Life is unpredictable. When tragedy strikes, your life insurance policy protects your family from financial disaster. But what happens if you die during the life insurance application process or while you’re between plans? Temporary life insurance policies can put your mind at ease by filling gaps in your coverage.
While term life insurance policies also provide coverage for a fixed period, temporary life insurance is distinct, as it’s specifically designed to protect your beneficiaries during underwriting, the process by which insurers review your application and make decisions regarding your coverage. Temporary life insurance coverage could provide you and your loved ones with an extra layer of reassurance when needed most.
What is temporary life insurance?
After you submit your life insurance application, it can typically take an insurance provider between six to eight weeks to review all your materials and make a final offer. However, your life insurance policy isn’t active until you pay your first premium. Many providers address this issue by offering temporary life insurance, also known as a temporary insurance agreement (TIA), to protect your beneficiaries during the application and review process. As long as the death benefit you have applied for is lower than $1,000,000, temporary life insurance typically provides the same amount of coverage.
Some providers, like Fidelity Life, offer policies with same-day coverage, even if you need to complete a medical exam. These plans eliminate the coverage gap, providing immediate security. If you have applied for one of these plans, you won’t need to buy temporary life insurance.
Are temporary life insurance and short-term life insurance the same?
Temporary life insurance is distinct from short-term life insurance, though it’s easy to confuse the two. Temporary life insurance bridges the period between application and approval or denial. Short-term life insurance usually offers coverage for a year to address longer gaps in insurance coverage.
For example, you might consider short-term coverage if you’re between jobs and unsure whether you will receive life insurance through your next employer or what your income will look like. Short-term policies are also a good option for young people who value flexibility, as they can be renewed on a yearly basis.
Short-term life insurance policies provide smaller death benefits than temporary life insurance policies. Short-term death benefits are usually capped at around $200,000, but monthly premiums are often in the single digits. Fidelity Life’s RAPIDecision Life One is one example of a short-term coverage policy. For as little as $7 per month, individuals receive coverage worth between $50,000 and $200,000, depending on their needs.
When might someone need a temporary life insurance policy?
Temporary life insurance addresses a very specific yet common need. It provides coverage from the moment you begin the life insurance application process. Temporary policies end when your new policy takes effect, when you are denied coverage, or after a fixed number of days, usually between 60 and 90, have passed since you’ve submitted your application.
Many major insurance providers offer temporary insurance policies. To provide your loved ones with this added protection, ask your insurance provider about temporary coverage early in the application process for your intended plan.
Everyone could benefit from this supplementary coverage, but it may be particularly useful if you work in a high-risk field. Furthermore, suppose you must delay your medical exam due to an outbreak of COVID-19. In that case, temporary life insurance can provide coverage until the surge or infection subsides and you can complete your medical exam. Some individuals do not qualify for temporary life insurance due to a medical condition, even if that condition does not preclude them from life insurance altogether. A trusted agent can help you navigate these nuances.
How much does temporary life insurance cost?
While prices differ across insurance companies, temporary life insurance premiums are typically included in the life insurance quote an individual has initially received for their desired policy. Actual life insurance premiums may differ from the initial quote and therefore may be higher or lower than temporary life insurance premiums.
In some cases, the payments you’ve made on your temporary life insurance plan are applied to your actual policy’s premiums after approval. On the other hand, if an insurer declines your application for life insurance after you have already paid into temporary coverage, your monthly premiums may be refunded. Make sure your insurance provider walks you through these possibilities.
Short-term life insurance from Fidelity Life
Temporary life insurance is useful but may not always be the best option for your circumstances. For example, if you’re concerned about the timeframe to complete a medical exam or your priority is obtaining full coverage immediately, a term policy might better suit your specific needs.
If affordable, flexible coverage is your goal, Fidelity Life’s short-term coverage, RAPIDecision® Life One, offered in partnership with Progressive, might be a better fit. This plan provides immediate coverage with no gaps, flexible terms, and ample coverage. After a year, the insured can choose to renew the plan or let it lapse. This policy is beneficial for people who want to take some time to explore life insurance plans and learn more about the product.
A licensed insurance agent can help determine whether a short-term life insurance policy suits your family’s needs. No matter your circumstances, Fidelity Life can help you provide the financial security your loved ones need.
