The COVID-19 crisis is impacting all of our lives, and at SC Insurance, we have been receiving questions about what it means for their own personal insurance.
The following is a review of some of the key areas, and the impact of the current crisis, along with comments or suggestions re what you should be doing to prepare.
Note: As this situation is changing rapidly, please check back for updates and changes to our information as we receive from our carriers and industry partners. Feel free to contact us anytime for clarification. Updated April 27, 2020
Published April 15, 2020, Darren Abrahams shares interesting opportunities related to life insurance and the Coronavirus in this article.
Effective April 6th, 2020 some of Canada’s largest life insurance companies are temporarily relaxing some of their rules to allow Canadians to obtain the coverage they need. For a limited time, people can apply for as much as $2m of life insurance and $250K of Critical Illness without having to meet anyone in person and no medical testing.
What is it? – Life Insurance is a contract that pays a lump sum to a named beneficiary in the event of death. There are many different kinds of policies available, but most fall into one of 2 types – Term (i.e. 10 year, 20 year) or Permanent (Universal Life, Whole Life).
Am I covered? – Life Insurance policies do not have an exclusion for COVID-19. If you should pass away due to COVID-19, your existing life insurance coverage would not be denied due to COVID-19.
Can I still get new coverage? – While there may be limitations on certain amounts of coverage, we still have many solutions to provide as much as $2m or more of coverage without a medical, and from the comfort and safety of your own home. Guaranteed-issue products are still available at this time.
Tips & Considerations – This is an ideal time to review your existing coverage amounts, pricing, and even review beneficiaries to be sure everything is up-to-date. Contact us for your own personal review.
What is it? – Long-Term-Disability (LTD) is coverage that replaces your income if you are unable to work due to accident or illness. There is usually a waiting period of 90 or 120 days before benefits are paid out. Benefits are typically paid on a monthly basis, up to max age 65.
Am I Covered? – If you are actively covered by an LTD policy, and you are unable to work beyond the waiting period due to the symptoms associated with having COVID-19, then you should be eligible to submit a claim under most policies.
Can I still get new coverage? – For the time being, if you are actively working and anticipate maintaining stable income, this coverage may be available. But the insurers’ position on this is constantly changing, and could make it difficult to obtain these policies at this time.
Tips & Considerations – This is an area that is constantly changing, and you may wish to review your current coverage with us. For example, if you have coverage through a group benefit plan, and are on temporary layoff, your disability coverage may not cover you during this period of time.
Critical Illness Insurance
What is it? – These policies cover a list of serious conditions, such as Cancer, Heart Attack, Stroke, and many more. The benefit is paid out as a lump sum, whether you are working or not.
Am I covered? – Policies have a set of covered conditions, and COVID-19 is not one of the listed conditions.
Can I still get new coverage? – At the time of writing, this coverage is still available from most insurers in Canada. We have solutions to allow you to obtain coverage via electronic application, and some policies available without medical underwriting.
Tips & Considerations – We believe that this product should be included in most people’s personal financial plans. And with some of the potential challenges re LTD eligibility during this period, we believe this is a powerful solution to protect families from the financial impact of dealing with a serious illness.
Health Insurance – Group Plans
Effective April 17th, 2020 some of Canada’s largest life insurance companies are offering premium credits for April/May 2020 and ongoing on a month to month basis. Contact us to find out if your plan is eligible for these credits.
Most employee benefit plans include the following benefits:
- Life Insurance
- Accidental Death & Dismemberment
- Extended Health Care
- Dental Care
Many plans also include:
- Long Term Disability (LTD)
- Critical Illness
- Health Spending Accounts & Wellness Accounts
- Employee Assistance Plans (EAP)
- Virtual Medical Care
Am I covered? – As long as you are actively employed, your coverage should not be impacted, and coverage for COVID-related claims should be eligible. There are restrictions re travel insurance, which are constantly changing. You should look to take advantage of any EAPs, or if your plan has Virtual Medical Care, you can consult with a nurse or Dr from the comfort of your home.
Can I still get new coverage? – Companies looking for new or competitive plans can still obtain new coverage. Plans are available for companies with as few as 1 or 2 employees.
Tips & Considerations – Anyone who is losing Benefits due to layoff, termination or any other reason is eligible for a Conversion Health Plan. You must apply within 60 days of losing your group plan coverage.
If you are on temporary layoff, and concerned that LTD coverage may not be extended during this period, there are other solutions to help protect you and your family. One example is critical illness protection (below), or you may also be eligible to convert elements of your previous coverage.
Strategies to Reduce Premiums for Business Owners – For a limited period, some carriers are allowing group plans to pause their Dental Care coverage, just for a short period, while Dental clinics are closed. Most plans have coverage for Accidental Dental under the Health Care Portion of their plan, and can use Cost Plus or Health Care Spending Accounts for Emergency Dental Care that may not be covered in the interim.
Health Insurance – Individual Plans
There are 3 types of plans that are available for those without employee benefit coverage:
- Conversion Plans: for those who lost group coverage within 60 days.
- Traditional Plans: Available with limited or no medical questions.
- Independent Contractor Plan: unique solution custom-tailored for contract workers.
Am I covered? – Existing Plans should not be impacted, and coverage for COVID-related claims should be eligible. There are restrictions re travel insurance, which are constantly changing.
Can I still get new coverage? – All 3 types of individual plans are currently still available.
Tips & Considerations – Whether you lost group benefit coverage, or are not eligible for group plans, there are solutions available for everyone. Independent Contractors have historically not been eligible for benefit plans. Our custom-tailored solution is available for those working on a contract basis. No medical questions, and comprehensive options including Health, Dental, Life, CI, LTD and more. If you are self-employed, or own your own business, we have solutions tailored for you.
Am I covered? – Currently Canada has imposed a ban on all non-essential travel. This means you may not leave the country until further notice unless otherwise authorized to do so. If you are currently out of the country and purchased travel insurance prior to the Canadian travel ban, your coverage will still respond to claims. We highly recommend that no Canadian travel outside of Canada until the travel ban has lifted and the borders re-open. Travel insurance is subject to change without notice, so anyone outside of Canada currently is recommended to return home as soon as possible.
Can I still get new coverage? – Travel Insurance is no longer available for COVID-19, but if you must leave the country, you can get coverage for other illnesses or accidents. If you are currently out of the country and need an extension to your current travel plan there may be options available. Your first contact should be your current travel insurance provider, either under a group or individual plan. Visitors to Canada can apply for emergency medical coverage however if they are in Canada currently there is a 48-hour waiting period for sickness. There is no coverage for COVID-19 or pre-existing conditions if unstable 180 days prior to your visit. Accident is covered at time of purchase.
Tips & Considerations – You should avoid all travel until further notice and as directed by the Canadian Government. If you find yourself out of the country currently and need an extension on your group plan or individual travel insurance, it is best to contact our office or your carrier to discuss options for coverage extensions.
Retirement Income Programs
What has changed as a result of COVID-19?
The Government announced a set of economic measures as part of the Government of Canada’s COVID-19 Economic Response Plan. That statement included proposed changes to the calculation of the 2020 required RRIF minimum withdrawal for registered retirement income funds (RRIF).
The RRIF minimum amount that must be withdrawn will be reduced by 25% for 2020. For example, if the 2020 RRIF minimum amount would have been $10,000, the reduced RRIF minimum amount will be $7,500.
There are no provisions to allow clients to recontribute amounts already withdrawn.
Can I still invest in these products?
Yes. While we don’t recommend making drastic decisions as a result of market fluctuations, times like these point to the value of having guaranteed investments. Many of the insured solutions we provide offer guaranteed income, regardless of market conditions. As of the time of this writing, these plans are still available for new clients and new deposits.