When does my life insurance policy actually begin?
UPDATED: Feb 26, 2014
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Asked February 26, 2014
Purchasing life insurance is a process that must be completed before your coverage will begin. Unlike car insurance, where you are covered as soon as the policy is purchased, life insurance requires a medical exam and other information before you will be insured. The process of purchasing a policy could take as much as a month, but your policy will not go into effect right away once you have been accepted.
After you have taken a medical exam and your rates have been adjusted to meet the level of risk you present, there is still a waiting period. To reduce the possibility of fraud on life insurance policies, insurers have instituted a waiting period before the policy becomes effective. This waiting period may be anywhere from 30 to 90 days, depending on the insurance company and the state where you live.
There is also contestability in insurance policies during which the policy can be canceled by either party. For example, the insurance company may decide that you are too high of a risk, or you may discover that you can get cheaper insurance from an online website like this one. In addition to the possibility of canceling the policy, the contestability period can also work in your favor. If there are errors in your application, the policy can only be voided if the insurance company becomes aware of those errors within the specified contestability period.
Some insurers will provide you with temporary coverage while you are waiting on the main policy to go into effect. Temporary life insurance comes at a higher rate, but it can be used during your waiting period, and protect your assets until the primary policy goes into force. If you work in a particularly dangerous field, or feel that your life is in danger, you may be willing to purchase a temporary policy just to be safe.
Answered February 26, 2014 by Anonymous