{"id":444,"date":"2020-04-28T20:05:45","date_gmt":"2020-04-28T20:05:45","guid":{"rendered":"https:\/\/diymakerhub.com\/?p=444"},"modified":"2024-05-31T21:25:25","modified_gmt":"2024-05-31T21:25:25","slug":"are-life-insurers-denying-benefits-for-deaths-related-to-covid-19","status":"publish","type":"post","link":"https:\/\/diymakerhub.com\/index.php\/2020\/04\/28\/are-life-insurers-denying-benefits-for-deaths-related-to-covid-19\/","title":{"rendered":"Are Life Insurers Denying Benefits for Deaths Related to COVID-19?"},"content":{"rendered":"
\"\"<\/figure>\n

Social media has been abuzz with posts\u00a0suggesting\u00a0life insurance claims related to COVID-19 are being summarily denied.\u00a0Much of the anxiety seems to stem from a\u00a0news story\u00a0titled:\u00a0Would my life insurance policy cover COVID-19 related death?<\/strong>\u00a0<\/strong>\u00a0<\/p>\n

An anchor for the\u00a0news organization\u00a0that aired the piece shared\u00a0it\u00a0on Twitter below the tweet:\u00a0<\/p>\n

Will your life insurance cover you if you die from #COVID19?<\/strong>\u00a0<\/p>\n

Well, it depends.<\/strong>\u00a0<\/p>\n

The tweet is accurate enough. As it would be if the reference to\u00a0COVID-19\u00a0was deleted.\u00a0Or if the tweet referred to another form of insurance.\u00a0<\/p>\n

Claims sometimes are denied.\u00a0\u00a0<\/p>\n

According to the\u00a0American Council of Life Insurers\u00a02019\u00a0\u00a0Fact Book<\/a>, life insurance\u00a0death\u00a0benefits\u00a0paid\u00a0in 2018\u00a0totaled\u00a0nearly\u00a0$80\u00a0billion, up from $77\u00a0billion in 2017.\u00a0Steadily rising\u00a0annual payouts like\u00a0the ones shown in the chart below\u00a0don\u2019t suggest an industry that spends a great deal of time slithering through loopholes to avoid paying legitimate claims.\u00a0\u00a0<\/p>\n

\"\"<\/figure>\n

\u201cLife insurance claims\u00a0are\u00a0rarely\u00a0denied,\u201d says Triple-I chief economist\u00a0Dr. Steven Weisbart<\/a>.\u00a0\u201cWhen they are, it\u2019s typically because the\u00a0policies had lapsed\u00a0due to non-payment of premium or the\u00a0policyholders\u00a0had\u00a0provided inaccurate or misleading information at the time of application or renewal.\u201d\u00a0<\/p>\n

Even in the event of a material misstatement on a life insurance application \u2013 say, the applicant lied about\u00a0a significant health issue\u00a0\u2013\u00a0the\u00a0insurer has to discover the misrepresentation within\u00a0a\u00a0defined \u201ccontestability period.\u201d\u00a0\u00a0<\/p>\n

If\u00a0the policyholder\u00a0dies\u00a0within that\u00a0period, which typically lasts two years from the\u00a0date of purchase, Dr.\u00a0Weisbart\u00a0says, the insurer can investigate whether the information\u00a0the applicant provided\u00a0was accurate. If\u00a0the policyholder dies after the contestability period ends, the insurer is out of luck.\u00a0\u00a0\u00a0\u00a0<\/p>\n

\n
\n

Insurers don\u2019t make money by rejecting claims. They make money by underwriting accurately, investing wisely, and making customers happy enough to recommend them to friends and family.\u00a0 <\/p>\n<\/blockquote>\n

\n

Compare the chart above, showing the billions of dollars in death benefits paid, with the chart below showing that contested claims are only a tiny fraction of those paid \u2013 and bear in mind that many, if not most, of those contested claims ultimately ended up being paid. <\/p>\n

\"\"<\/figure>\n

Regulated and closely watched<\/strong>\u00a0<\/p>\n

Insurance is one of the most heavily regulated and closely scrutinized industries in the world, and claims payment is at the heart of the insurance customer experience. Insurers don\u2019t make money by rejecting claims. They make money by underwriting accurately, investing wisely, and \u2013 as with any other business \u2013 making customers happy enough to recommend them to their friends\u00a0and family.\u00a0<\/p>\n

Unfortunately, many people\u00a0\u2013\u00a0including\u00a0much of the media\u00a0\u2013\u00a0simply\u00a0don\u2019t understand how insurance works: how premiums are set, what types of risks are excluded (or that exclusions are even \u201ca thing\u201d),\u00a0and how reserves and policyholder surplus work.\u00a0\u00a0<\/p>\n

This is demonstrated in some of the contentious discussions around COVID-19-related business interruption claims. In the case of business interruption, most of the\u00a0denied\u00a0claims have been\u00a0against policies that specifically exclude losses related to infectious disease. Moves are now afoot to\u00a0retroactively rewrite those contracts<\/a>\u00a0\u2013 to the immediate detriment of the insurance industry and longer-term\u00a0danger\u00a0to the people and\u00a0businesses\u00a0that depend on insurance \u2013\u00a0as\u00a0well as anyone who ever enters into any\u00a0contract\u00a0ever\u00a0again.\u00a0\u00a0<\/p>\n

I know of no life insurance policy that specifically excludes death from infectious disease. It\u2019s possible some \u201cdread disease\u201d policies that cover specific\u00a0conditions, such as cancer, might\u00a0not be paid if\u00a0COVID-19 \u2013 rather than the disease insured against \u2013 is deemed to be the cause of death.\u00a0Or that\u00a0a life claim might be denied if\u00a0premium payments were missed\u00a0or\u00a0a policyholder smoked or engaged in some other activity associated with high coronavirus mortality that they\u2019d denied on their application\u00a0less than two years earlier.\u00a0\u00a0<\/p>\n

So, yes: Some claims may be denied.\u00a0But such denials\u00a0are rare and\u00a0\u2013 social media\u00a0agitation\u00a0notwithstanding \u2013 don\u2019t\u00a0imply\u00a0nefarious behavior on the part of insurers.\u00a0\u00a0<\/p>\n

Financial First Responders<\/strong>\u00a0<\/p>\n

As the economic impact of the pandemic makes it difficult for consumers to keep current on their bills, states have begun to\u00a0mandate<\/a>\u00a0that life insurers keep policies in force, even\u00a0if policyholders miss payments.\u00a0At the same time, insurers \u2013 facing big\u00a0financial\u00a0hits across\u00a0the\u00a0many categories of risk they cover (including recent tornadoes and\u00a0the\u00a0upcoming hurricane and wildfire seasons) \u2013 are doing a lot to support their customers and the\u00a0communities in which they do business during this crisis.\u00a0<\/p>\n

Insurers are financial first responders when it comes to just about any loss-creating event the average person might imagine. Media organizations would do their consumers a greater service by clarifying that role and helping them understand how best to shop for the insurance they need than by dropping scary, misleading tweets on an already anxiety-filled public. <\/p>\n","protected":false},"excerpt":{"rendered":"

Social media has been abuzz with posts\u00a0suggesting\u00a0life insurance claims related to COVID-19 are being summarily […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[],"_links":{"self":[{"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/posts\/444"}],"collection":[{"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/comments?post=444"}],"version-history":[{"count":1,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/posts\/444\/revisions"}],"predecessor-version":[{"id":445,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/posts\/444\/revisions\/445"}],"wp:attachment":[{"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/media?parent=444"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/categories?post=444"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/diymakerhub.com\/index.php\/wp-json\/wp\/v2\/tags?post=444"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}