Term life
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- Backdating Effective Dates for
life insurance
backdating life insurance effective dates
The effective date is an important of any
term life insurance policy.
It can affect the price you will pay and more
importantly, how soon you will actually be covered.
In most cases, this may not
matter but occasionally, it makes all the difference if the applicant passes
away shortly after completing the application.
In some cases,
life insurance companies will allow backdating this date.
Let's look a
little closer at how this works.
Backdating has been in the news but only referring to the scandalous behavior
regarding insider stock purchases.
The type of backdating we're discussing
involves your
life insurance effective date and no such stigma.
Essentially, some carriers
may allow you to backdate your effective date.
First, what is it and what's the
impact of doing this?
What is backdating an effective date for life insurance?
Backdating is where a insurance carrier allows the applicant to apply a
different effective date than the actual application date.
State laws usually do
not allow backdating more than 6 months prior to the application date.
With that
fact, if the carrier allows backdating, roughly half of the applicants may
benefit from such a move during the calendar year.
There's usually a spot right
on the
term life insurance application to request such an action.
As with all
issues regarding the technicalities of term life options, we recommend that you
run your situation through us as licensed life insurance agents to make sure
it's the right move.
As Expert Life
Insurance Advisors, we're here to help at 800-710-0455 or by
email.
You can also run your instant term life quote here:
Backdating to get a better rate
The biggest issue may be the
term life insurance rate that you are charged.
A big factor that drives life
insurance cost is your age at the time of enrollment.
In our term life and age
effect article, we go in detail as to how important age is in determining your
final rate.
It might be the biggest consideration which is the premier reason
not to wait.
Backdating might allow an applicant to qualify under a younger age and
consequently, a lower rate.
For example, let's say a person is 39 and 9 months old and the carrier is
applying the nearest age approach to designating his/her life insurance
premiums.
If we go based solely on his application date, the rate will be based
on age 40.
If the carrier allows the applicant to backdate 3 months, the new
rate would be based on age 39.
This can add us to real money when you figure
that the term life policy may be active for years if not decades.
Most
life carriers have either minimum or maximum allowable age ranges.
Backdating may allow a person who wouldn't qualify based on these ranges to now
be eligible for term life.
If the maximum age to be eligible for life coverage
is 80 and you are 79 and 8 months, backdating would allow you to qualify if you
go back 3 months assuming the rating is based on nearest age.
Other considerations for backdating effective date of life policy
Is there a downside?
The term life applicant will need to pay for the
preceding time...essentially time that has already passed (obviously without any
issues).
So you need to weigh this lost premium versus the savings over the life
of the term life policy.
Again, we would be happy to help here. At no cost to you!
Of course we're happy to help you find the best rate and option for YOUR
health status:
Again, there is absolutely no cost to you for our services. Call
800-710-0455 Today!