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- Effective Dates for life insurance
the importance of the life insurance effective dates
When exactly does the term life insurance effective begin?
That's a great question with far reaching implications if benefits are
triggered while in the application process.
Let's take a look at effective dates and the other potential clauses that
are common for life insurance policies.
You can always quote the best term rates side by side here:
How the life insurance effective date is determined
To determine the effective date, we need to look at another fancy
insurance term called "offer and acceptance".
Keep in mind that the application and policy itself are contracts between
you and the
life insurance carrier.
With life insurance, offer and acceptance essentially speaks to the fact
that both parties agree to the contract.
The applicant confirms his/her agreement by completing the application
and submitting an initial premium amount.
The carrier, after completing the
life underwriting process, will send formal notice of approval which is
the company's agreement to the contractual terms and obligations of the
specific life insurance policy.
The "offer" is the applicant's submittal of signed and completed
application plus premium.
The "acceptance" occurs when the carrier agrees to the coverage and
issues an approval of the terms. The carrier is accepting the applicant's
"offer".
How Premium Can Affect Effective Date with Life Insurance
What if the applicant submits the application but not premium?
A common question we hear with insurance is why premium needs to be
submitted up front before the carrier makes a decision.
It is precisely due to the offer/acceptance clause of the insurance
contract described above.
Without the premium submittal, there is no "offer".
In this case, the carrier makes the offer if it issues a policy and this
policy is received by the applicant.
"Acceptance" only occurs when the applicant sends the corresponding
premium.
Why is this important in terms of the effective date?
With most carriers, the effective date will not occur until the premium
is received and the carrier may request a statement to confirm the applicant
is in good health before issuing the policy.
If health changes or an applicant passes away while in underwriting,
this difference is critical (understatement).
Due to this, our recommendation is to submit payment up front with
the application to avoid such a situation.
It does happen and you would hate to be a few days short on such a big
deal as life insurance protection.
The Receipt for life insurance and effective date
A receipt is usually generated when the application/payment is
submitted.
Depending on the carrier/plan, this establishes the effective date of
the policy.
If a receipt is not given, the effective date may be pushed out to when
the policy is issued and delivered to the application.
Delivery in many cases constitutes the effective date of the
policy.
This can be manual delivery or in today's world of people
purchasing term life insurance policies online, via emailing and/or
mailing of documents.
It's important to look at your policy of choice and understand how the
carrier establishes effective date.
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term life quote here for access to brochures for feel free to call or
email us with
questions regarding effective dates at 800-710-0455
In some cases, the
term life application may ask the carrier to backdate the effective date
after approval in order to get a younger age and a resulting better rate.
The effective date also affects the contestability clause (period usually
of two years during which the carrier can contest the policy based on
missing information or misrepresentation) and the suicide clause (usually
two years).
These clauses start counting from the assigned effective date.
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!