Insurance: Swine flu surprise

Hundreds of thousands of Canadians could come down with the H1N1 flu this season. If you’re among them, and your brush with the deadly bug motivates you to take out life insurance, get ready for a shock. Insurance companies may treat you like you have the plague.

Lorne Marr, president of LSM Insurance in Markham, Ont., says that insurance companies won’t treat you differently if you have the regular flu, unless you end up in hospital. But underwriters are breaking down H1N1 applicants into three categories: those who currently have the flu, those who had a mild case and recovered, and those who were hospitalized. Those who have it now won’t be considered for coverage until they get better, he says, while those who have recovered from a mild case have to wait two to three months. Those unlucky enough to be hospitalized may not qualify for life insurance for a full year.

Marr’s assessment is based on feedback from insurance industry underwriters. But when contacted by MoneySense, several insurance companies denied having such rules. One spokesperson told me I could qualify for a policy even if I had the swine flu right now.

To check, I called her company’s 1-800 number and asked to take out life insurance. I pretended that I’d recently been released from hospital with a bout with swine flu. After several back and forths with an underwriter, the phone representative said the company wouldn’t consider me until two to three months after a doctor said I was cured. “They want to see some stability before they make a decision,” I was told. “Who knows if you’re more prone to getting it again.” The good news: assuming I did qualify for insurance later, I wouldn’t be penalized for having had H1N1.

To avoid such delays, Marr suggests that if you’ve been thinking about getting life insurance, you may want to do it now, while you’re still healthy. If it’s too late, and you need to get life insurance right after a bout of the swine flu, your only immediate option is a policy that doesn’t require disclosure of any medical information. The premiums on such policies, however, can be awfully steep — usually three times as much as a normal policy.