{"id":352,"date":"2020-04-28T20:05:45","date_gmt":"2020-04-28T20:05:45","guid":{"rendered":"https:\/\/davidestudio.co\/?p=352"},"modified":"2024-05-31T21:32:50","modified_gmt":"2024-05-31T21:32:50","slug":"are-life-insurers-denying-benefits-for-deaths-related-to-covid-19","status":"publish","type":"post","link":"https:\/\/davidestudio.co\/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 suggesting life insurance claims related to COVID-19 are being summarily denied. Much of the anxiety seems to stem from a news story titled: Would my life insurance policy cover COVID-19 related death?<\/strong> <\/strong> <\/p>\n

An anchor for the news organization that aired the piece shared it on Twitter below the tweet: <\/p>\n

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

Well, it depends.<\/strong> <\/p>\n

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

Claims sometimes are denied.  <\/p>\n

According to the American Council of Life Insurers 2019  Fact Book<\/a>, life insurance death benefits paid in 2018 totaled nearly $80 billion, up from $77 billion in 2017. Steadily rising annual payouts like the ones shown in the chart below don\u2019t suggest an industry that spends a great deal of time slithering through loopholes to avoid paying legitimate claims.  <\/p>\n

\"\"<\/figure>\n

\u201cLife insurance claims are rarely denied,\u201d says Triple-I chief economist Dr. Steven Weisbart<\/a>. \u201cWhen they are, it\u2019s 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.\u201d <\/p>\n

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

If the policyholder dies within that period, which typically lasts two years from the date of purchase, Dr. Weisbart says, the insurer can investigate whether the information the applicant provided was accurate. If the policyholder dies after the contestability period ends, the insurer is out of luck.    <\/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.  <\/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> <\/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 and family. <\/p>\n

Unfortunately, many people \u2013 including much of the media \u2013 simply don\u2019t understand how insurance works: how premiums are set, what types of risks are excluded (or that exclusions are even \u201ca thing\u201d), and how reserves and policyholder surplus work.  <\/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 denied claims have been against policies that specifically exclude losses related to infectious disease. Moves are now afoot to retroactively rewrite those contracts<\/a> \u2013 to the immediate detriment of the insurance industry and longer-term danger to the people and businesses that depend on insurance \u2013 as well as anyone who ever enters into any contract ever again.  <\/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 conditions, such as cancer, might not be paid if COVID-19 \u2013 rather than the disease insured against \u2013 is deemed to be the cause of death. Or that a life claim might be denied if premium payments were missed or a policyholder smoked or engaged in some other activity associated with high coronavirus mortality that they\u2019d denied on their application less than two years earlier.  <\/p>\n

So, yes: Some claims may be denied. But such denials are rare and \u2013 social media agitation notwithstanding \u2013 don\u2019t imply nefarious behavior on the part of insurers.  <\/p>\n

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

As the economic impact of the pandemic makes it difficult for consumers to keep current on their bills, states have begun to mandate<\/a> that life insurers keep policies in force, even if policyholders miss payments. At the same time, insurers \u2013 facing big financial hits across the many categories of risk they cover (including recent tornadoes and the upcoming hurricane and wildfire seasons) \u2013 are doing a lot to support their customers and the communities in which they do business during this crisis. <\/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 suggesting life insurance claims related to COVID-19 are being summarily denied. Much of the anxiety seems to stem from a news story titled: Would my life insurance policy cover COVID-19 related death?   An anchor for the news organization that aired the piece shared it on Twitter below the tweet:  Will your life insurance cover you if you die […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[14],"tags":[],"_links":{"self":[{"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/posts\/352"}],"collection":[{"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/comments?post=352"}],"version-history":[{"count":1,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/posts\/352\/revisions"}],"predecessor-version":[{"id":353,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/posts\/352\/revisions\/353"}],"wp:attachment":[{"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/media?parent=352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/categories?post=352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidestudio.co\/index.php\/wp-json\/wp\/v2\/tags?post=352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}