Group Protection & Critical Illness insurance | COVID 19
As the Coronavirus pandemic continues to dominate headlines, our group protection teams have been busy understanding the implications of the virus on the protection markets and what businesses need to consider for their scheme members.
We spoke with Adam Revell, Head of Employee Benefits at Alan Boswell Financial Planners to get answers to some of the frequently asked questions.
Adam, let’s get straight to the tough question. Are group scheme members covered by group life insurance, if they pass away from Covid 19?
Yes, they are 100 percent covered. There’s absolutely no reason why they wouldn’t be. The terms of a death in service scheme is if someone passes away, in the relevant territories, then they’re covered. So, yes, is the answer to that.
What happens if, in an extreme case, a business suffers a number of deaths of members due to the Coronavirus. Is there a limit? Is there a point where it wouldn’t be covered?
“Yes. This is the catastrophic event limit. Within any death-in-service scheme, and this only applies to death-in-service, is a limit on the number of pay-outs that the scheme can have at any one location. Because Coronavirus is deemed to be a catastrophic event, what that means is that they’re effectively putting a cap on the amount that they can pay out to any one business. This will be detailed in individual policy documents because it’ll be relevant to each particular scheme.”
Is it a financial cap or a number of claims cap?
“It is the total sum assured. So it’s not the number of claims. It’s the monetary amount that those claims relate to. So you could have, say, a handful of very high earners, or a larger number of smaller earners and this would get you to the same end result.
“At renewal an insurance company may review those catastrophic event limits in light of the data provided. They won’t review them mid-year. So the only chance that they’ll be altered is at someone’s renewal date.”
Is COVID-19 covered under a critical illness scheme?
“No, it’s not. Coronvirus is not covered under any critical illness scheme or any critical illness policy. But if it leads to a further complication that is covered within an individual or group’s policy schedule, then it will be paid out. So, for example, COVID 19, in isolation is not covered, but if COVID-19 leads to kidney failure, then kidney failure could well be covered within that scheme rules, which means it would be paid out.
“Each scheme will have a marginally different definition of what their critical illnesses are. Some are more comprehensive than others, so it all depends on which illness or complication Coronavirus leads to.”
Will any members of a group income protection scheme be covered if off sick with Covid-19?
“Yes, because the terms of the income protection policy is that you’re incapable of doing your own job through accident or illness. So the answer to that is a very straightforward, yes. After the relevant deferred period, the income protection would kick in.”
If you have any questions on group life or critical illness insurance, whether related to COVID-19 or not, please call our Employee Benefits team on 01603 967967