If you’ve decided to purchase a life insurance plan, know that your beneficiaries aren’t financially protected when you submit your application. The review and approval process—known as underwriting—will take six weeks or longer. In the meantime, you won’t have coverage—if you don’t buy temporary life insurance.
What Is Temporary Life Insurance?
Temporary life insurance provides very short-term coverage, specifically during the underwriting process when applying for a life insurance policy.
Life Insurance underwriting is the process an insurer uses to ascertain whether you qualify for a policy and, if so, at what price. The insurance company will review your application materials and, if applicable, your life insurance medical exam outcomes:
- The insurer may also need certainly to verify certain records, such as your prescriptions. It will then determine your risk class and your life insurance quote.
- Your insurance company may offer temporary life insurance when you apply for term life or permanent life insurance policy.
- Not everybody qualifies for temporary life insurance. If temporary life insurance emerges is dependent upon this insurer and policy type.
- This temporary insurance shouldn’t be confused with term life insurance, which covers you for a collection period (usually 10 to 30 years).
How Does Temporary Life Insurance Work?
Temporary life insurance provides coverage while waiting for your life insurance application to be approved. If you die before underwriting is complete, your beneficiaries will get a death take advantage of your temporary life insurance policy:
- After you have signed your life insurance application and submitted payment for the temporary life insurance, your temporary coverage kicks in.
- Often, temporary life insurance lasts a maximum of 90 days. Within that timeframe, your temporary coverage will typically end for one of a couple of reasons:
- Your daily life insurance application was approved, and your policy is currently in effect.
- Your daily life insurance application was denied.
- You decided not to proceed with the life insurance application.
- You didn’t answer requests from the insurer information on time.
- The death benefit was paid out under temporary life insurance.
Where Can I Get Temporary Life Insurance?
Temporary life insurance is commonly offered by life insurance companies such as:
- Lincoln Financial
- Mutual of Omaha
- Pacific Life
How Much Does Temporary Life Insurance Cost?
Your insurance company will estimate your temporary life insurance premium based on the coverage amount you are applying for. You’ll be billed for the equivalent of one month’s premium, and once that payment is received, temporary coverage starts.
Remember that some insurers may cap the coverage amount for temporary life insurance, like a maximum of $1,000,000.
When the underwriting process for your policy is complete, you’ll receive the official approval (or rejection), and your premium will be adjusted to reflect the particular cost of your policy.
The payment you created for temporary insurance might be applied toward your first month’s premium.
If your policy isn’t approved, the insurer will generally refund you for the temporary coverage.
Is Temporary Life Insurance Worth It?
Ask your life insurance agent if temporary coverage is available. When it is, locking in temporary life insurance is a smart move because it costs a maximum of your regular life insurance will. And it offers you the satisfaction that insurance is set up as you wait for your application approval.
Alternatives to Temporary Life Insurance
There may be instances when you don’t want or can’t qualify for traditional life insurance but have a wish for short-term life insurance. If you want life insurance for a short period, you may consider buying a renewable term life insurance policy.
Unlike traditional term insurance, which provides level premiums for 10, 20, 30, and 40 years, renewable term life insurance provides coverage for one year. By the end of every year, you can renew the policy at an increased rate each time. Therefore it’s best for people who want to fill a short gap.