Creating a Will During the Coronavirus Pandemic
The coronavirus pandemic has completely changed our lives in a very short period of time. Across the country, schools, workplaces and restaurants have been closed until further notice. President Trump has declared a national emergency, and 95% of Americans have been ordered to stay at home. The United States has more than double the confirmed coronavirus cases of any other nation. Hospitalizations and death tolls increase exponentially each day.
The pandemic and its increasingly devastating effect have motivated many to purchase a life insurance policy and establish a will. Some life insurance companies have reported a 50% increase in life insurance applications since February. If you are one of the many Americans considering purchasing a life insurance policy, make sure you understand how you are covered for coronavirus.
There is nothing like a global pandemic to make you reevaluate your own mortality. If the pandemic has motivated you to establish or revise your will, you are not alone. As the coronavirus has rapidly spread across the country, the demand for wills has skyrocketed.
Estate planning lawyers are flooded with calls and emails from clients of all ages as the outbreak worsens. Some online estate-planning platforms reported increases of 143% week-over-week, with an estimated 220% uptick this past week alone.
Why Should I Create a Will?
When establishing a will, you choose who will receive your assets upon your death. Every state has its own statutes that determine how a decedent’s assets will be distributed. It is important to consider the laws and probate process for wills in your state. Experts stress the need for the elderly to have up-to-date wills but are also encouraging parents of all ages to create wills during the pandemic.
Many parents wrongfully assume that if they die their assets would go to their children. In some states, it depends on whether the child is a minor or not. Parents may also use their will to name a guardian for their children in case both parents die.
Asset distributions become even more complicated in mixed families, where there are children and spouses from different marriages or unions. In some states, a percentage of your assets may go to your significant other. In other states, you must be legally married for your partner to receive any of your assets.
When Should I Set Up a Will?
Experts recommend setting up a will as soon as possible and not worrying about creating the “perfect” will. Set up the best document you can, without being paralyzed by indecision. With constant changes taking place in a lifetime, you will likely need to revise it down the line anyway.
What Is the Process of Creating a Will?
The process for establishing a will ranges largely and depends on your specific needs. For some people, establishing a will requires multiple visits to an attorney and large stretches of time in between. The estate planning process will likely be longer if your documents include information regarding powers of attorneys, living wills, health care surrogates or other provisions. The probate laws of all 50 states presume the legitimacy of a will executed under the supervision of an attorney.
For very simple estates, or for people who do not have the financial means to contract a lawyer, there are other options available. There are various online services available, including companies like LegalZoom and Rocket Lawyer. Online will services are especially useful for essential workers during the pandemic who have less time on their hands and are at a higher risk of contracting coronavirus.
In some states, you can remotely execute a will using online tools and services. If you decide to use an online will service, make sure you are working with a reputable provider that understands and complies with your state-specific standards.
It is important to note that although it’s better than having no will at all, an online do-it-yourself will, created without attorney supervision, is more likely to be challenged in probate court. Probate proceedings can be costly, time-consuming and emotionally taxing for your heirs.
How Much Does it Cost to Establish a Will?
The cost of drafting a will largely depends on how detailed your will is and any professionals you contract to assist you in creating it. Estate planning lawyers will typically charge for a flat fee or bill hourly. A flat fee is an established comprehensive fee for all services involved in preparing the will. Hourly billing is dependent on the amount of time the lawyer spends on your will.
Depending on where you live and how complex your will is, a lawyer may charge you anything from hundreds to thousands of dollars to draft or revise a will. An online website like LegalZoom will cost anywhere from $35 for financial power of attorney to $329 for a bundle of estate planning documents plus a telephone consultation with a lawyer.
How Is the Pandemic Changing the Process of Establishing a Will?
It is important to understand that wills are governed by state law. Although lawyers can draft your documents from their remote offices, electronic signatures from various parties may not be recognized as legally valid. Clients and lawyers are doing their best to navigate these legalities during the pandemic. Clients are using video services to contact their lawyers and notaries as a means of practicing social distancing. Obtaining signatures from the required witnesses has become tricky too. Some lawyers are video recording meetings that require witnesses or notaries in order to provide a digital record of signatures.
A large hurdle in the will process during the pandemic is the notarizing process. Often all signing parties must be physically present in the same room when the will is signed in order for the document to be legally valid. In some states, you need two witnesses and a notary to establish a valid will. In other states, you only need only one witness. However, as of March 26, 2020, only the states of Virginia, Texas, Nevada, Michigan, Minnesota, Montana, Ohio, Tennessee, Florida, Idaho, Kentucky, Oklahoma, and North Dakota were fully set up to perform remote notarizations.
Many governors are allowing exceptions to the rigid state laws that surround wills. States that will temporarily authorize remote online notarizations include Alabama, Colorado, Connecticut, Illinois, Iowa, Maryland, New Hampshire, New York, Pennsylvania, Vermont, Washington and Wisconsin. The National Notary Association provides an up-to-date list of states that recognize remote online notarizations during the coronavirus pandemic and additional details about the notarizing process.
What if I Am Already Sick?
If you are already sick, you may want to consider establishing a power of attorney, also known as an agent. You should only name someone as an agent that you fully trust with your most important decisions. You should also provide your agent with detailed descriptions of their responsibilities and copies of all relevant documents.
Your agent will be able to make financial and legal decisions for you on your behalf when you are unable to. A durable power of attorney takes effect immediately. Although an agent is not able to make changes to or establish a will on your behalf, your agent can help with important financial duties should you not be able to perform them. With a durable power of attorney, your agent can perform tasks such as filing taxes and covering premiums for life insurance, which may otherwise lapse.
What Do Traditional Life Insurance Policies Cover?
Standard life insurance policies cover death by any cause, at any time and in any place. The only exception is death by suicide. If you die within the first two years of purchasing your life insurance policy, you will be paid on a “graded death benefit” amount, not for the full amount you are insured.
Traditional life insurance policies are not instant and require careful planning. There are several steps required for getting a traditional life insurance policy, including:
- Completing the application
- Getting a life insurance medical exam
- Sending in medical records
- Verification of information and a review by your life insurance company
Will My Life Insurance Cover Coronavirus?
If you already have life insurance, your coverage includes death by coronavirus while on U.S. soil and abroad. Even if you travel to an area with an outbreak, an active life insurance policy covers death caused by a pandemic.
If you are currently applying for a life insurance policy, you may not be covered for coronavirus. You may also experience a delayed application process or higher premiums while applying for life insurance during a pandemic. It is important to remember that life insurance policies are not active until you have officially signed the proper documentation supplied by the life insurance company and paid your first premium in full.
Can I Get Life Insurance Coverage if I Have Coronavirus?
If you have coronavirus during your application process, you may not be able to obtain life insurance coverage. Some life insurance companies will consider approving your policy on a case-by-case basis. Other insurers will reject your application completely or postpone your offer pending your full recovery.
If you recover but have long-term health consequences as a result of the virus, you could have higher premiums. If you make a full recovery with no long-term health consequences anticipated, your insurance premium should not be much higher than if you never contracted the virus.
It is essential you are honest in your life insurance application process. If you already have active coverage, you must also have been honest during that application process. There is a contestability period, usually in the first two years of your policy, when life insurance companies can investigate misrepresented application materials. If the life insurance company discovers that you were not honest in the application process they can refuse to pay out your death benefits.
The contestability period is the most common time period for your life insurance company to investigate fraudulent information. However, if your life insurance company discovers you lied in your application they can still refuse to pay your death benefits at any time during your policy.
What If I Travelled to a High-Risk Area Before Applying?
You should be honest in your application process about your recent travels. If you have been exposed to, or have contracted coronavirus, you must disclose this information to your life insurance company. Not being honest to your life insurance company may result in invalidation of your policy, or refusal to pay out benefits to your beneficiaries in the event of your death.
Some life insurance companies may not insure you if you have:
- Traveled to China within the last 30 days
- You plan to travel to China
- You have recently traveled to/are planning to travel to high-risk areas, including but not limited to: Italy, Iran, Japan, South Korea, Taiwan and Vietnam
Due to the rapid spread of the coronavirus, you need to verify with each life insurance company that you are applying to that you are covered for both past and future traveling.
How Can I Get Life Insurance Fast or Temporarily?
There are options available for a speedier life insurance policy application. There are life insurance policies available that do not require a medical exam with a decreased underwriting period. There are also limited temporary life insurance policies available for purchase while you are waiting for a traditional life insurance policy to go into effect.
You can get a temporary life insurance policy while waiting to take your medical exam or during the insurance underwriting period. Temporary life insurance policies can act as a bridge between noncoverage and traditional life insurance coverage. You may purchase temporary life insurance to ensure some death benefit is paid out to your beneficiaries if you were to die before your traditional life insurance policy went into effect.
There are also instant life insurance policies that use an algorithm to calculate your policy rate. Instant life insurance policies take about ten minutes from starting the application to receiving a policy offer. You are much more likely to be approved for an instant life insurance policy if you are young and healthy. If you are not approved for the instant policy, you may have to go through the more traditional life insurance process that includes a medical examination.
The best time to begin the life insurance policy application and will writing processes are now. Here are 25 questions you should ask a life insurance company when purchasing a life insurance policy. Enter your zip code below to begin shopping for a life insurance policy that will provide both you and your family peace of mind both during and after this pandemic.
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