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June 10, 2019

Do life insurance policies have a waiting period?

life insurance waiting period

If you’ve been considering life insurance for a while, you may be researching what kind is best for you. After contemplating for a significant amount of time, you may want to reap the benefits of your choice from the day you sign up for your life insurance policy. When looking at policies, be sure to consider the waiting period.

A waiting period is the time between you opening the policy and it actually going into effect. You may have to wait a couple of years before your beneficiaries would be able to get the full benefit of your life insurance. Typically, waiting periods occur because of the lax requirements revolving around health exams and questionnaires. Because the issuer doesn’t know the condition of your health, this reduces their risk of covering you by ensuring you didn’t purchase last minute knowing you were about to pass.1

Some policies do not require a waiting period.

Simplified Issue Life Insurance
Depending on the policy you receive, some simplified issue life insurance do not have waiting periods. This type of insurance usually does not require a medical exam, however it typically requires a health questionnaire. If everything looks good on the health questionnaire, the insurance company may accept you as a client. Because they have an understanding of your health background, insurers feel confident in your medical status, so they give you immediate coverage.2

Term Life Insurance
Some term life insurance policies will most likely require you to both answer detailed health questions and take a medical exam. They need to know your health history to feel comfortable with you being their client. Knowing the risks, they may be more willing to cover you immediately.3

Whole Life Insurance
There are both simplified and fully underwriting whole life insurance products on the market. Many whole life insurance policies undergo medical exams and questionnaires, creating an all-around vision of your health, allowing the insurance company to understand your life expectancy. The low risk you provide for them validates them covering you from the time your policy is set in place.4

There are, however, types of life insurance that do come with a waiting period.

Guaranteed Issue Life Insurance
Typically, those looking at this type of insurance do not have a great enough health condition to be approved by the aforementioned life insurance policies. The insurance company may not require any questions or exams. With that in mind, they do on average have a one-to-two year waiting period. Insurers do this due to the lack of information regarding your health and it helps to reduce their risk of insuring you. If you are to pass during the waiting period, you will not receive your full death benefit, but you will be refunded all the premiums that had been paid up to that point.2

Whether you’re considering a waiting period or not, be sure to search around and speak to local licensed Agents to figure out what type of life insurance policy is best for you.

  1. Waiting Period, Investopedia.com, 2018
  2. Life Insurance No Medical Exam No Waiting Period, Insurancequotes2day.com, 2019
  3. Term Life Insurance: How it Works, Insure.com, 2019
  4. What does fully underwritten mean? Nobleoak.com.au, 2019

Categories: Life Insurance, Term Life Insurance, Whole Life Insurance

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