March 12, 2020
Coronavirus-Will my life insurance payout?
Coronavirus-Will my life insurance payout?

Amidst all the headlines and sensationalist news about Coronavirus (COVID-19), we thought it a good idea to let our clients know how they stand with their insurance policies when it comes to contracting the Coronavirus.

What we know so far…

COVID-19 is a new illness that can affect your lungs and airways. It’s caused by a virus called Coronavirus.

Symptoms of coronavirus

The symptoms of coronavirus* are:

  • a cough
  • a high temperature
  • shortness of breath

But these symptoms do not necessarily mean you have the illness.

The symptoms are similar to other illnesses that are much more common, such as cold and flu.

Treatment for coronavirus

There is currently no specific treatment for coronavirus. Antibiotics do not help, as they do not work against viruses. Treatment aims to relieve the symptoms while your body fights the illness.

Those infected need to stay in isolation away from other people until they have recovered.

 The stats

About 81% of people who are infected with the coronavirus will have mild cases of COVID-19. Whilst, people who are older or have underlying health conditions seem to be most at risk of having severe disease or complications.**

*NHS Choices March 2020

** China CDC Weekly, February 2020. 

How is life covered affected?

Life cover pays out if the person insured dies. With Coronavirus, if the insured person dies from having it or complications that have arisen from Coronavirus, it will payout. Simple as that.

Will my critical illness insurance payout?

Whilst, Critical Illness Insurance pays out a tax-free sum if you become seriously unwell, the condition must be one of those listed in your policy. Critical illness policies differ in the number and type of conditions covered.

Every plan covers:
 “core” conditions:
  • Cancer
  • Heart attack
  • Stroke

Coronavirus is not considered a critical illness in itself. Anyone can catch COVID-19 and in the majority of the population, mild symptoms are said to prevalent. It must be noted though that certain populations appear to be more vulnerable to its effects.

If subsequently, an illness develops from COVID-19 that is listed under your critical illness plan, then a claim can be submitted.

Can I claim on my income protection insurance?

Income Protection Insurance helps to protect your income if you were unable to work as the result of an accident or sickness.

Income Protection Insurance could provide a tax-free income which continues to pay out until you can return to work or until you retire.

The majority of income protection policies have what is called a deferred period, meaning the benefit won’t pay out until after an agreed period. This can range from 4, 8, 12, 26 or 52 weeks.

How long will people suffer from the virus / remain contagious? This information is not only sketchy but also will vary from person to person.

With the majority of people, as soon as they begin to suffer from symptoms, they may feel too ill to work. By the time they reach their deferred period when payment can begin, they may be feeling better enough to return to work. Income protection will be vital if people suffer complications after being exposed to the virus, that causes long term sickness.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

What the insurer’s say

Certain mutual insurers offer cover from day one of illness. Although, this is very expensive given the higher risk of an immediate claim.

One Mutual insurer*** has made it public how they would assess claims due to Coronavirus:

“If the policyholder is suffering from symptoms and has been told by 111 or Public Health to self-isolate, then a claim will be considered, subject to the contract terms and conditions.

We appreciate that currently providing a medical certificate from a GP for coronavirus is very difficult and therefore we will be requesting alternative documentary evidence, which might include asking if the virus was contracted abroad. After 14 days we will ask the policyholder for medical certification.”

Keeping you updated

Being a new virus with a worldwide scenario, insurers are having to adapt and statements will be released and updated as the virus spreads. We are keeping an eye on developments daily to establish the latest stance from all insurers.

***Cirencester Friendly March 2020

Should you have any queries whatsoever, please Call Freephone  0800 644 4468

Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.

Please feel free to read our Independent client reviews, or read about the team at Future Proof.

Call me back