Insider experts pick the best products and services to help you make smart decisions with your money (here’s how). in some cases we receive a commission from our partners, however our opinions are our own. terms apply to offers listed on this page.
- In a life insurance policy, the effective date is the day your life insurance coverage begins.
- the issue date is when your policy is approved and you can accept or reject it.
- If you have guaranteed issue or simplified issue life insurance, you may have a two-year waiting period before the coverage kicks in.
- policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »
Life insurance is a contract between you and the life insurance company, in which you pay premiums (monthly or annually) for a payment that your living relatives will receive when you die, known as a death benefit. if you die, the insurance company pays the death benefit to the chosen beneficiary.
There are two types of life insurance: permanent life and term life. both may require a medical exam as part of the approval process, known as underwriting. The underwriting process can take four to six weeks, and once you’re approved, you’ll receive a policy. There are several dates to keep in mind once you receive your policy, especially the effective date.
what is the effective date of the life insurance?
The underwriting process is how the insurance company determines your insurability, deciding how much risk you have and what death benefit you qualify for. The insurance company collects information about your health, job, income, finances, and other personal information to determine how much it will insure you and what your premium will be.
The effective date is the date your life insurance coverage begins. If your effective date is September 1, 2021 and you die before that date, your policy will not pay your beneficiaries. if you die after this date, your policy will pay your beneficiaries.
While the effective date is the day your coverage begins, the issue date is the date the policy is issued to you for acceptance. You can accept or reject the policy. If you die between the issue date and the effective date, your beneficiaries will not receive your death benefit unless you have elected temporary coverage.
Some companies offer term life insurance until your application is approved
If you don’t have a previous life insurance policy in force, some insurance companies offer conditional or term life insurance until the underwriting process is complete.
If you’re signing up for a traditional life insurance policy and your provider offers temporary coverage in the interim, you may want to consider it so you know you’re covered while you wait. you pay the regular premium and if you die during enrollment, your beneficiaries receive your death benefit. it ends once you are approved for full coverage.
what is the two-year waiting period?
If you have a guaranteed issue or simplified issue life insurance policy, there is generally a two-year waiting period. Guaranteed issue life insurance is sometimes called “final expense” insurance because the coverage amounts are so low that they basically only cover funeral and burial expenses.
Guaranteed and simplified life insurance policies are life insurance policies without a medical exam. Because there is no medical exam, you are a higher risk to the insurance company. Some insurance companies have a two-year waiting period for these policies.
If you die within the first two years of coverage, the policy will not pay. Therefore, if your effective date is September 1, 2021, your beneficiaries will not receive a death benefit unless you die after September 1, 2023. Check with your insurance provider to see if you have a death benefit period. wait two years.
what is the ‘disputability’ period for life insurance?
Most insurance companies have a “disputability” period. the dispute period varies by carrier, but is generally one to two years from the effective date. According to AARP, if you die within the first two years of coverage, the insurance company may request your medical records regarding your death.
The contest period is different from the two-year waiting period for guaranteed issue and simplified issue life insurance policies. If the policyholder is found to have lied on the application or failed to disclose material facts, the insurance company may invalidate the policy.
policy expiration date
If you have permanent life insurance, your insurance lasts a lifetime. however, if you have term life insurance, it is for a specific length of time (5, 10, 15, 20, or 30 years) and then must be renewed, so it is less expensive than permanent life insurance.
For more information, you can read our guide to life insurance terms and definitions.