Potential exceptions

Traditional life insurance policies, such as whole life insurance and term life insurance, are likely to cover COVID-19 deaths, according to representatives from the industry research group LIMRA, State Farm, and Farmers New World Life (part of Farmers Insurance).

There are, however, a few exceptions. An insurer, for example, may deny a claim for a coronavirus death if the policyholder:

• I submitted an application that was incorrect or incomplete. Claims can be denied for a variety of reasons, including failing to disclose travel plans or lying about one's weight or income. If you die within the first two years of coverage, an insurer will usually conduct a more thorough investigation of the claim and initial application. Even after the two-year life insurance contestability period has expired, a company can refuse to pay a claim if false information is discovered on the application. Take your time when filling out an application, be truthful, and ask questions if you don't understand what is being asked.
• Insurance premiums were not paid. If your policy lapses due to nonpayment and you die before it is reinstated, your beneficiary will typically not receive a payout. When a premium payment is late, life insurance companies frequently offer a 30- or 31-day grace period. Your coverage will remain in effect as long as you continue to pay the insurer during this period. During the coronavirus pandemic, insurers may extend this grace period; in fact, some state regulators require it. Contact your insurance company before your premium is due if you are having difficulty making payments. Otherwise, your insurance coverage will be terminated until you apply for reinstatement and your insurer agrees to it. To be eligible for reinstatement, you may need to demonstrate that you are not a risk to insure.
• I only purchased an accidental death policy. Accidental death and dismemberment insurance, or AD&D, is designed to protect you in the event of an accident. It does not pay out if you die as a result of illness or disease. AD&D coverage is sometimes added as a rider to a standard life insurance policy. In that case, the underlying traditional policy would still pay out for a COVID-19-related death.

How to file a life insurance claim

Following the death of a policyholder, the beneficiary must file a life insurance claim by following these steps:

1. Make multiple copies of the death certificate.
2. For claim paperwork, contact the policyholder's agent or the insurance company.
3. Send in the necessary documentation, including a certified copy of the death certificate.

Following the submission of a claim, the beneficiary can usually choose whether to receive payments in a lump sum or in instalments.

Other life insurance policies

People who are employed at the time of their death may have a group term life insurance policy through their employer. When a policyholder dies, the employer usually contacts the beneficiary, but you can also use the process outlined above to file a claim if you know the name of the insurance company.

Survivor benefits may also be available from the Social Security Administration for spouses, minor and disabled children, grandchildren, parents, and ex-spouses.

Visit the Centers for Disease Control and Prevention's website for more information on COVID-19.