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July 31, 2020

Life Insurance in a Pandemic – COVID-19/Coronavirus is *not* Excluded

Here’s the Gist

  • Life insurance comes with a list of exclusions, your policy may not pay out if you die in a specific way, for example suicide within 2 years
  • COVID-19/Coronavirus is not one of those exclusions
  • The Coronavirus has made many people more aware of their own mortality, no one is safe from death — no matter their age
  • It’s easier to get coverage online than ever to make sure your family is taken care of with a policy that is right for you

Does term life insurance always pay out the policy when the insured dies?

Life insurance is for one thing — you want to know that your family will be taken care of if something happens to you. With that in mind, it is extremely important to realize that life insurance, while it usually will pay out, comes with a list of exclusions.

Let’s dive in and learn about some common ones!

What Is a Life Insurance Exclusion?

The point of life insurance is to help provide for your family if something unexpected happens to you. However, if you put your life in danger in certain situations, the company has the right to deny coverage.            

These situations are called exclusions. You’re covered...except for if this particular thing happens to you - and pandemics are not one of them. Check out some common exclusions in the table below.  

Common Exclusions

  • Suicide - Death by suicide is one of the most common exclusions. However, it usually only applies to the first year or two of the policy. If the insured commits suicide during that initial period, premiums are usually refunded, but the company will not pay out the death benefit.
  • Fraud - If the insured person lies on their application, the company doesn’t have to pay. For example, if the person doesn’t disclose their cancer diagnosis and then dies, their family receives no death benefit, even if they didn’t die of cancer.
  • Act of War - This is less common than it used to be but check your policy. This exclusion won’t cover you if you die in an act of war.
  • Dangerous Pastimes - Specific pastimes can *sometimes* be excluded. These include things like rock climbing, SCUBA diving, or race car driving.
  • Travel-related - If you are killed while traveling in what your insurance company deems a “high-risk” area, you may not be eligible  for the death benefit.
  • Criminal Activity - If the insured is killed while doing something illegal, they may not be covered.

In some cases, instead of putting an exclusion, companies will add a surcharge to your premium. For example, if you travel to “high-risk” areas, you can still get coverage, you’ll just pay a little more for it.

Coronavirus Life Insurance

There has unsurprisingly been a surge in life insurance applications since the pandemic began. At this time there are no coronavirus-related exclusions. Illnesses are typically covered by life insurance, even pandemic ones.

Don’t have pandemic life insurance in Canada yet? It’s now easier than ever to apply and get coverage online to help stay safe during these troubling times.

For further information to check out more of our articles to learn the answers to your burning questions about COVID-19 life insurance and term life insurance in general!