What Does Coronavirus COVID-19 Mean For My Personal (Life) Insurance Policies? What Can I Do To Protect Myself & My Family Financially?

What is Personal Insurance (Life Insurance)?

MoneySmart.gov.au has written Personal Insurance – Life Insurance can help protect you and your loved ones financially if something unexpected happens. 

• Life Cover – pays a lump sum when you die
• Total and Permanent Disability Cover (TPD) – pays a lump sum to help you with rehabilitation and living costs
• Trauma Insurance/Critical Illness Cover – covers you if you’re diagnosed with a major illness 
• Income Protection cover – pays some of your income if you can’t work due to illness or injury 
• Buy/Sell Personal Insurance – Ensure a smooth transition of business ownership in the above listed events (and possibly more)

In simple terms, it is a type of cover that provides financial security to you and your family for events such as a serious injury or illness, loss of ability to earn, total and permanent disability or even death.

The common policies/covers that personal insurance refers to are listed above. 

Questions and Answers Specifically About Coronavirus Personal Insurances Impacts & Concerns (We will continue to add to this section as the questions come through to us)

Q.Can I claim on my personal insurance policies if it relates to Coronavirus?

A. Yes, if you meet a condition of payment then you will be paid for that policy even if it is the coronavirus COVID-19 or related. 

For example, let’s assume you had an income protection policy in place with a 14 day waiting period and a benefit period to the age of 65. 

If the coronavirus led to you being unable to work for 2 months due to sickness/illness. The policy would pay you your sum insured for the 2 months less the initial 14 days. 

As with all claims, customers must have fulfilled their disclosure obligations and have met the terms of their specific policy in order to be eligible for a benefit payment.

Based on the very nature of personal life insurance policies they are typically outcome and impact related, not usually a specific illness related unless your policy has an exclusion that would have been stated to you upon application. Coronavirus personal life insurance policy impacts are minimal at this stage. 

Q. Am I still covered even though COVID-19 Coronavirus is considered a pandemic?

A. Yes, you are still covered. As per the report on riskinfo.com.au insurers have confirmed that there are no exclusions in existing life insurance policies that would prevent the policy paying out for a claim related to Coronavirus as long as the policy holder has followed Government travel advice. 

High quality personal insurance providers do not have a pandemic exclusion on their personal insurance policies. This is something you should review with your existing policy or what you are going to apply for.

The financial services council policy manager said that “… all life insurance companies have pandemic risk management plans in place…” “with no expectation of it changing yet especially for existing insurance policies.” 

Q. If I was to apply for a new policy will I be covered for anything related to coronavirus COVID-19?

A. In this article, multiple insurers such as ‘BT Life Insurance, AIA Australia, TAL, MLC Life, AMP Life, Clear View, MetLife, Integrity Life’ and more have indicated that NEW Customers will be treated no differently in terms of how the policy is impacted by the latest pandemic. 

Standard medical tests and detailed questionnaires will apply as usual. If anything extra is excluded you will know before you reach the point of agreeing to take up the contract. 

It was initially noted that NEW customers wouldn’t be affected, however with us being on the front line, we have seen some insurers place exclusions on clients policies, especially those involved in healthcare! 

Did you know these 3 things about personal insurance? 

1. You can pay for the premiums of Life Cover, TPD Cover and Income Protection cover through your Superannuation fund.
   Without realising you might already have these provided to you automatically inside your superannuation fund.
2. Personal Insurance (policies) are a contract. Normally between the Life Insurance company, the person insured and the person/entity paying the premiums. If you have taken out a retail insurance product and have had to go through ‘medical underwriting’ companies typically can’t change your contract. 
3. Not all personal insurance policies are equal. Different products and policies have different contract terms and will without doubt have different costs. Age, occupation and amount insured will have a major impact on the premium price.
   Make sure you know what your policy covers you for and when you are eligible to claim on it.