In an Unknown World, Discover How Life Insurance Has Your Back
Why You May Need Life Insurance During COVID-19
Across the country, COVID-19 rates continue to fluctuate as Canadians adjust to the new normal.
One outcome of the virus is that it has created a dialogue around mortality and is motivating people to be better prepared for unprecedented circumstances.
Canadians can get peace of mind during this time by purchasing life insurance. Life insurance can have your back and safeguard your loved ones financially if you were to pass away.
Life Insurance Covers Deaths Related to COVID-19
So, can you still buy life insurance during the pandemic?
You absolutely can.
Depending on the life insurance provider, you can be eligible for a life insurance policy, and it will pay out for all types of death – including anything related to complications from COVID-19.
The company may have a questionnaire to determine your risk of exposure to the virus during the application process. As a precaution, they may want you to wait 14 days (the amount of time it takes for coronavirus symptoms to appear) before proceeding with the process. Once your application has been approved, this coverage could kick-in immediately.
Many people have relied on life insurance during COVID-19 since it provides financial protection for loved ones. If you were to pass away unexpectedly from the virus or related medical complications, how would your loved ones be able to take care of themselves financially? A life insurance benefit can help to ensure that your loved ones aren’t left behind with your debts and expenses.
Here are some debts and costs a life insurance benefit can help with:
- Cover final expenses, including the cost of a funeral
- Cover children’s/grandchildren’s education costs
- Pay off mortgage
- Replace income
- Leave a legacy for a cause close to your heart
How Life Insurance Premiums Can be Affected by COVID-19
Evidence shows that life insurance premiums may be affected by COVID-19 and may be on the rise due to low interest rates.1 Since permanent life insurance is more likely to pay out a benefit, this has been the segment where prices have increased.
Earlier this year, in response to the pandemic, the Bank of Canada slashed interest rates to help boost the economy. With lower interest rates, they anticipated that Canadians would be more likely to make purchases despite the uncertainty in relation to the virus.
However, life insurance providers often have your premiums in investments; to compensate for these lowered rates, life insurance providers may hike up their premiums.2 It’s important to note that this depends on the life insurance provider. Some providers continue to have affordable rates that customers can take advantage of to get the financial protection they need.
Current life insurance policy holders will not be affected by the spike in prices, as their premiums are locked in.
How to Buy Life Insurance During COVID-19
Depending on the life insurance provider, there are contactless ways to apply and qualify for life insurance. Here are your options for life insurance during COVID-19:
Permanent versus Term Life Insurance
Permanent life insurance gives you coverage for the duration of your life and your premium is locked in at this rate. In contrast, term life insurance provides coverage for the duration of the term (typically 10, 20, 25 or 30 years) and once it expires you need to renew the term to continue receiving coverage. At this point, your premiums will likely increase since life insurance providers will consider your age and any other health issues.
No Medical and Simplified Issue Life Insurance versus Traditional Life Insurance
No medical and simplified issue life insurance allows you to secure coverage quickly, with a straightforward and hassle-free application process. There are no medical tests or exams (no needles or drawing of fluids). Simply answer some health-related questions and get your policy issued in just a few days. As mentioned previously, there may be a questionnaire about your exposure to COVID-19.
In contrast, traditional life insurance involves a lengthy application process with full paramedical exams and the potential for additional tests if required. Your policy may not be issued for weeks or even months. Due to reduced hours and capacity at laboratories, it may take longer to get your tests done.