Coronavirus: Will life insurance, income protection and critical illness cover pay out?

Many of our clients have long-standing life assurance and insurance policies such as health, critical illness cover and income protection to give them peace of mind in uncertainty. Unfortunately 2020 has proven to be a rather uncertain year in just its first quarter.

Great Britain is now a hot-spot for Covid-19, which has spread to 123 countries from its source in China, according to the World Health Organisation (WHO).

Whilst the press have written extensively on problems connected to travel insurance policies,  there has been little information about protection products, outside the professional press.

We set out below a general overview as to what our clients may encounter from their life companies

Life assurance and critical illness cover

We have reviewed the web pages of several large insurance companies  and there is a fair degree of unanimity over life assurance claims.

In those rare cases (under 2% of those infected) where people die as a result of contracting Coronavirus, their life assurance policy should pay out. There do not appear to have been any measures put in place to speed up the processing or payment of claims.

As far as critical illness cover is concerned, the picture is not as clear

Nearly all insurance companies say that they will not pay out on critical illness cover as a result of coronavirus because it is not a specified illness on their policies and because most people who contract it go on to make a full recovery.

However, policy holders who are left with lasting lung conditions following the illness (again a very small percentage) should be able to make a claim, but this will depend on the wording of the policy.

Income protection insurance

When some businesses  are laying off contractors and putting new contracts on hold, many policy holders are concerned that the policies they bought to see themselves and their families through difficult times will pay them an income.

Some insurers are surreptitiously adjusting what is covered in light of the coronavirus situation, so it is even more essential to check what is covered by a policy and log on to your insurer’s website.

Existing customers who are forced to stop working, perhaps because an employer has laid them off or because they have been told to self-isolate, should claim on any suitable policies as soon as possible.

Income protection insurance, payment protection insurance, mortgage payment protection insurance, or any kind of unemployment cover can take time to process and there may be a waiting period before you qualify.

However, many policies require a minimum of four weeks off before they start paying out, so if you are only out of pocket for two weeks of self-isolation, you may not receive anything.

But as soon as you think you may need to claim, you should act fast to ensure you are at the top of the queue.

We regularly assist clients with the tax implications of their protection products and through our associated Independent Financial Advisors we can have your products reviewed for suitability and resilience.
Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at  or speak with an account manager to get any process started

SRC-Time Ltd
2nd Floor
Stanford Gate
South Road

T: +44 (0) 1273 326 556
F: +44 (0) 1273 733 827

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