Life Insurance and COVID-19. If you have existing Life Insurance then yes you will have cover for Coronavirus or COVID-19 – if you die from COVID 19 then your policy will pay. Currently at the time of writing all insurers are still offering Life cover with no exclusions for COVID 19. However they are asking questions about your recent travel – any planned travel etc – if possible. Funeral cover will generally cover COVID 19 – however most Funeral plans only cover illnesses after being in place for 2 years so this is something to be aware of. Trauma cover or critical illness does not cover a COVID 19 claim however there is an Intensive care benefit you could claim upon. Income Protection would cover a claim if you got sick from the Coronavirus and would kick in when you reached your waiting period, if you lose your job if you have redundancy cover then this would pay out. But not many people take up redundancy cover in New Zealand – this may change in the future. There is no cover if you cannot work due to the current lockdown for COVID 19 in New Zealand. For existing income protection policyholders there is mental health cover in most policies so this could be possible to claim under if you lost your job. Currently getting income protection cover is getting harder as insurers are either changing the wording for new policies or restricting it to certain occupations. Talk to us today about Life Insurance and COVID-19.
What your Life Insurance and Income Protection policy covers you for in regards to COVID-19
Life Insurance This will pay out for premature death and/or terminal illness so arguably with our low mortality rate with COVID-19 this is not such a concern for most. However ignoring COVID-19 for a second (yes I know it is hard too!) having life insurance cover in place right now is more important in this strange and troubling time for if you were to die of something else you would want your family protected financially
Trauma Insurance This pays our for named illnesses and injuries with cancer, heart attacks and strokes forming about 75% of claims in New Zealand. However there is a benefit in most of the policies sold by life insurance brokers called an Intensive Care benefit which pays out if you have been admitted to an intensive care ward of a hospital for a certain period of time. Once again a lot of the bank sold trauma products will not have this benefit in them – hence why getting cheap cover seems a good idea at the time and when paying premiums but at claim time it may not seem such a good idea.
Income Protection This covers a portion of your income for sickness and injury if you could not work. So generally if one gets coronavirus the average recovery period is about 2 weeks and most income protection wait periods before the income cover kicks in is about 4 weeks or longer so you wouldn’t get a pay out. However if you were in hospital longer and took longer to recover then you would be eligible for a claim. Also some of the premium income protection policies sold by Life Insurance brokers also have a hospitalisation benefit and Bed Confinement benefit which kicks in after 3 days if you weer admitted to a registered hospital or confined to a bed at home and under the supervision of a registered medical practitioner then you would be eligible for your monthly benefit or a portion of it depending on how long you were in the hospital or bed confinement. Lastly there is mental health cover which is why Partners Life has currently excluded this benefit under their income protection. For example if you became depressed during the COVID-19 pandemic and couldn’t work or lost your job or income and became depressed then you could lodge a claim under the mental health option which would need to be assessed by the correct people. For those who have agreed value products then they can get an agreed level of income paid out without needing to prove financials whereas those on indemnity products would need to prove the best consecutive 52 weeks of the last 3 years for income. Once again if you don’t have a comprehensive income protection policy then these benefits may not be available to you – so check your policy wording.
Mortgage Protection Essentially the same product as income protection insurance just with a different name and treated differently by both the IRD and ACC. But as per the above with income protection then the same options would be available to claim upon. Mortgage protection pays an agreed level of cover so you just need to prove a loss from illness or injury or mental health claim.
Total & Permanent Disablement Insurance (TPD) The claims on this benefit are not as common and generally this means you could never do your job again or you were unable to do some of lifes daily activities such as eating/dressing etc. So you are unlikely to have a claim with COVID-19 with this product. It would be more likely you claim on this for an incident that happens whilst under the COVID-19 pandemic
Health Insurance If you suffer from coronavirus and you are seriously unwell you will be admitted to a public hospital. Private hospitals are not set up for emergency care they are for elective surgery only. However there is a public hospital stay benefit built into most Health Insurance policies which pays out on a daily basis after you have been in hospital for a certain period of time
Funeral Insurance This will cover you for death, however when you take out a funeral insurance policy illness related deaths are generally not covered for 2 years when you first take out a policy. So if you have cover then it would be wise not to change it right now. This type of cover is generally held by the older population and who are more vulnerable from COVID-19. So if you have a funeral policy that has been in place for 2 years then you would be covered if you died from the coronavirus.
Redundancy Insurance Whilst this is probably one of the most important insurance products available right now it is quite ironic that this benefit is hardly ever sold. This is due to its cost and limited cover as it only protects you for 6 months if you were made redundant. However right now this benefit could prove to be quite useful. Banks do tend to sell a bit of this cover either on credit card insurance or tagged onto their stripped down income covers. When you take this cover out you have a 6 month stand down before this benefit becomes payable and there are quite a few questions around potential redundancy. Right now pretty much all companies have stopped offering this benefit and for others they have deferred the benefit for a further 3 months on top of the standard 6 month stand down.
Insurance Cover whilst under COVID-19 pandemic
Whilst it is unlikely that you will claim under Life Insurance or income protection insurance or trauma insurance during the COVID-19 pandemic it does make one feel a bit more vulnerable all the same.
Insurances such as Life Insurance are important and right now with an uncertain time ahead protecting both yours and your loved ones financial future is vitally important. This should be considered if you were thinking of cancelling your insurance cover, replacing your cover with a cheaper company or if you currently don’t have some or any of these insurance covers.