The effective date is the day your life insurance coverage becomes active. For example, if your policy lists January 1, 2023 as the effective date, it means that if you pass away on or after that date, your insurer will pay the death benefit to your listed beneficiaries.
When does a life insurance policy becomes effective?
A life insurance policy typically becomes effective once your application has been approved, you’ve signed your policy and made your first premium payment.
While it doesn’t take long to apply for life insurance online, it can take five to six weeks to go through underwriting — which is the process insurers use to evaluate your application. After underwriting, you’ll get a final policy decision and have an active life insurance policy.
→ Learn more about how life insurance underwriting works
How do you find the effective date of a policy?
Your life insurance effective date can be found in your policy statement and the online portal for your insurance policy. The actual effective date varies for each policy because it’s the day that you sign your policy papers and pay your first premium.
If your life insurance company handles all policy documentation by mail, it will mail you a new policy document that includes the effective date.
Getting coverage before your effective date
Because there are multiple steps to the life insurance application process, there’s a gap between when you start your application and when your coverage actually kicks in.
If you die during that time — also known as a coverage gap — then your family won’t receive the death benefit. Adding temporary coverage to your policy is one way to avoid going without coverage.
Temporary life insurance coverage
Temporary coverage lasts from the time you either sign your application (or take your medical exam, depending on the insurer) until your effective date. Most insurance companies give you the option to add temporary coverage on your application.
A temporary life insurance policy offers anywhere from $50,000 to $1 million in coverage — maximum amounts vary for each insurer — and ensures your loved ones get some financial support if you pass away before your application is approved.
The cost of temporary coverage is based on the quote you receive when you initially apply for life insurance.
Can an age change impact the effective date?
An age change is another scenario where your coverage technically starts before your effective date. If you pass your birthday or half-birthday during the underwriting process, you may have the option to backdate your life insurance policy by paying an extra monthly premium.
This way, your effective date will begin at the age you were when you applied, as opposed to your current age. Since life insurance premiums increase as you get older, some people choose to pay an extra premium upfront in order to get lowest rate for the rest of their term.
In this scenario, you’re technically paying for time without coverage in order to lock in the lowest rate. Not all life insurance companies allow this, but the insurance agent you’re working with will be able to help you if your age change affects your policy.
What is the life insurance issue date?
Your policy’s issue date is the day that your policy is approved and your insurer offers you coverage. At this point you can choose to accept or reject the policy, but you don’t have coverage yet.
If you die between the issue date and the effective date, your beneficiary won’t receive the death benefit.
The time in between the issue date and effective date can vary, depending on whether you sign the policy immediately or you choose to wait. The amount of time you have to accept or reject the policy depends on the insurance company and your health classification.
People with just one or two minor health conditions may have up to a few months to accept the policy, while people who have more complex health concerns and higher insurance risk may only have 30 days.
→ Learn more about life insurance classifications
How to keep your life insurance policy active
For your life insurance policy to remain active, or in force, you’ll need to continue to make premium payments on time.
There are a few rare caveats, mostly in instances of fraud.. For example, if you lie on your life insurance application and the insurer finds out, it can cancel your policy and invalidate your coverage.
What happens when your policy expires?
You’ll lose your insurance coverage when your policy expires. In other words, if you die after your policy has expired, your family won’t receive a death benefit. Your policy’s expiration date is usually called the term date.
If you still have any financial obligations or dependents on your term date, you’ll need to either renew your existing policy, purchase a new policy to retain coverage, or convert your term life policy into a permanent life insurance policy.
How to shop for a new policy
To avoid a coverage gap, start the application process for a new policy six months before your policy’s expiration date.
This entails repeating the original process over again — you’ll fill out a health questionnaire or take a medical exam, and the insurance company will review your application details over several weeks. Your rates and eligibility for certain policies will likely be different the second time around due to age and health, depending on how long ago you purchased your previous policy.
Your life insurance policy’s effective date is an important detail in your family’s financial plan. If you don’t have an existing policy, ask your life insurance agent about temporary coverage to ensure your loved ones are protected before your policy becomes active.
