What Is Temporary Life Insurance?
Life insurance can give you peace of mind, ensuring your loved ones are financially prepared in the event of your loss. But what happens if you apply for coverage and the underwriting process takes several months before it goes into effect?
Temporary life insurance is a form of coverage that is available to you if you are purchasing a long-term life insurance policy. It offers temporary coverage so that if you pass away before your term or permanent life insurance policy is approved, your family will still receive a payout.
This article will discuss how temporary life insurance works, when it’s a good investment, and what it costs.
Key Takeaways
Temporary life insurance is not a policy you can buy a la carte. It is only offered by certain companies if you are already applying for a long-term life insurance policy.
Temporary life insurance offers coverage for the time frame between applying for a policy and your policy going into effect.
The cost of temporary life insurance is based on the quote you received for the long-term policy you applied for.
What Is Temporary Life Insurance?
Temporary life insurance lasts for around 90 days and provides coverage until your life insurance policy kicks in. It is only available if you are already applying for long-term life insurance, and it is not something you can buy on its own.
How Does Temporary Life Insurance Work?
Term life insurance, called a “temporary insurance agreement” or TIA provides you with immediate life insurance coverage. It legally requires your insurance company to payout a life insurance death benefit to your loved ones if you pass away, even if the underwriting process for your long term life insurance has not been complete.
Note: This is not the same as term policies with a fixed expiration or no-exam policies, which go into effect sooner without a medical exam.
Temporary life insurance lasts for around 90 days, providing coverage until your life insurance policy is approved and goes into effect.
If your insurance company offers temporary life insurance, you will be offered this option when you start your application process. You cannot buy this type of product on its own; instead, it’s a way for you to receive interim coverage until your full application has been approved.
- If you agree to it, it will cover the same value as the life insurance policy for which you are applying, generally with a limit of up to 1 million dollars.
- If you agree to it, temporary life insurance will begin immediately and remain in effect until your other policy is approved.
On average, a traditional life insurance policy can take four to eight weeks to be approved.
Temporary life insurance is coverage that applies to the gap between submitting the application and being approved for a long-term policy. If you pass away before your application is approved, your temporary life insurance will provide a payout to your beneficiaries equal to the amount for which you applied.
When Does Temporary Life Insurance Begin?
Temporary life insurance begins immediately once you submit the application and pay the first month’s premium. Your insurance provider will notify you of the start date of the coverage.
Depending on when you submit your application during the week and when the first premium payment is taken, it might be several days before the policy goes into effect. However, it will remain in effect until the underwriting is complete on your long-term life insurance policy.
Read More: How Long Do You Have To Life Insurance Before You Die?
When Does Temporary Life Insurance End?
In general, temporary life insurance ends once your policy is approved and put into effect. However, there are a few circumstances that determine when temporary life insurance ends:
- The set time period passes following your application for life insurance, which is usually 60-90 days.
- Your main life insurance policy is approved and active.
- You terminate the coverage.
- You die by suicide*
- You intentionally provided incorrect information on your original application, which means that the temporary life insurance (and other applications for long-term life insurance) will be canceled.
*Most companies will not pay out a life insurance policy if you die by suicide within the first two years of your policy being enacted.
Should I Buy Temporary Life Insurance?
Temporary life insurance is worth the investment if you want to ensure your family is protected against any financial loss or strain if you pass away before your policy goes into effect.
Temporary insurance does not cost anything more than a single monthly premium payment, even if it takes your insurance company a couple of months to approve your policy. That money, once approved, gets put toward the first premium you owe on your long-term policy, which makes it a sound investment for anyone looking.
Tip: If you need a policy immediately and you don’t want to invest in a long-term policy as well as a temporary life insurance policy, no exam policies skip the medical exam.
How Much Is Temporary Life Insurance?
According to the III, the average monthly premium for life insurance is $165.
Temporary life insurance costs are equivalent to the same premium you would pay for whichever long-term policy you are trying to get. The premium is based on your initial life insurance quote, which includes factors like:
- The type of policy you choose
- Coverage amount
- Riders you add
- Smoker or nonsmoker
- Pre Existing health issues
- Age
- Weight
- Gender
- Career
Tip: If you are considering taking out a policy, quit smoking and lose weight/improve pre-existing health conditions a few months before the medical exam to reduce the cost of premiums.
The tables below offer a quick view of different monthly premiums for temporary life insurance based on facts like a) the insurance policy, b) coverage amount, and c) personal demographics.
No-Exam Average Rates
| Policy coverage | 10-year term | 20-year term | 30-year term |
| $250,000 coverage amount for a female | $11 | $15 | $21 |
| $250,000 coverage amount for a male | $13 | $17 | $25 |
| $500,000 coverage amount for a female | $16 | $25 | $37 |
| $500,000 coverage amount for a male | $19 | $29 | $44 |
| $1 million coverage amount for a female | $24 | $41 | $68 |
| $1 million coverage amount for male | $29 | $50 | $81 |
Whole Life Insurance Rates Payable Until Age 99
Whole life insurance or permanent life insurance remains in effect until death, as long as you pay your premiums.
22% of people choose permanent life insurance policies over term policies so they can build wealth to leave behind for their families.
| Age & Gender | $250,000 coverage amount | $500,000 coverage amount | $1 million coverage amount |
| 25 Year-Old Female | $112 | $213 | $421 |
| 25 Year-Old Male | $123 | $239 | $472 |
| 35 Year-Old Female | $167 | $323 | $641 |
| 35 Year-Old Male | $181 | $357 | $712 |
| 45 Year-Old Female | $257 | $508 | $1,007 |
| 45 Year-Old Male | $283 | $561 | $1,113 |
| 55 Year-Old Female | $419 | $839 | $1,655 |
| 55 Year-Old Male | $466 | $922 | $1,837 |
Term Life Insurance Rates Per Year For A 50-Year-Old Male
Term life insurance provides coverage for a set term. You can choose different coverage amounts and term lengths and, in some cases, have your term policy converted to a permanent or whole policy.
Term life insurance is the most popular form; 48% of Americans have it, and the average coverage amount is $110,000.
| Age / Term | Male Coverage | |||
| Age | Term length | $250,000 | $500,000 | $1 million |
| 30-Year-Old | 10-year term | $13 | $19 | $32 |
| 30-Year-Old | 20-year term | $18 | $27 | $45 |
| 30-Year-Old | 30-year term | $24 | $46 | $76 |
| 40-Year-Old | 10-year term | $16 | $27 | $46 |
| 40-Year-Old | 20-year term | $25 | $43 | $79 |
| 40-Year-Old | 30-year term | $41 | $73 | $132 |
| 50-Year-Old | 10-year term | $32 | $61 | $103 |
| 50-Year-Old | 20-year term | $55 | $101 | $173 |
| 50-Year-Old | 30-year term | $98 | $196 | $302 |
| Age / Term | Female Coverage | |||
| Age | Term length | $250,000 | $500,000 | $1 million |
| 30-Year-Old | 10-year term | $11 | $15 | $26 |
| 30-Year-Old | 20-year term | $14 | $24 | $34 |
| 30-Year-Old | 30-year term | $22 | $38 | $62 |
| 40-Year-Old | 10-year term | $14 | $24 | $37 |
| 40-Year-Old | 20-year term | $19 | $31 | $58 |
| 40-Year-Old | 30-year term | $34 | $57 | $103 |
| 50-Year-Old | 10-year term | $28 | $49 | $89 |
| 50-Year-Old | 20-year term | $44 | $78 | $139 |
| 50-Year-Old | 30-year term | $71 | $147 | $240 |
Where Can I Get Temporary Life Insurance?
You can get temporary life insurance from one of several top life insurance companies, including the following:
- Brighthouse Financial which offers TIA up to $500,000 in coverage
- Lincoln Financial, which offers TIA up to $500,000 in coverage
- Mutual of Omaha, which offers TIA up to $1 million in coverage
- Pacific Life, which offers TIA up to $1 million in coverage
- Prudential which offers TIA up to $1 million in coverage
- Transamerica, which offers TIA up to $1 million in coverage
What Happens To My Temporary Premiums If My Policy Is Not Approved?
The premiums you pay toward your temporary life insurance act as a deposit. After that, one of two things happens:
- Once your regular policy is approved, the payments you make for temporary life insurance are applied to the first month’s premium you owe on your regular policy.
- If your regular policy is denied or you decide not to take it, the initial premium you paid toward your temporary coverage is returned.
Note: If an insurance company denies your policy because of fraud, you may not get the temporary premium returned. This is the only exception.
Alternatives To Temporary Life Insurance
There are several alternatives to temporary life insurance, depending on your needs.
Primary Need: Immediate Coverage
If you need coverage immediately, a popular alternative to temporary life insurance is a no-exam policy. The medical exam is one of the things that can impact how long the underwriting process takes but if you forgo a medical exam with this type of policy, you can have your coverage go into effect much sooner.
No-exam policies expedite the approval process so you can have coverage that goes into effect much sooner but the coverage is more limited and premiums cost more because the insurance company is taking on risk by waiving the medical exam.
Primary Need: More Affordability
If you want something less expensive that offers basic coverage in the event of an emergency, burial insurance is usually only $10,000 to $20,000 in coverage, enough for funeral expenses but nothing else.
According to the National Funeral Directors Association (NFDA), the average cost of a funeral with burial is $7,848, and a funeral with cremation is $6,971.
Primary Need: Short-Term Coverage
Progressive offers a unique option, their Short-Term Life Insurance which offers 1 year of coverage. This policy does not require a medical exam. It offers coverage up to $200,000 and at the end of the 1 year you can buy another 1 year short-term policy, another term policy (minimum 10 years), or a permanent policy.
Primary Need: Term Coverage
Another alternative to temporary life insurance is a traditional term policy. Term policies provide limited coverage for a set length of time, usually divisible by 5 or 10 years, rather than a permanent policy.
According to the III, a 20-year term policy is the most popular.
You can also pick term policies that are renewable or convert them into whole life insurance policies at a certain point.
FAQs
What is a temporary life insurance agreement?
Temporary life insurance is temporary coverage that takes effect from the time your long-term life insurance application begins until your application is approved or denied.
How long does temporary life insurance last?
Temporary life insurance generally lasts one or two months, going into effect from the time the application begins for your long-term life insurance policy and providing coverage throughout the underwriting process until such time as the application is approved, denied, or you cancel.
Sources
⇅- NFDA – Statistics
- Progressive – Short-Term Life Insurance
- Insurance Information Institute – Facts + Statistics: Life Insurance
- Business Insider – The average cost of life insurance by age, gender, and coverage type
