The Dates That Make Up A Life Insurance Policy
There are several red-letter days in the life of a life insurance policy
, and you had better understand what they are so that you commit no faux pas. Let's learn what to do about each of these dates.
If you and your policy make it back to your place alone, you can consider that an effective date.
You will probably be surprised to learn what your policy looks like when you're alone with it, but the good news is that even after you've got it to yourself, you're not committed to anything. Sure, by this point, you're financially invested, but that investment only lasts for a single premium payment period. At any time, you can dump your policy. Just stop giving it money, and it will die.
We tend to think of effective dates as those that conclude with both of us completely uncovered, but with life insurance, it's okay to be covered, so long as it's the policy (and nothing else) that's doing the covering.
"Policy date" is synonymous with effective date.
Date of issue
A date of issue is when your policy comes. This should occur on your effective date.
Good things tend to end... or just become less good until you wish they'd end. So it is with life insurance.
Depending on the policy that you've been living under, though, you might get something out of the separation:
If yours is an ROP (return of premium) policy, you'll have all your money refunded to you when you split. If yours is a whole life insurance policy, you'll actually be granted a full death benefit, even though you're still alive. If you were with ordinary term life insurance, though, your cash is gone for good.
Universal life insurance is the only type that is immune to the ravages of age. It can be yours and young and beautiful forever.
The older you get, the more you have to pay for company of the insurance persuasion. After all, no insurance policy wants to be with an enervated, old duffer.
Your age basis is the number used to calculate the price you pay for an effective date, but your age basis may not always coincide with your actual age. Instead of using your most recent birthday, some companies will increment your age basis six months before your birthday so that your age basis actually reflects your nearest birthday.
by: Mark Manderson
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