All Life Insurance Tips

When will term life insurance become effective?

Say I get a term life insurance for 20 years and the coverage is $500,000, and I start it today, how long will it take so that when I die, my beneficiary will get the money? Does it varies depending on the insurance company or is there a general effective date?

Public Comments

1. The point of term life insurance is that if you die at any point during the term (in this case, 20 years), the beneficiary gets the full amount of money. There's no effective date. However, term life policies generally require you to answer health and lifestyle questions, and if you die quickly after starting the policy, they may do more of an investigation as to whether you answered those things truthfully (and deny payout if you did not).
2. If it starts today, it's effective if you die tomorrow. But you can't put life insurance in force quite that quickly, most of the time. Keep in mind, no life insurance will cover suicide the first two years, PERIOD. There is such a thing as "conditional acceptance", where it becomes effective right away, AS LONG AS all your answers check out, on the application. Fudge something, though, and they can back out.
3. If you submit the initial payment with your signed application you might have immediate coverage via a Conditional Life Insurance Receipt. However, there are caveats that you must understand and accept. First, is the fact that the coverage is conditional upon approval of the application, completion of underwriting. Some conditional receipts may require the successful outcome of a medical examination. Second, the amount of the conditional coverage is often not 100% of the amount applied for. Third, there may be a time limit on the duration of the conditional coverage. If there are delays in underwriting the conditional coverage may cease before actual coverage goes into effect. There is no standard conditional life insurance receipt so have your agent explain the provisions so that you understand them.