Today you’re going to learn how temporary life insurance works, how much it costs, is it necessary, and how it may or may not fit into your coverage goals.
Continue reading to learn more about:
- What is temporary life insurance?
- How long does temporary life insurance last?
- How do I qualify for temporary life insurance?
- What is the maximum amount I can get?
- How much will temporary life insurance cost?
What is Temporary Life Insurance?
Let’s start with a temporary life insurance definition. Temporary Life Insurance is a term used to describe coverage provided by the insurance company between the time your application is submitted and your first premium payment when your policy is issued.
If you’ve never purchased life insurance before, you may not be aware of how long the process is. Some fully underwritten polices can take 4-6 weeks after submitting the application. Once you’re finally approved you can then buy your policy and your coverage will begin. In other words, you’re not covered during the application process- just when you buy your policy.
When you first begin the life insurance application process you will be asked if you want to add temporary life insurance. This simply means that the insurance company you’re applying with can give you protection throughout the life insurance underwriting process.
How Long Does Temporary Life Insurance Last?
If you choose to get temporary life insurance you’ll get an additional step called the Temporary Life Insurance Receipt. This will provide you the company’s explanation of coverage as well as when your temporary life insurance begins and ends. Be sure to read the outline of coverage because there are situations where the carrier will and will not pay a claim with temporary life insurance.
When Does Temporary Life Insurance End?
When you request temporary life insurance your coverage will end when any of these 5 situations occur:
- You are denied or declined life insurance.
- Your application is approved and policy is issued.
- A specific day that’s stated on your temporary insurance agreement. Usually this is somewhere between 60 to 90 days after you have applied.
- Five days after you end your proposed life insurance coverage or request a premium refund
- The life insurance carrier can also reserve the right cancel your temporary life insurance during the process at any time.
You also should know that a death benefit may not be paid if you lie about your health that would disqualify you from coverage or if suicide is the cause of death during the temporary life insurance period.
What is a Temporary Life Insurance Agreement (TIA)
Let’s make sure there isn’t any confusion because there are many life insurance terms that sound the same. Another name for temporary life insurance is Temporary Life Insurance Agreement or TIA. Just know that these terms as well as Temporary Life Insurance Receipt all mean the same. They provide you temporary coverage during the application and underwriting process while you wait for the outcome from the life insurance company.
How Do I Qualify For Temporary Life Insurance?
When you apply with temporary life insurance coverage, you’ll need to qualify by answering some basic questions. Some of the more common qualifications require the following:
- Your Age (Usually available up to age 70)
- Basic Medical History Questions
- Basic Current Medical Condition Questions
Temporary life insurance is typically available to you as long as you’re under age 70 and you don’t have any major medical conditions or history.
What is the Maximum Amount of Temporary Coverage?
The maximum amount will vary depending on the life insurance you apply with. There are life insurance companies that provide up to $500,000 in temporary life insurance and others up to $1 million.
How Much Will Temporary Life Insurance Cost?
The life insurance company you apply with will ask you to include the 1st month’s premium with your application. The temporary life insurance cost will be based on your initial quote and doesn’t cost anything more past that single payment.
However, to answer this question correctly, you need to know how the typical life insurance application and purchase process goes down.
- You start with getting quotes from your agent.
- Your quote is based on your health & coverage goals.
- You apply and go through underwriting.
- Your final outcome is determined by the company.
- Final outcomes include: Declined, Approved as Applied, Approved Other as Applied.
- Buy your policy if approved.
If you are approved by the company and you accept their offer, you temporary life insurance check is going to be applied toward your 1st life insurance premium payment.
>>IMPORTANT: The premium payment that you were first quoted may end up being more or less when you’re approved. In order to put your life insurance policy in force, your 1st payment may be modified.
Temporary Life Insurance Case Study
Let’s look at a couple of common examples of adding temporary life insurance.
1. Approved as Applied
John Doe is quoted at $75 per month for a policy based on his age, health and coverage needs. This rate is based on a “Preferred Best” health class. He includes the $75 check with his application. John is approved at “Preferred Best” and his $75 is applied to his 1st month’s premium.
2. Approved Other Than Applied
Now, what if John is approved at a “Standard” health class? Remember that John received his initial $75 quote based on “Preferred Best” rates. John’s rate at “Standard” is $100 per month. John’s $75 would be applied to the 1st month’s premium, but he would have to also need to pay the $25 difference.
Temporary life insurance can provide you peace of mind during the lengthy application process. If you were to die suddenly while waiting for your application to be approved, your temporary life insurance would cover you. Make sure to always and understand the rules stated in your temporary life insurance receipt. It will state when your temporary coverage will begin, end, and what is covered.
We hope you now have a better understanding of temporary life insurance. Be sure to check our posts about No Exam Life Insurance as well as the Fastest Life Insurance Companies if you’re wanting to get coverage fast.
Please contact us if you have any question or would like us to help you compare companies, rates and options. Our agents can help you through every step of the application process, including temporary insurance. You can get started now by comparing life insurance quotes.