7 Life, Disability and Supplemental Health Answers for a COVID-19 World

Question marks (Image: Allison Bell/ALM)

For a financial professional who sells life insurance, disability insurance, and related products and services, such as critical illness insurance, the natural reaction to client questions about what's happening now might be to lie in bed with a cup of warm tea and a teddy bear.

But many life insurers, insurance distributors and others are resisting the inclination to self isolate from the news. They're preparing guides to what's happening, updating their websites and social media streams, calling and emailing clients, and organizing webinars and online chats to help guide clients through the COVID-19 pandemic, and the COVID-19-related disruptions in the economy.

Here are examples of seven life and health community efforts to answer questions about products other than major medical insurance.

One sign of how rapidly everything is changing is differences in how everyone refers to The Virus. Some call the virus by its formal name, severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Some refer to the name of the disease the virus causes, COVID-19. Many simply refer to "the coronavirus."

1. "Does life insurance cover coronavirus?"

Many organizations have posted answers to this question.

Here's how Life Ant, an online life insurance quote service, answers the question:

Luckily, if you already have an insurance policy in place, it will still cover you if you pass away from complications related to the coronavirus. This is true even if you have traveled to a coronavirus-inflicted area. This is because insurance companies can't change policies that are already in place.

2. "Should you get life insurance during a pandemic?"

Here's an example of a question with answers that are mutating hourly.

When many life organizations posted answers about this question, or similar questions, they assumed that this was a question of interest mainly to people traveling to the city of Wuhan, in China. Not to people who live, work and travel to places like Seattle and New York.

Policygenius, an insurance sales site, notes, for example, that life insurers might postpone application approval if an applicant has traveled to China within the last 30 days or has future plans to travel outside the United States.

Here's a portion of the Policygenius answer that relates to applicants who may have been exposed to COVID-19 pneumonia anywhere, not just in China:

Some life insurance companies may postpone your application if you have a member of your household who has recently returned from travel outside the U.S. or if you have come into close contact with someone who has tested positive some life insurance companies may postpone your application if you have a member of your household who has recently returned from travel outside the U.S. or if positive for COVID-19. You may also be required to provide a statement of good health for a new or pending life insurance application.

How each life insurance company will treat your application if you happen to contract the coronavirus will also vary. Insurers may reject your application or postpone your offer until you have made a full recovery.

3. "Will my coverage end if I can't afford to pay my premiums?"

This is an example of a short, simple question that could be hard to answer. Some states are asking insurers, or requiring insurers, to provide extra grace periods for non-payment of premiums.

Some insurers are announcing extra grace period provisions or offers of flexibility of their own.

Here's how Haven Life Insurance Agency, an affiliate of Massachusetts Mutual Life Insurance Company, is answering this question:

We are here to support our customers during this time of uncertainty and financial hardship. Customers who are concerned about maintaining their monthly premiums should contact our customer success team for accommodations.

4. "If I contract COVID-19, can I utilize the accelerated death benefit rider?"

Here's a question with an answer that may depend on the rules in the state in which the consumer lives and the exact language in the accelerated death benefit rider.

Here's how Haven Life answers the question about the accelerated death rider that comes with its life insurance policies:

Currently, the majority of COVID-19 cases are not fatal for younger, healthier individuals, which many of our customers are. And to access the accelerated death benefit rider, a policyholder must be terminally ill with a documented life expectancy of two years or less.

If a policyholder were to become terminally ill due to a severe infection from COVID-19, they can access 75 percent of their death benefit or up to $250,000, whichever is less. Please keep in mind that whatever funds are accessed will be subtracted from the overall life insurance policy payout made to beneficiaries. For example, if a policyowner has a $500,000 policy and accesses $100,000 of the funds using the accelerated death benefit provision, their beneficiaries would receive a payout of $400,000.

5. "For claimants who are quarantined because of exposure to COVID-19 but are not themselves afflicted with the disease, will these claimants be considered disabled?"

Many carriers and financial professionals are suddenly having to look for, and interpret, the quarantine-related provisions in disability insurance policies and other policies.

Here, for example, is part of what MetLife is saying about the relationship between its disability coverage and COVID-19 quarantines:

Claimants are unlikely to satisfy the definition of disability in the applicable plan solely due to being quarantined. If the claimant develops COVID-19 or even some other qualifying sickness while quarantined, and it meets the definition of disability within the policy, benefits would be reviewed for payment.

6. "Are quarantined individuals 'in active employment'? Does coverage continue during a quarantine?"

Many COVID-19 quarantine questions related to life, disability and supplemental health provisions other than cash benefits provisions.

Here, for example, is how Unum Group handles questions about how being in quarantine affects the status of an employee in a group benefits plan:

Generally, we would consider a quarantined individual to be in "active employment" if the employee is quarantined pursuant to a government order or if the employee's quarantine is an approved leave in accordance with the leave provisions of the applicable policy.

We will consider individuals who self-quarantine to be in active employment for a period of time consistent with the quarantine period recommended by the Center for Disease Control (currently 2 weeks).

An individual's coverage will continue while they are quarantined per these guidelines if premiums are paid.

7. "How does the Quarantine Rider work?"

Many carriers are explaining that the typical critical illness insurance policy will not pay benefits to people diagnosed with COVID-19, but that hospital indemnity insurance policies likely will pay benefits to people hospitalized for COVID-19 care.

Some carriers do offer products or features that might provide some protection against COVID-19-related quarantine costs, and they're now interpreting what those provisions do.

The Guardian Life Insurance Company of America, for example, has this response to questions about what its benefit plan quarantine rider does:

The Quarantine Rider covers employees if they are placed under a doctor ordered quarantine and are unable to perform the major duties of their job. The employee must be suspected of carrying or having been exposed to an infectious and contagious disease as determined by the doctor who would then order the quarantine. The nature of quarantine and the definition to support it is determined by the Centers for Disease Control (CDC) or the U.S. Secretary of Health and Human Services.

— Read Insurance Companies Are Essential: States, on ThinkAdvisor.

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7 Life, Disability and Supplemental Health Answers for a COVID-19 World

1. "Does life insurance cover coronavirus?"

2. "Should you get life insurance during a pandemic?"

3. "Will my coverage end if I can't afford to pay my premiums?"

4. "If I contract COVID-19, can I utilize the accelerated death benefit rider?"

5. "For claimants who are quarantined because of exposure to COVID-19 but are not themselves afflicted with the disease, will these claimants be considered disabled?"

6. "Are quarantined individuals 'in active employment'? Does coverage continue during a quarantine?"

7. "How does the Quarantine Rider work?"

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7 Life, Disability and Supplemental Health Answers for a COVID-19 World

1. "Does life insurance cover coronavirus?"

2. "Should you get life insurance during a pandemic?"

3. "Will my coverage end if I can't afford to pay my premiums?"

4. "If I contract COVID-19, can I utilize the accelerated death benefit rider?"

5. "For claimants who are quarantined because of exposure to COVID-19 but are not themselves afflicted with the disease, will these claimants be considered disabled?"

6. "Are quarantined individuals 'in active employment'? Does coverage continue during a quarantine?"

7. "How does the Quarantine Rider work?"

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