Read on to find out.
Existing life insurance policyholders
If the individual who passes away due to the coronavirus had a life insurance policy, the nominee of the policy will get the sum assured as the death benefit.
“If the deceased person had a life insurance policy, then the nominee or the beneficiary nominee must know that the death caused by health-related issues are generally covered under a life insurance policy including term insurance,” says Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com. This means that when the insured person dies, the death benefit is paid to the nominee or the beneficiary nominee after a valid life insurance claim is filed.
Death benefit is the agreed amount of money (sum assured) payable by the insurer upon the death of the insured person to the nominee or the beneficiary. At the time of buying the policy, the policyholder lists out the name/s of those nominee/s who will receive the death benefit in case the insured person dies. Nominees can check the sum assured in the policy document.
Agarwal said, “Existing life insurance policyholders are covered. While some life insurance policies have exclusions for a specific cause of death, coronavirus will be covered if you already have an existing life insurance policy.” She added, “In the rare event, if you die from a pandemic illness, your beneficiary will receive the death benefit.”
If you get a policy now, will it cover COVID-19?
If you are planning on buying a life insurance policy at this point in time, then you should keep in mind that insurers determine the premiums of a policy on the basis of your health and medical history. Hence, it’s reasonable to assume that a global health crisis like the coronavirus would have some impact on your policy acceptance and premiums, if you are currently in the application process stage.
Agarwal said, “If your life insurance policy application is in process, the insurer may hold or even reject the policy if you have already contracted the coronavirus infection.” She added, “As long as the policyholder has disclosed all details correctly at the time of buying the life insurance policy, wherein the person was not infected with coronavirus, the death benefit claim would be payable even if it arises due to death from coronavirus infection afterwards.”
However, every policyholder should scrutinise the exclusions of their life insurance policy carefully to know of the various situations where they will not be covered.
What if life insurers consider COVID-19 under critical illnesses?
Adhil Shetty, CEO, BankBazaar.com said, “Normally, life insurance policies don’t explicitly deny payment of benefit for deaths caused by any illness. However, you need to consider the conditions of the life insurance policy add-ons, whose benefits will be paid out only if those conditions are adhered to. For instance, for life insurance policies with critical illness benefits, claims may not be entertained in an instance where medical advice was not adhered to/by the policyholder.”
Further, he said that assuming COVID-19 is covered as a critical illness in a policy’s rider, then its benefits will be paid out (or not paid out) as per the rider’s terms and conditions. “For example, one term plan says it will not pay the critical illness benefit where the critical illness is caused directly or indirectly by any of the listed critical illness conditions where death occurs within 30 days of the diagnosis. This, however, should not interfere with the payment of the basic sum assured on the term insurance policy,” he said.