An interesting part of the life insurance enrollment process is the securing of temporary life insurance while in process.  Having some type of protection immediately goes a long way towards the peace of mind that you are purchasing through life insurance.  Let's look a little closer at how temporary life insurance works. 

The effective date is an important part of the life insurance enrollment process for many reasons.  Of course the biggest impact is that it dictates when you are actually covered for protection.  Most people may think "What does it matter...now or a few weeks from now".  Unfortunately, we have seen situations where it does matter and the result can be catastrophic especially in light of the fact that the insured person was in process to purchase life insurance.  It's almost depressing in such a situation which is why we recommend our clients to enact the temporary life insurance featured offered by most carriers.  So what's involved?

First, it's different from carrier to carrier but let's look at some common elements of temporary life insurance.  There's usually a quick medical questionnaire to address the more serious health issues that might prevent you from qualifying even for temporary life insurance.  The amounts allowed are usually capped at a certain amount.  It may be less than the full policy that you are applying for or there may just be a hard cap on the amount which you can receive temporary life for.  For example, if you're applying for $1M in life benefit, temporary life may not be available. 

The life policy effective date is usually the signature date on the temporary life insurance application and agreement.  This may be different from the full life insurance application date.  There's also commonly a stop date during which this temporary life exists.  This means that if the stop date is 90 day maximum, the coverage will not extend beyond 90 days after the effective date.  Again, this is meant as a temporary life insurance benefit just to cover you while you're in underwriting for the full policy.  It's not designed to go beyond that point.  It's also not in addition to your underwritten policy and/or other life insurance benefits.   This means they will subtract other policy benefits due to you from the total amount of temporary life insurance for which you apply. 

If you are approved for your fully underwritten life insurance policy, that policy will generally replace the temporary life insurance policy and premiums paid will be applied to the fully insured policy on a pro-rated basis.  Standard clauses such as mis-representation, fraud, and suicide are usually contained in the temporary life application and agreement. 

Payment is an important part of the life insurance contract and temporary life is no different.  Some applicants will submit their completed application but no payment if allowed by the carrier.  This usually means that the proposed insured is not protected during the underwriting process.  The underwriting process can take weeks if not months so we strongly recommend that you submit payment with your life insurance application.  You have at least a 10 day free look period from when the carrier delivers a policy to you to can cancel the policy never effective for a full refund so there's no reason not to.  You never want to be in that situation where the unforeseen happens and you pass away during the underwriting process without the protection of temporary life insurance.  As a good life insurance agent, we can't let you take this un-needed risk.