How has life insurance changed since the pandemic?

In 2020, at the height of the pandemic, life insurance payouts related to COVID-19 topped out at $154 million. Over 50,000 Canadians have passed from COVID-19 since the initial emergence of the pandemic, now over four years ago.  

The pandemic caused us to rethink a lot of things about the way we lived our lives, including our futures. For many, life insurance is a backup plan in case things go awry; how has it changed since the monumental uptick in claims due to COVID-19? 

The short answer is yes. If you already had a life insurance policy prior to your illness and you were to pass away due to COVID-19 or a related ailment, a claim could be made by your beneficiary. This is because life insurance isn’t designed to treat deaths as a result of coronavirus any differently than those caused by similar respiratory illnesses, flu, or natural causes. 

No. There’s some misconception around the fact that having a COVID-19 vaccination, no matter what kind, will impact your insurance. A statement issued in March 2021 by the Canadian Life and Health Insurance Association promised that no Canadians applying for policies would be denied coverage if they were using a vaccine that had been approved by Health Canada. 

At the same time, receiving a vaccination won’t necessarily decrease your rates, either. While Canadian health and life insurers are generally supportive of Canadians receiving vaccines, it won’t qualify you for a discount or premium reduction.  

If you are currently sick with the coronavirus and have severe symptoms, applying for life insurance may not be possible for two weeks to a month, or until you’ve recovered. It’s the same as being unable to apply for life insurance if you’re in the ER or have been hospitalized due to a serious ailment. 

Basically, you may have your life insurance application postponed if: 

What if you had severe COVID that resulted in long-lasting ailments? Long COVID, also called long-haul COVID, is characterized by a group of health ailments developing after an initial COVID-19 infection. Some of the long-term effects of COVID-19 are debilitating.  

Like any other pre-existing condition, getting life insurance after-the-fact can be confusing. Having a pre-existing condition, whether that’s cancer, a heart ailment, etc., won’t automatically disqualify you from getting a policy. But some insurers will decline coverage or they’ll place a “rating” which increases the premium for the policy. 

There are also guaranteed issue policies available if you don’t qualify with a standard insurer, but keep in mind that these are often more expensive and have limitations on the amount of coverage available. As well, they may have waiting periods of up to two years. If you pass away during the waiting period, your beneficiaries will only receive a return of the premium paid rather than the death benefit. We’ll get into more about guaranteed life insurance in the sections below. 

Options for life insurance may vary depending on the type and severity of the pre-existing condition you have. Ask an insurance broker about your eligibility for any of the following: 

Guaranteed life insurance is designed to protect individuals regardless of their medical history, but for that reason policies tend to be more expensive. Also, they may pay only a small death benefit, usually with a limit of $50,000. 

Some insurance providers may also call this no-medical life insurance. Simplified life insurance is yet another name often used.  

This coverage is designed to protect you for a specific duration, usually 10, 20, or even 30 years. It’s ideal for those who don’t want to spend much on their coverage but want peace-of-mind while they’re paying off a mortgage, their children’s post-secondary education, etc. Term life insurance may be more expensive if you have a pre-existing condition, but it still costs nowhere near as much as any permanent life policies.  

Permanent life insurance provides coverage for you whole life, as you continue to pay your premiums. This insurance is limited, however, as only those with a clean bill of health or minor pre-existing conditions may qualify. Any pre-existing condition may result in getting a “rated” policy, which will mean higher premiums.  

Other “life circumstances” can result in a policy being rated as well. This includes having a high-risk occupation, being a smoker, or partaking in high-risk activities. 

If we’re talking “industry-level” shifts, then no—life insurance hasn’t changed. COVID-19, depending on its severity and impacts, can either delay an application for life insurance or serve as a pre-existing condition. Certain life insurance companies won’t write policies for individuals with pre-existing conditions at all, so it’s important to shop around to find an affordable policy that meets your coverage needs.  

Shopping for coverage is done easiest with the help of a friendly, knowledgeable Mitch Insurance broker. Give us a call or click here to get started. We’ll help you find affordable life insurance, regardless of your medical history.