Understanding Life Insurance Policy Dates

It’s worth understanding the different ”dates” that make up a life insurance policy. There a few subtle rules that govern what you can and cannot do with your policy. We’re going to look at a few specific life insurance dates. Before we start, though, let me say this caution you not expect to any action until after the second date.

Effective date

If you and your policy make it back to your place alone, you can consider that an effective date.

After spending some time with your policy, you may feel as though you’ve made a horrible mistake (it happens). Not to worry, though. There’s no ring on it’s finger. You can drop your existing policy any time you like! Just stop paying premiums, and it will shrivel up and 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

Your policy’s date of issue is the date that it is issued to you. Issue dates are generally synonymous with effective dates.

Maturity date

Good things tend to end… or just become less good until you wish they’d end. So it is with life insurance.

When you and your policy split, though, you may not have to walk away empty-handed. You can at least avoid paying alimony.

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.

Age basis

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.

Age basis itself is not a date, but dates are of concern. Your age basis is the age that the insurer considers you to be. It’s the age that the insurer uses to calculate your cost of insurance. In level premium plans, your advancing age is of no concern, only your age basis at the start of the plan.
In many cases, your age basis is equal to your age. An insurer will increment your age basis either on your birthday or six months before your birthday (so that your age basis is based upon your nearest birthday, not your last birthday).

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