Whatever your living situation, many of us faced unprecedented challenges during the COVID-19 pandemic. Lots came to realise that if a breadwinner in your household is unable to work (or worse still: dies), it can have significant, long-lasting, and even catastrophic financial consequences.

We know that people will be wondering whether they could've done something to better protect themselves against the financial consequences of the pandemic – or if it's possible to do so now. Some of you may already have policies in place, but be unsure about what's covered, and what's not. This guide will help.

It’s worth noting that how a pandemic affects life insurance, income protection and critical illness cover will depend on whether you have an existing insurance policy in place or you want to take out a new policy; what kind of scenarios you’re looking to protect against; what financial commitments or dependents you have; as well as other factors like your age, health and lifestyle. As ever, the key is to be as informed as possible about the insurance policies you already have, or the policies you plan to buy, before making any decisions.

Life insurance

Quick summary: How life insurance works

Life insurance is an insurance policy that pays out a lump sum if you die. It’s usually taken out to support your family’s financial needs if you died unexpectedly, especially in cases where they’re dependent on your income. Insurers take your age, health and lifestyle into consideration when underwriting your life insurance cover, so these factors affect how much it costs to be insured. Read more in our guide to life insurance.

Is coronavirus covered by life insurance?

Life insurance covers any cause of death, including pandemics – so yes, coronavirus would be covered if you already have a policy in place. This would be the case even if you’ve travelled to a known affected area, so long as you were honest and accurate about your health and lifestyle during the application process, whenever that was. Insurers can’t add exclusions to existing policies, so coronavirus would definitely be covered if you already have life insurance.

Can I take out life insurance now in case I get coronavirus?

The pandemic may have got you thinking about taking out a new life insurance policy, especially if you’ve realised your family would be financially vulnerable if something happened to the breadwinner(s) in your household. In the early days of the pandemic in the UK, buying a policy may have taken longer than usual as insurers updated underwriting processes to reflect the situation, and there may have been delays in receiving medical reports (where necessary) – but those delays should have dissipated now.

When applying for life insurance, you always have to answer underwriting questions about your health and lifestyle (it’s very important to answer these honestly, because inaccurate information may invalidate your policy or lead to it not paying out). During the pandemic, insurers were postponing their decision to accept your application for 30 days if any of the following applied to you:

  • You had COVID-19 symptoms
  • You were or had been self-isolating
  • You had tested positive for COVID-19 (or been in contact with someone who had)
  • You had travelled to a high-risk country (or been in contact with someone who had)

This continues to be the case, although we are starting to see insurers reduce the number of coronavirus questions they ask. In particular, fewer insurers are asking about travel to high-risk areas.

If you’re in a high-risk group for coronavirus (i.e. you’re older or have an underlying health condition), insurers were certainly taking this into account during the underwriting process for new policy applications. At the height of the pandemic, we saw life insurance applications that would usually be accepted with a loading on the price – instead being declined. This is less and less the case, as most insurers are now reverting to previous underwriting standards.

If you’re not in a high-risk group, now continues to be a good time to buy life insurance, especially if the current pandemic has alerted you to financial vulnerabilities in your own household. While this pandemic will no doubt fade away, we always recommend protecting your financial commitments and dependents with life insurance – because the risks are the same if you die unexpectedly, however that happens. The goods news is: if you’re young, fit and healthy, the premiums are likely to be highly affordable.

How coronavirus affects life insurance

  • Life insurance would pay out if you died from coronavirus
  • Insurers added coronavirus questions to the underwriting process during the pandemic, but are reducing these now
  • The process of getting covered is likely to take longer during a pandemic
  • For those in a high-risk group, it may have been harder than usual to get covered during the pandemic
  • For those in a low-risk group, the pandemic would not have affected the price of getting covered

Income protection

Quick summary: How income protection works

Income protection is an insurance policy that pays out if you’re unable to work for any medical reason – physical or mental, illness or injury. The idea is to protect you financially if you can’t work for a long time, giving you longer-term protection than sick pay or savings would provide. All income protection policies come with a waiting period, which is the amount of time you wait between becoming unable to work and starting to receive payments (typical insurer waiting periods are 1, 4, 8, 13, 26 or 52 weeks). Read more in our guide to income protection.

Does income protection cover me if I get coronavirus?

The coronavirus pandemic meant loss of income was a very real problem for millions of people in the UK. Besides government support, many wondered whether they'd be covered by their income protection (if they already have a policy) or could be covered (if they took one out).

The fact is: income protection was unlikely to pose an immediate solution to the financial struggles faced as a result of the pandemic. This is partly because income protection policies come with a waiting period; but also because the medical consequences of coronavirus, in the majority of cases, are unlikely to be sufficient grounds for an income protection claim. Here’s why:

  • You can’t work because you have coronavirus
    Income protection would only cover you if you're still medically unable to work after your waiting period. The most common waiting periods are 4 weeks or 13 weeks, and the average recovery time for coronavirus is 1-2 weeks (if your case is mild, which the majority are). To be able to claim, your recovery period needs to be longer than your waiting period, which is unlikely to be the case with coronavirus.
  • You can’t work because you’re self-isolating
    Most insurers are allowing claims if you need to self-isolate because you've tested positive – but again, it'll only be valid if your self-isolation period is longer than your waiting period. This is unlikely to be the case when the recommended self-isolation period for coronavirus ranges between 7 and 14 days.

    Insurers won't accept claims if you need to self-isolate because you've come into contact with someone who's tested positive or you've been in a country with high infection rates. Unless you test positive yourself, you won't meet your insurer's definition for being unable to work.
  • You can’t work because your employer has stopped operating or you're self-employed and your work has dried up
    Income protection only covers you if you’re medically unable to work, so you wouldn’t be able to claim if you lost your income for this reason. If you’re in this position, government support is your best option.

Should I take out income protection in case I get coronavirus?

For the reasons outlined above, income protection is unlikely to help in the majority of coronavirus cases. But if the pandemic highlighted that your household is financially vulnerable, then you may want to consider getting covered to protect yourself against misfortune in the future.

Just remember: income protection only covers you if you’re medically unable to work, and only starts paying after the waiting period (agreed when you take out the policy) has elapsed.

If you do decide to take out a new income protection policy but you’re on furlough, bear in mind that some insurers will base your policy on your normal salary, while others will base it on the reduced salary you’re receiving through the furlough scheme.

Are insurers excluding coronavirus from income protection policies?

Any policies bought before 13/03/2020 will not have any coronavirus-related exclusions. Policies bought after that time might have – for instance: some friendly societies have added exclusions for self-isolation, even if it’s medically required. As ever, it’s very important to be aware of any policy exclusions before buying.

At the start of the pandemic in the UK, a few insurers withdrew income protection products with 1-day, 1-week, 4-week and 8-week waiting periods from the market. Since then, however, some of the 1-week, 4-week and 8-week waiting period policies have been reinstated.

How coronavirus affects income protection

  • Income protection will only pay out if you can’t work for medical reasons
  • It will only pay out if you’re still unable to work beyond your waiting period
  • It’s unlikely to help in the majority of immediate coronavirus-related scenarios
  • It's best for longer-term illnesses or injuries that prevent you from being able to work

Critical illness cover

Quick summary: How critical illness cover works

Critical illness cover is an insurance policy that pays out a lump sum if you’re diagnosed with one of the illnesses or conditions listed in your policy. It’s designed to help protect you against the financial impact a serious diagnosis can have. Common claims on this kind of policy are for cancer, heart attack and stroke, but most policies also cover a range of other serious conditions. Many policies also offer additional children’s cover. Read more in our guide to critical illness cover.

Is coronavirus covered by critical illness insurance?

Coronavirus is not one of the illnesses listed in any critical illness policy – so no: you wouldn't be covered by critical illness cover if you were diagnosed with COVID-19. However, if you were to contract coronavirus and it led to severe complications, like a stroke, heart attack, or kidney failure, these may be defined as critical illnesses in your policy – in which case, you'd be able to make a claim.

How coronavirus affects critical illness cover

  • Critical illness cover will not pay out for coronavirus diagnosis
  • It might pay out if having coronavirus led to complications defined as criticall illnesses in your policy (e.g. a stroke or heart attack)
  • Combined critical illness and life cover would only pay out if you died from coronavirus
  • The process of getting covered will take longer during a pandemic
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