Like the banks and the Government, insurers are also offering premium holidays and policy suspension – due to the COVID-19 lockdown. Firstly pole should firstly look at the options around premium holidays rather than first cancelling their policies.
Each insurer has different options in regards to suspending policies to taking premium holidays – after which premiums would need to be paid back. Partners Life have set in place a premium holiday if your income has dropped by 20% or more as a result of the coronavirus lockdown. During this time the benefits would still be kept in place. AIA will allow policy suspension but during this time there will not be any cover. AIA are also allowing premium holidays up to 6 months but the missed premiums will need to be made up at some stage.
The real issue is if people cancelled their life insurance, trauma and critical illness and income protection insurance policies now. Looking forward they will potentially incur exclusions. These could be for their own pre-existing conditions which they could have developed after they took the policy out.
At present no life insurance policies have pandemic exclusions, but this could change. Already Partners Life have removed the mental health benefit in their income protection insurance range for new policies, so a current policy with them already becomes more valuable. At the time of writing they were the first but we expect more insurers will follow suit. Redundancy cover has been removed by most of the insurers at this time.
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