- A life insurance policy's 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.
- Guaranteed issue or simplified issue life insurance may have a two-year waiting period before coverage kicks in.
- Compare life insurance online in minutes with Everyday Life Insurance.
Life insurance is a contract between you and the life insurance company, where you pay premiums (monthly or annually) for a payout that your living relatives will receive upon your death, known as the death benefit. Should you die, the insurance company pays the death benefit to your chosen beneficiary.
There are two types of life insurance: permanent life and term life. Both can require a life insurance medical exam as part of the approval process, known as underwriting. Once your insurer approves you for coverage, there are several dates to be mindful of, especially the effective date.
What is the life insurance effective date?
The effective date is the date your life insurance coverage begins. If your effective date is September 1, 2024, and you die before then, your policy will not pay your beneficiaries. If you die after this date, your policy will pay your beneficiaries. Your effective date is often tied to the date of your first monthly premium payment.
Finding and clarifying your policy's effective date
You can find your policy's effective date on your policy statement via a hard copy your insurer sent through the mail or through your insurer's online portal. However, if you have any questions or run into any trouble finding your policy's effective date, contact your insurance company. It should be able to help you find the day your policy goes into effect and any other important dates.
Importance of the effective date
Impact of the effective date on insurance claims
If you pass away before your policy's effective date and your beneficiaries file a claim, they won't receive your death benefit. However, if you have a temporary or another effective policy, your beneficiaries can file a claim and receive coverage.
Impact on premiums and billing cycles
Your insurer will likely require you to pay your premiums by your effective date. If you're on a monthly billing schedule, and your effective date is April 15, your next billing date will be May 15.
The same rule applies to yearly renewals, except your effective date will be in the same month and day the following year instead of the following month. Keep in mind that this is contingent on your insurer setting your effective date as your payment date. However, this date may vary by policy and insurer.
Some companies may require you to pay your bill before the effective date. This can be especially true if the policy was backdated or there is a specific underwriting reason requiring earlier payment.
Changing the effective date
Adjusting life insurance effective dates can be difficult once locked in. As mentioned earlier, backdating your policy for premium savings is one way to alter your policy's effective date. You may also request a change in effective date to align with other policies, but your insurer may not grant this request.
Otherwise, you'll likely have to cancel your policy and apply again. This may require you to go through the underwriting process again.
Precautions and considerations
Ensuring coverage during the application process
If you have no previous life insurance policy in effect, some insurance companies provide conditional or temporary life insurance until the underwriting process is complete.
If you're undergoing underwriting for a traditional life insurance policy and your provider offers temporary coverage in the interim, you might want to consider it so you know you're covered while you wait. You pay the regular premium and if you die during underwriting, your beneficiaries receive your death benefit. It ends once you're approved for full coverage.
Contestability period for life insurance
Most insurance companies have a "contestability" period. The contestability period varies by carrier but is usually one to two years from the effective date. According to AARP, if you die within the first two years of coverage, the insurance company can request your medical history regarding your death.
The contestability period is different from the two-year waiting period for guaranteed issue and simplified issue life insurance policies. If the insurance company discovers that the policyholder lied on the application or failed to disclose important facts, it can invalidate the policy.
Policy expiration date
If you have permanent life insurance, your insurance lasts your lifetime. However, if you have term life insurance, it lasts for a specific time period — 5, 10, 15, 20, or 30 years — and afterward, it must be renewed, which is why it's less expensive than permanent life insurance.
Life insurance comparison site Policygenius recommends applying for a new policy six months before your current policy expiration date to avoid a coverage gap. This gives you enough time to undergo the underwriting process and wait for approval.
Take a look at the expiration dates for a term and permanent life insurance, as well as other important features for both policies.
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Life insurance effective date FAQ
In some cases, yes, the effective date of a life insurance policy can be before the policy is issued. Insurers may backdate policies to secure a lower premium rate based on your younger age, but this depends on the insurer's policies and regulations.
It depends on the life event. If you die before your policy's effective date, your beneficiaries won't receive a death benefit. If your health changes, you must disclose these changes to your insurer, which may lead to underwriting reassessments.
Changes to the effective date are rare and usually require canceling your policy, performing another health questionnaire and medical exam, and obtaining a policy under new terms (which may not always be favorable).
The payment of the first premium often initiates the coverage, aligning closely with the effective date, but specific arrangements vary by insurer and policy.
A life insurance policy typically takes effect once you pay your first monthly premium. For traditional life insurance policies, this can take place four to six weeks after your application. However, policies that do not require medical exams usually have a faster underwriting process, usually two to three weeks after an application is submitted. Some online term life insurance companies even offer same-day approval and coverage.
