Many people are wondering how the Coronavirus (COVID-19) pandemic may impact insurance cover. Here we provide answers to 9 common questions.
1. Are there any exclusions on my existing policy for COVID-19?
Most retail insurers have said that there are no COVID-19 exclusions on existing policies – as long as your cover was in place prior to the declaration of the CoVid19 pandemic (generally 20th February 2020) you are covered in the event that CoVid19 leads to a claim.
The insurers who have made statements include:
- AIA / Comminsure
- AMP Life
- BT Insurance (incl..Westpac Life)
- ClearView LifeSolutions
- PPS Mutual (NobleOak)
- TAL / Asteron
If you have insurance through a group life policy – which includes ‘policies through superannuation – this may include pandemic exclusions and it is best to check with your insurer or super fund.
2. Can I make a life insurance claim for a death related to COVID-19?
If an individual dies from COVID-19 (subject to the information above), this would be covered.
3. My income has stopped or been cut substantially because of COVID-19. Is there anything my insurer has on offer to minimise the impact of premiums on me and my family in the coming months?
Most insurers are looking into options so that clients experiencing hardship because of job or income loss don’t need to cancel their cover. Some of these include the following:
- Suspending cover or a premium pause: some insurers can pause premiums for up to 12 months on request from the insured. During this time coverage stops. At the conclusion of the pause (which can be ended earlier), cover restarts without any need for a health / employment declaration.
- Waiver of premiums while involuntarily unemployed: Some insurers can waive premiums for up to 3 months if the insured person becomes involuntarily unemployed with coverage retained during this time.
- Transfer of ownership: Some insurers give clients the option to transfer ownership from non- super to super. Some will allow this process online while others will require that clients call their adviser to arrange the change.
4. Can I make a COVID-19 related claim for TPD, Income Protection or Trauma?
You may be able to do so, depending on whether your illness meets the terms and conditions of your policy. The COVID-19 is not excluded for existing policies.
For example, if you have an income protection policy with a 30-day waiting period, are diagnosed with the virus and become unable to work for 3 weeks, then because you are able to return to work within your waiting period, you wouldn’t be eligible to claim. On the other hand, if you were unwell and unable to work for another 3 weeks (6 weeks in total of illness) then you would be most likely be able to claim for 2 weeks benefit.
Of course, if you have a policy with a longer wait period (say 90 days), then your illness would need to extend beyond this longer timeframe for you to be able to make a claim. Based on what we know about COVID-19 to-date, recovery is expected to be before that.
Importantly, if you have income protection cover and your cover is on an “indemnity” basis, then if you do need to make a claim, your reduced income could mean a reduced benefit payment.
5. What happens when applying for more cover?
You can expect to see additional COVID-19 questions when applying for new applications for cover which ask about recent travel as well as potential contact with others that may have been exposed. We’re also finding that some insurers are asking for additional medical tests than has previously been the case.
If you’re unwell at the time of applying, it’s likely that your application won’t be considered until you are given a clean bill of health from your doctor. We could see blanket COVID-19 exclusions in future for cover increases, where new cover is taken out, and where cover is reinstated while the current pandemic remains.
It’s always beat to confirm the specifics of your application with the insurer before the cover is put in place.
6. I have COVID-19. Can I get cover or increase my existing cover?
No, you can only apply when you’re given a clean bill of health from your doctor.
7. I haven’t been diagnosed with COVID-19 but have been in contact with someone diagnosed with it. Can I get cover?
You will need to wait for the required timeframe so that you have medical clearance confirming you do not have COVID-19.
8. Can I make a claim for Income Protection relating to COVID-19 for having to be away from work because of self-isolation or due to medical advice not to attend work, even though I haven’t been diagnosed with this illness?
No, self-isolation or medical advice to stay away from work as a precaution to your health does not qualify you for an income protection claim.
However, if you were diagnosed with a related illness – for example anxiety or depression resulting from the current crisis – as long as you are covered for mental health conditions (and don’t have an exclusion on your policy) then you may be able to claim on your income protection.
9. Does Income Protection insure against redundancy or loss of job?
Generally no. Income Protection is designed to cover you in the event of extended illness, injury or accident.