy that builds cash value, it is often possible to use the cash value within the policy to pay premiums. This will keep the death benefit level and save money out of pocket. It should be noted that this is usually not a permanent solution as eventually the cash value would be exhausted. Once this happens, the policy would lapse.
If I were to pass away from coronavirus, would my family receive the death benefit?
Policies that are already in effect can’t be changed by the insurer. Almost all policies that are sold would cover death from almost every circumstance. Most policies have a two-year contestability period. If the insured person passes away within the first two years of policy date, the company can contest the death and investigate the circumstances of the death. After this period ends, the company no longer has that right. Thus, policies in force for longer than the contestability period should have no issue of benefit payment because of current conditions.
Can I get life insurance during this pandemic?
As of this writing, most life insurance companies are continuing to take new applications. Many have included a “Statement of Good Health” at the time of issue, which is a form simply saying that your health hasn’t changed from the day that the application was done. Most insurers also ask about recent travel history and upcoming travel plans. This isn’t new to our situation now. Travel questions have been on life insurance applications for years. If someone has traveled to an area of the world that was heavily affected by the virus, there may be a waiting period before the company considers making an offer to the client.
As always, you should check with your agent or the company with any questions about your specific policy.
Matt TavaniRegional Sales Director. Life & Financial Specialist