Life Insurers respond to Covid-19 crisis
Life insurance companies provide a number of financial products including life insurance, income protection/critical illness protection (both individual and through group / employer), pensions and investments. The Covid-19 pandemic brings uncertainty and the steps needed to deal with the crisis can result in financial and employment uncertainty for many policyholders.
Life insurers are strongly supporting their customers through the current crisis and are organising their resources to ensure that customer contact, servicing and payment of claims remains of the highest priority. Additionally, life insurers are providing a variety of options and solutions that will assist with providing peace of mind and financial breathing space for their customers, their families and their businesses.
For many customers, particularly those with pensions and investments, it is important to obtain financial advice in relation to the options available. Where possible, customers should contact their financial adviser or broker for advice in availing of the most appropriate option for their personal circumstances.
The following Q&A may help customers to understand their options for their policy.
Is Covid-19 covered under my life assurance policy?
A life insurance policy is designed to pay an agreed sum on the death of the policyholder. If death occurs as a result of Covid-19, this will be covered under your life insurance policy.
Is Covid-19 a specified illness under my Critical/serious illness cover?
Critical or serious illness cover is designed to pay a lump sum on diagnosis of a specified illness. As Covid-19 is a new illness, it will not be covered as a specified illness under this particular type of protection policy. However, if Covid-19 develops into one of the illnesses specified under the policy,you may be eligible to claim for this illness in accordance with the policy’s other normal terms and conditions.
I can’t afford to pay my premium for my protection policy, but I want to keep the policy. Can my insurer help me?
There are a number of measures that may be available from your life insurance provider to assist you to continue with your policy in instances of financial stress. Many insurers will offer either a payment holiday or a reinstatement option. A payment holiday will allow you to defer your monthly premium for a certain amount of months without losing cover on the policy (typically up to 3 months), so a valid claim during the payment holiday would still be covered under the policy. Other policies include a reinstatement option that allows the policy to be reinstated after a period of missed payments with little or no updated underwriting required. A premium holiday or a reinstatement option are not free insurance cover you will be asked to pay the premiums missed at the end of the period. The terms of the payment holiday or reinstatement option available can be dependent on each individual case and individual insurance provider and you should contact your insurer as soon as possible to discuss your current situation to understand the options that are available to you.
Am I still covered under my Group insurance scheme?
Insurers are mindful that many employers are also struggling to maintain viability in the current situation. Support for premium payments will be administered on a case-by-case basis and employers are encouraged to contact their insurer as soon as possible to discuss the range of options and solutions available.
Is Covid-19 covered under my income protection policy? Can I claim on this if I have been made redundant or lost my job as a result of Covid-19?
Income protection insurance is designed to replace some or all of your regular working income in the event that you are too ill to work for a period of time. This assumes that you will be medically advised to take time off work and most policies will require that a diagnosis of an illness, including Covid-19, has been received in order to claim on that policy. It should be noted that many policies will include a deferred period which must take place before the claim will be paid. You should contact your insurer or financial adviser for further details.
Will I be asked about Covid-19 if I apply for a life, critical/serious illness or income protection policy?
Yes. Like any other illness, Covid-19 will have an impact on your health, should you contract it. Some people, particularly those with underlying medical conditions, may well suffer more of an impact if infected and all relevant information needs to be considered when applying for these types of policies. Different insurers may ask Covid-19 related questions in different ways but will be likely to cover whether you are currently experiencing symptoms and whether you have been tested/waiting on results of a test.
The value of my pension/investment policy has dropped significantly. Should I encash it?
Pension and investment policies are designed to be long-term investments to allow for the various ups and downs in the market over time. A crisis such as the Covid-19 pandemic can have a negative effect on investments, and you may see the value of your policy falling. This can lead many customers to believe that encashing the policy should be done quickly before the value decreases even more. However, previous experience of these type of crises suggests that encashing early can reduce long-term returns. It is highly recommended that before you make a decision to encash, you consult with your broker or financial adviser to understand the impact this could have on your longer-term goals and objectives and to support you to make the best decision based on your personal circumstances.
Should I switch to a lower risk investment fund?
Again, switching the funds to a lower risk fund or cash, even for a short period, can have a significant and long-lasting negative impact on the long-term performance of the policy. Your insurer can explain your options to you, but you should always consult with your financial broker or adviser prior to making a decision to switch.
Will my Insurer remain open to handle claims and other policy queries?
Each insurer has gone to extensive lengths to maintain services levels whilst encouraging their staff to work from home in line with Government guidelines. They remain available to help you understand the options available to you and to process claims and other transactions. All front-line staff have been fully briefed on a range of customer initiatives to support policyholders during the current crisis and you should contact your provider directly should you have any queries. It is recommended that you contact your insurer online or by email in the first instance where this is possible.