For life insurers, Canadians with coronavirus could be too big a risk

Survey of insurance companies reveals varying levels of willingness to cover infected Canadians

For life insurers, Canadians with coronavirus could be too big a risk

As the impact of the Wuhan coronavirus continues to spread across industries and regions, Canadian life insurance companies are struggling to get a handle on the danger it poses — and those who are infected could pay the price.

Citing a new survey of Canadian life insurers conducted by LSM Insurance, the National Post reported that some companies would flat-out deny coverage to applicants who have contracted the disease, while others would consider accepting those who have been certified disease-free under certain conditions.

“It’s not that they think it’s a horrible thing,” Lorne Marr, insurance broker and director of new business for LSM Insurance, told the Post. “It’s not like you have terminal cancer … Insurance is about compiling and analyzing data, and there’s still very, very limited data.”

According to the survey, respondents fell into two broad groups: insurers without a defined approach to deal with coronavirus, and those who could explain exactly under what conditions people with coronavirus can get life insurance.

Among the first group, companies said they would either decline the application, delay it until they have a clearly-defined course of action, or offer only guaranteed-issue life insurance. Such policies, LSM Insurance noted, usually don’t pay claims within one or two years of issuance; aside from not requiring medical screening, they also come with higher premiums and lower payouts, reported the Post.

The second group, meanwhile, said they will offer standard or simplified life insurance policies to those who have been certified coronavirus-free for at least three months, or fully healed and cleared by a physician after being diagnosed.  

While the response might seem harsh for applicants, it’s actually laxer compared to the industry response to SARS before. Speaking to the Post, Marr said that insurers at the time refused to cover anyone who had come down with the virus, adding that it changed eventually for those who made full recoveries.