How has Coronavirus impacted life insurance in the UK?
According to official government data, the Coronavirus death toll has exceeded 100,000, and continues to rise. A devastating statistic and one which would have seemed unthinkable 18 months earlier.
One sector which has seen growth, as a result of this horrible global pandemic, is the life insurance industry. There has been a significant increase in applications as people seek to protect the financial future of their loved ones’, whatever the future holds.
However, this spike in interest has led to many questions and much confusion. As a result, we asked the UK’s largest life insurance broker, Reassured, to help answer some frequently asked questions they are currently experiencing…
- Can I still get life insurance during the Coronavirus pandemic?
Yes, you can. At the time of writing this article (15/02/21) it is still very possible to secure affordable life insurance. In fact, generally speaking, very little has changed pre- and post-pandemic.
You are still able to:
- Take out a new life insurance policy
- Make a claim for Coronavirus
- Receive a pay out for death due to Coronavirus
That said, the application process has changed slightly for most providers, with new COVID related questions being asked of applicants, like:
- Have you tested positive for COVID-19?
- Have you been in contact with anyone who has tested positive for COVID-19?
- Have you been required to self-isolate?
- Have you displayed any COVID-19 symptoms?
An insurer will ask these questions to acquire a clearer picture of your current health and thus the likelihood of a claim, so that they can accurately calculate your premium.
- What if I have Coronavirus – can I still get life insurance?
Yes and no. Instead of declining your application outright, insurers are much more likely to postpone your application until you have made a complete recovery. The length of the postponement will vary between a few weeks to a few months, depending on the insurer.
After the postponed period has passed, the application can continue as normal.
- Does life insurance pay out for Coronavirus?
Yes, in the vast majority of cases, if you have an existing policy and pass away as a result of Coronavirus your loved ones can claim on your life insurance, receiving a full pay out.
New policies taken out will also cover death due to Coronavirus, but claims may be subject to the contestability clause.
This is a clause written into a policy that enables the insurer to request more information about your passing to establish if COVID-19 was present at the point of application.
A successful pay out will only be jeopardized if you have lied or withheld information during the application (known as non-disclosure).
Lastly, a small percentage of older policies contain a pandemic clause, which would mean a pay out could not be made for Coronavirus, but this is very rare. Check your policy terms and conditions to confirm your position.
- Will my monthly premiums increase because of Coronavirus?
No, it is unlikely that you will be charged more for your monthly premium as a result of Coronavirus alone. The key factors when it comes to calculating the cost are still your age, smoking status, cover amount, policy type and medical history.
If you have an existing policy you will not see an increase in your cost of premium, as this figure was agreed at the point of application.
- Do I need to take a test in order to get life insurance?
No, it is not currently compulsory to take a Coronavirus test before applying for life insurance, however you may wish to take a test in order to provide the most accurate answers during the application.
As mentioned above, due to new underwriting criteria insurers will now ask a number of COVID-19 related questions. By having a recent test result, you can more accurately answer these questions and there is a lower risk of non-disclosure.
- Can I still take out a funeral plan during the pandemic?
Yes, you can still take out a prepaid funeral plan, as funerals are currently still going ahead in the UK.
A funeral plan enables you to lock in the current cost of a funeral, avoiding rising fees being passed to your family. They also enable you to plan the funeral you want, as opposed to the one your loved ones think you want.
That said, because of COVID-19 there are currently restrictions imposed on funeral service, including the;
- Number of mourners allowed
- Number of mourners travelling in the limousine
- Embalming of the body (if required)
Current government guidance advises that up to 30 people can attend a funeral service in England. Whilst in Scotland, the maximum number is 20 people and in Wales, the attendance ‘should be kept to a minimum’.
Please note, the above is correct at the time of writing, however the government guidance is regularly revised.
Compare life insurance quotes
Different insurers employ different underwriting methods, and this means the cost of your monthly premiums can vary wildly. This is especially the case if you have or have had a pre-existing medical condition, such as Covid-19.
As a result, it is vital to compare multiple quotes to ensure you get the best available deal.
A reputable insurance broker (FCA regulated) can help you do this, usually free of charge, or you may decide to use a comparison website.
Whichever comparison method you choose, now is a good time to secure life insurance, especially if you have loved ones who reply on you financially.