What is an Effective Date?
An effective date is the date on which a life insurance policy’s coverage goes into effect. If the insured dies on or after that date, the life insurance company is obligated to pay the death benefit (assuming the policy owner has paid the premiums due).
The dates on a life insurance policy
Life insurance generally comes with two important dates: the issue date and the effective date. The issue date is what it sounds like: the date on which the life insurance company issues your policy once they’ve approved your application.
That doesn’t necessarily mean that your coverage is active, though. You’ll need to wait until the effective date for that. On the effective date, the insurer considers coverage in force. From that date forward (assuming the policy owner continues to pay their premiums), the insurance company will pay out the death benefit when the insured dies.
If you bought permanent life insurance and continue paying your premium, coverage stays active from the effective date on.
If you bought term life insurance and continue paying your premium, coverage starts on the effective date and has the potential to end when the term expires unless you decide to pay the higher premiums necessary to maintain the policy until the final renewable date.
Guaranteed issue life insurance effective dates
Most life insurance policies are medically underwritten, which means that the insured needs to get a medical exam and/or complete a questionnaire before the insurer will issue coverage.
If you have a health condition that would make a life insurer deny your application or you don’t want to be subject to a medical exam, guaranteed issue life insurance is an option. To get this type of life insurance, you only need to be within the specified age bracket.