During the COVID-19 pandemic, it's important to protect yourself and your loved ones. Having a life insurance policy ensures your family can cope financially if you're not around.
In troubling times such as these, it’s natural to worry about how your family might cope if you were no longer around to look after them. The financial benefits of life insurance can make a world of difference to loved ones left behind. But since this pandemic is a novel threat, you might be wondering if an existing policy would cover death from COVID-19, or if new life insurance coverage can be obtained while the current crisis persists.

Here’s what you need to know about life insurance and the coronavirus.

Why Should You Get Life Insurance?

If you have dependents who rely on your income, such as a spouse or children, life insurance ensures they will have financial assistance after you die. The benefit paid upon death comes in the form of a tax-free lump-sum payment and can be used by the designated beneficiaries any way they like. This includes paying day-to-day living expenses, paying down the mortgage, debt repayments, education costs, and anything else.

Even if you have some life insurance through your employer (coverage is often one, two or three times your annual salary), it may not be enough to cover all of your family’s needs. Also, if you lose your job or leave the company, your coverage ends. Depending on your age, purchasing life insurance later in life could be very expensive since age is one of the main factors used to determine premiums.

The current COVID-19 pandemic underscores the fact that a fatal accident or illness can happen suddenly and the importance of having adequate life insurance coverage in place to protect your family.

Does Life Insurance Cover Coronavirus?

If you already have a life insurance policy and have kept up with your premiums, your beneficiaries will be paid the full benefit of your coverage amount if you die as a result of COVID-19.

In fact, life insurance generally pays out for all types of death (other than suicide) unless there is a specific exclusion specified in your policy. For example, if one of your hobbies is skydiving, your insurance provider will probably include an exclusion in your policy for death from skydiving.

Also, if you die during the contestability period, usually within the first two years of a policy’s purchase, your insurance company may investigate your death. If you lied or withheld information on your insurance application, the death benefit claim may be denied.

Can You Still Get Life Insurance During COVID-19?

Yes. Canadians can continue to apply for life insurance and, so far, new policies do not contain exclusions for deaths related to the coronavirus. It is possible that this could change in the future, which is another good reason to purchase coverage sooner rather than later.

However, as is the case with any illness, the insurance company may not approve your application right away if you currently have the virus or are waiting for a diagnosis. In such situations, the insurer would defer approval until after you’ve recovered or diagnosis is complete.

Similarly, if you have travelled to a coronavirus hotspot, or you plan to travel to one in the next year, the provider may choose to defer approval of your application.

How Will COVID-19 Affect Your Life Insurance Quote?

Insurance providers calculate your insurance premiums on several factors that determine your risk of dying within the policy’s term. The greater the risk, the more you’ll pay. Because there is a greater risk of dying during a pandemic than there would be otherwise, it’s possible insurance providers will raise rates for new policies. (Premiums on existing policies will not change due to the virus.)

In general, the cost of life insurance depends on the following:

  • Your age and gender. The younger you are, the less likely you are to die in the foreseeable future, so premiums are lower. Women pay a little less than men since their life expectancies are slightly higher.

  • Policy type. The shorter the term, the less likely you are to die within the coverage period, so premiums are lower. Conversely, a permanent life insurance policy that covers you to any age is the most expensive because the chances that you’ll die while covered are 100%.

  • Coverage amount. The higher your coverage, or potential death benefit, the more you’ll pay in premiums.

  • Your health. Smokers or those with underlying health conditions pay more. As such, if you’ve had COVID-19 and it left lasting damage to your lungs, your rates could be higher.

How To Get Life Insurance

You can buy life insurance in Canada in three ways:

  • Deal with an insurance company to purchase a policy directly
  • Consult a licensed broker who can sell you a policy from one of several different insurance companies and help you to make a selection
  • Use an online search platform to compare policies and quotes from many insurance providers at once and, if desired, purchase coverage

Here are a few of the best life insurance companies in Canada, all of which you can access online:

PolicyMe

 policyme_logoThis licensed digital life insurance advisor helps you compare and buy life insurance from top insurance companies in Canada. The PolicyMe online calculator and (non-commissioned) sales advisors will help you determine your coverage needs, provide quotes and submit your application online.

Learn more about PolicyMe


PolicyAdvisor

 policy advisor insurancePolicyAdvisor is an insurance brokerage that provides advice by phone, email, live chat and through its online check-up tool and coverage calculator. Once you’ve determined your coverage needs, you can view, save and compare policy details from 17 of the largest insurance providers side-by-side, as well as submit an application for coverage online. At this time, new applications do not have any coronavirus-related exclusions.

Learn more about PolicyAdvisor


Kanetix

 kanetixKanetix lets you search for rates from more than 50 insurance providers. There’s a “compare this rate” tool that sets up a table of three quotes and coverage details. If you decide to purchase a policy, the site will connect you to the specific insurance company so you can secure your selected rate.

Learn more about Kanetix


InsuranceHotline.com

Insurance HotlineInsuranceHotline.com is an online platform that offers quotes from more than two dozen Canadian insurance providers. If you want to move forward with coverage at the quoted rate, you’ll be referred to an independent licensed insurance broker or agent in your area who can sell you the policy.

Learn more about Insurance Hotline


FAQs

You’ll want to purchase enough coverage to meet the needs of your family or other beneficiaries after you die, but also at a premium you can afford. Your calculation should include the cost of your funeral and estate fees, as well as any expenses for the duration that your dependents will need the assistance. For example, if you have a large mortgage and your children are very young, you likely need more coverage than someone who expects their mortgage to be paid off and their children to be grown and earning their own incomes in the next few years.
Typically, life insurance policies for coverage of $1 million or more, or for individuals who are 50 or older, are not approved until the applicant takes a medical test, including blood and urine tests. However, due to social and physical distancing requirements of the pandemic, many companies are temporarily waiving this requirement for up to $2 million in coverage, and are instead conducting a health interview by phone. In some cases, providers may also request medical records from the applicant’s doctor.
Your policy may include a grace period of 30 days or more, in which you could delay payment of your monthly premium without having the policy lapse. Even if your policy doesn’t specify a grace period, some insurers are allowing extra time to make payments on a case-by-case basis under these unprecedented circumstances. Be sure to contact the provider directly to ask.
If you do not pay your premiums within the grace period, or according to any special arrangements agreed to with your provider, your policy will lapse. This means the policy is no longer in effect and will not pay any benefits upon your death. If you later want to resume coverage, you’d have to apply for a new policy and your premiums would likely be higher.

The Final Word

Events like the coronavirus pandemic can serve as a reminder that we are all vulnerable, but there are steps we can take to protect the ones we love.

If you have an existing life insurance policy, take comfort in knowing your coverage applies, even for COVID-19, so long as you make your payments on time. If you don’t have life insurance to help your dependents financially upon your death, you can still purchase a policy now.

Finally, since you’re taking care of important business, update or make a will ASAP. If you don’t already have a will, you can make a legal online will through a Canadian provider such as Willful. For a limited time, Young & Thrifty readers can save $20 on any Willful plan. Otherwise, the court will end up deciding what happens to your assets or children, and the settlement of your estate will be delayed.

Get $20 off any Willful plan with YOUNGANDTHRIFTY promo code!

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