Temporary life insurance helps you create an instant estate. It is probably the single greatest unique aspect differentiating investment in life insurance from 401Ks and IRA funds. However, no matter if you use life insurance as an investment (whole life policies), or for simple protection without cash value (term life policies), you should always get a temporary life insurance certificate. After meeting with an agent or broker, you decide to file an application, which must go through an underwriting process. The duration of this process is effected by multiple factors and cannot be estimated in advance.
Reasons for the Temporary Life Insurance Certificate
Getting this certificate provides you temporary coverage for the entire underwriting process. The coverage is conditional to your insurability. This means that if the underwriting process proves you insurable, the death benefit, should something happened to you at this time, will be paid in full. This is crucial! If your medical history later reveals anything to disqualify you from insurability, then any money (binder) paid up to date, will be returned by the insurance company. So, you’re covered instantly and risk nothing. Since you opted for life insurance, there is no reason to wait for your coverage! Underwriting, especially in higher whole life policies, can be a lengthy process.
Another vital reason is locking in your insurability on the day of the app. If you get the temporary life insurance certificate, then your final premiums will be based on your medical condition on the day the certificate is issued. Should your health status change during underwriting, your rating will not be effected. If you’re like most people, you’ve been putting off getting life insurance long enough. Don’t put it off even more.
How to Get the Certificate
It is a simple process. Once you and your broker complete and submit your life app, you simply make a financial binder. You can give your broker a check and he/she will issue the certificate on the spot. Insurance companies have an online form available for its sales reps. Second option is wiring (transferring) money to the the insurance company’s account. You will receive the certificate once your payment is credited to recipient’s account.
How Much Money Do You Need to Pay?
There is no defined amount. Can’t be. At the time of filing an app, you only have estimates of future premiums. The precise amounts will be defined by the underwriting process. The estimated premiums are available in your illustration. You may use that as a guide. Although there is no defined amount, it is smart to pay your first estimated premium due. This way you take care of two things at once. You get a certificate and don’t have to worry about first payment. If for any reason you don’t have that much money available, even a check for $5 will do and you can rest easy that you are insured.