Uncovering the Truth: Life Insurers and COVID-19 Death Claims

The Buzz on Social Media

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 from #COVID19? Well, it depends.

Life Insurance Claims Denial

According to the American Council of Life Insurers 2019 Fact Book, 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’t suggest an industry that spends a great deal of time slithering through loopholes to avoid paying legitimate claims. Life insurance claims are rarely denied, says Triple-I chief economist Dr. Steven Weisbart. When they are, it’s 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.

Regulated and Closely Watched

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’t make money by rejecting claims. They make money by underwriting accurately, investing wisely, and – as with any other business – making customers happy enough to recommend them to their friends and family. Unfortunately, many people – including much of the media – simply don’t understand how insurance works: how premiums are set, what types of risks are excluded (or that exclusions are even “a thing”), and how reserves and policyholder surplus work.

In conclusion, while some claims may be denied, such denials are rare and don’t imply nefarious behavior on the part of insurers. It’s important for consumers to understand their policy terms and conditions, and to keep their information up-to-date to avoid any potential issues with claim payments.