There may be several reasons why a person might wonder whether term life insurance starts immediately. Most of the reasons behind this question suggest that something bad may be about to happen. Why ask how quickly coverage begins if the insured is perfectly healthy and of sound mind?
If this describes your situation get informed about several key concepts regarding term life insurance start dates, suicide contestability periods, and rules governing death during the underwriting process.
- Important policy date definitions
- Suicide contestability periods
- Death before policy issue date
Term Life Insurance Start Date Definitions
Policy start date definitions are the first place to begin answering the question when term life coverage begins. Each insurance company works with different rules, term, and procedures. Read your policy language and outline of coverage carefully for the precise definitions that apply to you. The two most important start dates to define are: policy issue date and coverage effective date
The policy issue date is the day when the insurance company completes its underwriting process and approves the policy for coverage. We will revisit this definition later in the article.
Request a term life insurance quote if you are in a hurry to get your policy started. Determine policy premium costs and benefits.
Coverage Effective Date
The term life insurance coverage effective date is the day that the policy is put in force. This date is important because other policy features key off of this date. The policy anniversary date, contestable suicide periods, conversion privileges, and optional riders may be based on the coverage effective date.
There may be several methods or rules used to establish the coverage effective date. Life insurance is a contract. Contract law requires signed authorization (signed policy application) and consideration (one month of policy premium). Below are three different scenarios:
- Premium collected with application – Coverage begins on policy application date if approved.
- Premium paid after policy issuance – Coverage begins after the policy is delivered and accepted by the policyholder during his or her lifetime and continued insurability.
- Policies purchased through employer payroll deduction – Coverage begins on the account’s coverage effective date.
Of the three alternatives noted above paying the premium at the time of application is the best method for getting your term life insurance policy to start immediately.
Term Life Suicide Contestability Periods
Life insurance companies include suicide contestability periods to protect themselves from intentional acts. Any insurance company that began coverage immediately without suicide contestability period would quickly go out of business. Term life insurance death benefit amounts could be ten thousand times the monthly premium costs – depending upon age.
Coverage for death resulting from intentional acts begins after a one or two-year contestability period. Each state has differing regulations regarding suicide exclusion time frames. Check your policy for details.
If you are thinking of hurting yourself – don’t do it. Think of the loved ones you would leave behind. They value your presence in their lives more than you could ever imagine.
Medical Underwriting Rules and Start Dates
Earlier this article defined the policy issue date. This is the date when the insurance company completes its medical underwriting process and approves the policy. But the process takes time. It could take days, weeks, or months. The underwriting process may involve checking medical databases, contacting doctors and medical providers, and having a nurse come to your home to perform a medical examination.
Many people feel an urgency to purchase term life coverage and have it take effect immediately when their health begins to deteriorate. The best time to buy life insurance is when we are healthy. It is human nature to put things off, but we often wait too long. Not every policy applied for is issued. Also, the applicant’s health can change before the policy is issued.
Death Preceding Policy Issue Date
What happens if the proposed insured dies before the policy issue date? Someone could complete an application for coverage and pass away while the insurance company is still performing its due diligence. This is a complex legal matter that may require an attorney’s assistance. But there are several circumstances that may play out.
If the applicant was not healthy enough to meet the underwriting criteria then the policy would be declined, and no death benefit paid.
If the applicant was healthy enough to meet the underwriting criteria the date of death would be compared to the coverage effective date. If the applicant died before the coverage effective date, the claim would be denied. Please review the definitions above for the three ways of determining the coverage effective date.
In conclusion, if you are in a hurry this is what you need to do. Take out a term life insurance application immediately. Nobody is guaranteed tomorrow. Pay your policy premium at the time of application to get the earliest coverage effective date.
- Life insurance dates
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