You're ready. You've decided that it's time to purchase life insurance. A few questions you might be asking: When does my life insurance policy actually begin? How long before life insurance takes effect? These are great questions. Understanding when your life insurance policy starts is important. There are 3 key dates in your life insurance policy that you need to know: Policy Date, Issue Date, and Life Insurance Effective Date.
These dates can be a little confusing – so we're going to explain everything you need to know about when life insurance coverage begins.
Important Life Insurance Policy Dates
There are three important dates that we need to cover. To make things more complicated, life insurance companies often have their own definitions. Don't worry. We're going to make sense of it all. Just make sure to read the language in your policy and the outline of coverage.
Here are the three most important start dates that you need to know:
- Policy Date
- Issue Date
- Effective Date
Let's now look more closely into these dates.
Life Insurance Policy Date
What is the policy date? It is the actual date written on your life insurance policy. It is important because there many important dates linked and begin with it. Your life insurance policy includes a suicide clause, contestability period, premium renewal dates, and grace period expiration dates. These dates are all tied to the policy date.
Life Insurance Issue Date
What is the life insurance issue date ? The issue date is when the insurance company finishes underwriting and approves your life insurance application. The Policy Date and the Issue Date are sometimes the same. However, some life insurance companies will add additional days to your issue date to name a policy date. This allows the life insurance companies some extra time for your policy to be delivered to you.
Life Insurance Effective Date
The life insurance effective date is the most important. It is the actual date that your policy is put in force. It's when the life insurance company will provide coverage. In other words, the life insurance company is contractually liable on the effective date. Life insurance companies typically determine the effective date in the application and policy. Your coverage will not be effective until your policy is delivered and your initial life insurance premium is paid.
Does Life Insurance Start Immediately?
It depends. The date that your life insurance policy takes effect is based on several factors. There are several rules and ways that are used to create your effective date. It's important to remember that life insurance is a legal contract. The law requires that your life insurance application is signed. You also need to pay for the policy with at least 1 month of premium. You're probably thinking, "Ok, but what are the rules that determine the effective date?" Glad you asked!
What determines the effective date of a life insurance policy?
Almost all life insurance applications will state that your coverage will not be effective until you pay your 1st payment and the policy is delivered.
Now it's Quiz Time! Based on these factors, which of the following determines the effective date of a life insurance policy?
- When you pay your premium with your application.
- When you pay your premium after the policy's delivered and accepted.
- When your policy's bought with an employer payroll deduction.
The answer? All of the above!
If your premium was paid when you applied, you'll typically get a conditional receipt. The conditional receipt makes your coverage effective on the date of the application. If you pass underwriting, your coverage will continue on. If you get declined life insurance because you're uninsurable — the conditional receipt is voided and you will not have coverage.
What About Suicide?
Effective dates will be different for a few scenarios. There are suicide clauses and contestability periods in life insurance policies. These periods were made to protect life insurance companies from going bankrupt. If life insurance companies provided day 1 coverage for suicide, they'd be out of business quickly. In order to protect themselves, they put in a 1 – 2 year constestability period.
Make sure to check the laws and regulations of your resident state. Each one can be different in their suicide exclusion time.
What If I die before the effective date?
What if you die somewhere between the application and policy issue date? For example, let's say you applied for life insurance today. It can take anywhere from a day to several months before your application is processed. Life insurance underwriting can take a long time depending on the type of life insurance policy you apply for.
What will happen if you die before the life insurance company completes their underwriting? This is a complex matter and an attorney may need to help you. Here are some common situations that could happen:
- You applied for life insurance and you had a serious health condition. Your health didn't meet the life insurance underwriting rule for the company you applied with. Your life insurance policy would be declined and your beneficiary wouldn't receive a death benefit.
- You applied for life insurance. You were healthy and could meet the company's underwriting rules. A side by side comparison would be made using the effective date to the date of death. If you died before the effective date, your benefit would not be paid.
Sounds scary right? When you apply for life insurance, you're probably think that your coverage is effective on the application date. It isn't – unless you are offered Temporary Life Insurance.
Temporary Life Insurance
Some life insurance companies offer temporary life insurance coverage when you apply. Start and stop dates range by carrier and so do the coverage amounts. Some companies offer up to $500,000 to $1,000,000. This temporary coverage can provide protection during the underwriting process. In other words, a death benefit could be paid if you die sometime between the application and effective date. I'm saying "could" because you still need to pass underwriting and qualify for life insurance.
Temporary coverage is a great option for anyone who is worried about dying during the long underwriting process. It simply provides peace of mind while you wait on the underwriter's decision.
How can I get my policy to start immediately?
The best method is to pay your premium with your policy. Your coverage can begin on the application date when your premium is collected with the application. The fastest way to get your policy is to apply for a term life insurance no medical exam policy.
>Related: If you're interested in getting coverage fast, be sure to read our reviews on the fastest life insurance companies.
Life Insurance Effective Date Questions
Still wondering about when your life insurance coverage begins? Perhaps you're not sure which policy is right for you? Choosing the right policy can be a bit confusing and stressful. Don’t worry – at Life Insurance Blog we’re ready to help.
Our independent life insurance agents are here to help answer all your question. We don't have any sales quotas to meet. We don't try to push you towards any particular company. We have relationships with the best life insurance companies in order to find the right one for you. In fact, we have access to over 60 companies. We have no doubt that we’ll find the best life insurance company for you.
Would you like to receive a free accurate quote based on your specific health, lifestyle and age? We’ll provide you help with quotes as well as the type of policy and amount of insurance you’re needing. You can also get started now with our online life insurance calculator. Give us a call at 888-411-1329 and let's see how we can help. It's toll-free and there are no obligations. We look forward to helping you.