Insurers are pulling income protection insurance due to the coronavirus outbreak – and some are looking for ways NOT to pay out if you get sick
- Insurers pull out of the income protection market as coronavirus spreads
- Those still offering it reportedly planning to introduce coronavirus exclusions
- This means new policyholders won’t get a payout if they fall sick with the virus
- Coronavirus symptoms: what are they and should you see a doctor?
Insurers have started to pull their income protection insurance products in the wake of the coronavirus outbreak.
Income protection is a type of insurance designed to pay you a regular income if you can’t earn due to an illness or injury. Most policies are designed to keep paying out until you retire or are fit enough to return to work.
But insurers have already started to stop selling this type of cover as the coronavirus pandemic continues to accelerate.
And while existing policyholders won’t be affected, insurers that haven’t yet stopped selling income protection are looking at ways to include ‘cornavirus exclusions’ in their new policies.
Income Protection insurers are introducing exclusions for new policies so that they won’t have to pay out if their policyholder cannot work to falling ill with the coronavirus (stock photo)
This means they won’t have to pay out if their policyholders fall sick and can’t work because of the virus.
In response price comparison sites have already stopped listing this type of insurance.
Anna McEntee, director of insurance at Compare the Market, said: ‘Due to the outbreak of coronavirus, some income protection insurance providers have decided to stop offering insurance or are reviewing the basis on which they will offer it, with the potential for coronavirus related exclusions to be introduced.
‘In order to protect our customers we have therefore decided to temporarily stop offering income protection quotes via our website during this period of uncertainty.
‘We will resume income protection comparison as soon as we can be sure that the prices presented will meet the needs and expectations of our customers.
‘We will be informed by government advice and continue to work closely with our insurance partners on this issue. Other life insurance products are not impacted.’
This is Money has also received reports that insurers are starting to pull their Mortgage Payment Protection Insurance.
This type of cover is supposed to protect you if you are unable to pay your mortgage due to illness or redundancy.
Insurers have come under fire in recent days after it was revealed that most businesses would not be covered by their insurance if the government ordered them to close.
What are the different types of protection insurance and will they pay out?
The main protection insurance policies that people take out tend to be life insurance, critical illness cover and income protection.
When it comes to income protection, existing policyholders will need to check with their provider to see if they will be covered in the event that they cannot work to due falling ill with the coronavirus.
However the Association of British Insurers has said the majority of policies won’t pay out to those self-isolating.
For example, if a member of your household is unwell and you follow the Government’s advice by self-isolating, your policy won’t cover you.
If you’re taking out a new policy it’s now unlikely that you will be covered if you fall ill with coronavirus.
Critical illness cover offers a payout on the diagnosis of a particular illness. If you have a critical illness policy, it’s unlikely to cover coronavirus. Again, check your policy wording or ask your insurer if you need clarification.
Life insurance pays out when you die. There are a few different types – level term insurance, which offers a set payout for a set period of time, decreasing term insurance, which covers you with a declining sum for a set period of time, and whole of life cover, which pays out a set sum whenever you die.
Life insurance won’t pay out automatically – a claim has to be made by the policyholder’s dependents once they pass away.
In the unlikely event that a policyholder were to pass away due to coronavirus, insurers such as Zurich have said that it is likely they will pay out.