When Does Term Life Insurance Start?
Term life insurance policies follow set dates to determine the amount of payment and coverage you receive. The exact start point for your term insurance will vary depending on the company you’ve purchased insurance from and the specifications in your policy.
Term life insurance has two major starting points to look out for, the policy issue date and the effective coverage date.
Policy Issue Date
The policy issue date refers to the day when the insurance company approves the insurance policy. When it comes to life insurance, the policy issue date will not take place until the company has completed the underwriting process. This can include checking medical databases, contacting medical providers, and conducting a medical examination to determine the state of your health before providing you with a policy.
Underwriting takes time, and it can even be months before the company completes the process. In some cases, the company may not issue the policy. It is best to apply for a life insurance policy while you are still in good health to keep costs low and insure you have coverage when you need it.
Coverage Effective Date
While the policy issue date is when the insurance company approves coverage, the coverage effective date is when the policy goes into effect. This date comes from the terms of your specific life insurance contract. Common determinations of start date are:
- Premium collected with application, where coverage begins on policy application date
- Policies purchased through employer payroll deduction, where coverage begins on the overall account’s effective date
- Premium paid after policy insurance, where coverage begins after the policyholder receives and accepts the policy
Your coverage effective date will set the time when your insurer will pay life insurance benefits in the event of your death. As term life insurance works within a specific range of times (usually ten, twenty, or thirty years), your coverage effective date will also determine the end of your policy and other conversion privileges.
Suicide Contestability Periods
A suicide contestability period applies to all life insurance policies. During the period, the insurance company does not have to pay benefits if the policyholder’s death was the result of intentional self-harm.
In Arizona, the average length of the suicide contestability period is two years. After the two years period has passed, the policy will then cover death through intentional acts. The exact date of the start of this coverage comes from your policy’s coverage effective date.
What Happens If You Die Before the Policy Issue Date?
If you have applied for term life insurance, there is still every chance something could happen to you before the insurer completes the underwriting process and issues the policy. Whether the policy will still cover the death depends on the exact scenario.
If you were not healthy enough to receive approval for the policy, the company would decline the policy and not pay any death benefit. Likewise, if the insurer did approve your policy but death was before the coverage effective date, there would also be no death benefit.
However, if you received approval for your life insurance policy and death occurred within the coverage effective date, your beneficiaries would be able to receive a payout from the insurance policy. Matters of determining life insurance effectiveness can become complicated affairs that require the help of an attorney.