Is COVID Diagnosis a Life Insurance Disqualifier?

From social distancing measures to personal protective equipment to a growth in the amount of people working 100% remotely, the coronavirus has changed a lot of aspects and views of day-to-day life.

Whether the changes were anticipated or not, COVID-19 has also spurred a renewed focus on life insurance. After several years of diminished growth, the number of life insurance policy purchases rose in 2020, according to data maintained by LIMRA. The reason appears to be largely linked to the pandemic, as one-third of respondents, in a separate LIMRA poll, said COVID lent urgency to the issue of getting insured. For those who haven't yet obtained a policy, respondents said they intended to within a year at the most.

However, given the fact that some diagnosed with the disease have encountered ongoing health complications, it's caused prospective policyholders to question whether they're even eligible. Is it possible that a COVID diagnosis is a life insurance disqualifier?

If the COVID-19 strain has proven anything to health experts around the globe — and the public in general — it's the ease with which it can be transmitted. The statistics tell the story: According to Johns Hopkins University & Medicine Coronavirus Resource Center, there have been more than 161.3 million cases worldwide, based on figures collected May 14. In the United States alone, 32.8 million have been stricken with the disease.

The severity of the symptoms can vary widely; in fact, some don't experience any readily identifiable symptoms whatsoever. For the most part, though, they can mimic the common flu, including:

  • Fever and/or chills
  • Cough
  • Fatigue
  • Muscle and/or body aches
  • Headache
  • Sore throat
  • Congestion or runny nose
  • Nausea vomiting
  • Diarrhea

The Centers for Disease Control and Prevention also pointed out that a loss of taste or smell is common among those who have encountered the disease and have since recovered.

Adverse health effects can be long term
For others, the ramifications of COVID-19 can be more pronounced, to the point of requiring medical attention. Persistent chest pain and trouble breathing are the most common of these symptoms. When people have been hospitalized, it's frequently due to breathing complications, which may require a respirator.

While the vast majority of those infected recover fully, some encounter what the National Institutes of Health describes as "a constellation of symptoms" long after they were first diagnosed. The NIH refers to this phenomenon as "Long COVID." The related symptoms can last for a number of months. Since coronavirus is a novel disease, it's unclear how long they last; it could be years or more. Nor is it certain how they impact someone's lifespan.

It's these unknowns that have sparked the question as to whether those who have contracted COVID may be turned down by a life insurer. Others have wondered about if death benefits are denied should someone succumb to the disease.

III: 'Claims are rarely denied'
According to the Insurance Information Institute, these questions are fueled by speculation, and conjecture rather than any official policies.

"Life insurance claims are rarely denied," said Dr. Steven Weisbart, who serves as chief economist for the Insurance Information Institute. "When they are, it's typically because the policies had lapsed due to non-payment of premium or the policyholders had provided inaccurate or misleading information at the time of application or renewal."

Having a policy or claim denied  is not without cause. In India — the world's second-largest country in terms of population — several people who had COVID say they were denied or informed they would have to wait before an official decision on whether they could get covered. Parikshit Gupta, a software engineer who lives in the west Indian city of Pune, told Money Control he wanted to obtain a term life insurance policy. But once he revealed he'd recovered from COVID, private insurers informed him he'd have to wait for several months.

It's worth noting that the rules and stipulations insurers have from one country to another often differ.
While virtually no country has entirely avoided COVID-19, India has gotten the worst of it in many ways, as variants of the disease have led to a massive resurgence in hospitalizations and case totals. According to Prime Minister Narenda Modi, total infections have surpassed 24 million and thousands are dying by the day, Reuters reported. Experts say the 24 million figure is likely a highly conservative estimate.

As far as the U.S. is concerned and how life insurers treat COVID-19-related claims, Weisbart says he isn't aware of an insurance policy that specifically cites infectious diseases as an outcome in which a claim is denied.

While life insurers do have rules in place regarding certain health outcomes and may turn down a claim if the cause of death is one thing and the disease being insured against is another, flat denial for COVID-19 would be highly unusual. He further noted that insurers don't make money by denying claims, so it's not in their economic interest to do so. What allows them to stay in business is accurate underwriting.

What's the deal on vaccines?
COVID diagnoses isn't the only issue that appears to be confusing Americans as it relates to life insurance. So are the vaccines.

In record time, the pharmaceutical industry released a number of highly effective vaccine treatments, which were authorized for emergency use by the Food and Drug Administration. Nearly 50% of adults nationwide has received at least one dose. In rare instances, some of those who received a shot encountered severe complications, including the formation of blood clots and other adverse health effects.

Rumors have swirled that life insurers consider whether someone obtained the vaccine during claims settlement.

Paul Graham, senior vice president of the American Council of Life Insurers, noted in a statement that nothing could be further from the truth.

"A social media post appears to be behind the spread of entirely false information, suggesting a COVID-19 vaccine could be a factor a life insurer considers in the claims-paying process," Graham explained. "The fact is that life insurers do not consider whether or not a policyholder has received a COVID vaccine when deciding whether to pay a claim. Life insurance policy contracts are very clear on how policies work, and what cause, if any, might lead to the denial of a benefit. A vaccine for COVID-19 is not one of them."

Graham further noted that policyholders should understand that COVID-19 vaccinations have zero influence whatsoever on whether claims are paid and not.

Bottom line: If you have questions on how health outcomes affect life insurance — COVID related or otherwise — talk to your provider to get the full story.