Will the COVID-19 Vaccine Affect My Life Insurance Coverage?
If you’ve Googled some variation of this question over the course of the past few months, you’ve likely gotten a pretty straightforward answer: “The COVID-19 vaccine does not impact an insurer’s decision to pay out claims.” Some sources might even go so far as to say that getting the COVID vaccine may increase the chances of an approved life insurance claim. However, these claims can be very dangerous to make without some more context.
First, in the context of a regular life insurance policy, we are evaluating whether a claim will pay out AFTER the insured has passed away. Unless the policy is within the first two years of the issue date (the contestability period), the insured’s cause of death has no effect on the claim for benefits. Therefore, whether the insured received the COVID-19 vaccine would not have any bearing on the viability of the claim for death benefits.
However, if the policy is within the first two years of the issue date (contestable policy), and the cause of the insured’s death is potentially related to COVID-19, the claim will almost certainly undergo a contestability review/investigation. The purpose of the investigation is to determine whether any of the answers on the application were incorrect or inaccurate at the time of signing. For example, if the insured was experiencing symptoms related to COVID-19 and was advised to seek treatment for COVID-19 prior to applying for life insurance, an insurance company will likely attempt to deny the claim for material misrepresentation on the application. In essence, the insurance company is making the argument that the insured knew that he or she had or may have had a pre-existing illness or condition that would affect the insurance company’s underwriting decision but failed to report it during the application process thereby committing a form of fraud.
Unfortunately, in many states, the cause of death does not need to be related to the misrepresentation on the application for the claim to be denied. For example, if the insured died from a heart attack within the first two years of the policy, and the insurance company uncovered an incorrect answer related to the insured’s history of diabetes on the application, the claim can still be denied. The point is that the medical history was inaccurate which would have affected the insurance company’s ability to underwrite the policy. Therefore, in the context of a regular life insurance policy, the COVID-19 vaccine would have no additional or added effect on life insurance coverage or benefits.
This is not necessarily the case for other types of life insurance policies such as Accidental Death & Dismemberment policies, Critical/Chronic Illness riders, or Accelerated Death benefits. Next week, we will look at how the COVID-19 vaccine may affect Accidental Death & Dismemberment coverage and benefits.
