Temporary Life Insurance

Temporary life insurance is a short-term coverage, often of 30 to 90 days that is offered during the underwriting process. It offers a death benefit to your beneficiaries if you die during the waiting period until your actual policy is approved, which may take several weeks to complete. In this guide, we’ll explain everything about temporary life insurance, what it is, how it works, cost, potential pros and cons and when it may make sense for you.

Key Takeaways

A temporary life insurance, also called a "Temporary Insurance Agreement," is offered through a conditional receipt or binding receipt.

The cost of temporary life insurance may or may not be the same as the primary coverage.

This short-term coverage is not automatically included, so you must purchase it, but not every insurer may offer it.

Temporary insurance may end when your primary policy is approved and active, denied, or when you withdraw the coverage.

Remember, temporary life insurance is not a stand-alone policy.

What is a Temporary Life Insurance Policy?

Temporary life insurance is short-term interim coverage that bridges the gap during the underwriting process until the primary coverage is approved. Some insurers offer it when you apply for a longer-term policy, whether term or permanent life insurance, and you must pay premiums for the coverage.

If you die during the waiting period between your application and final approval, it can offer financial support to your family with a life insurance payout. Though it is not a long-term solution, it can offer peace of mind, keeping you prepared for life uncertainties that may happen anytime.

Remember, a temporary life insurance policy, comes for a shorter term of a few days, but is different from a short-term life insurance that can be purchased independently.

How Does Temporary Life Insurance Work?

The life insurance application process goes through multiple stages before the final approval. This could be time-consuming and may take several weeks. During this period, temporary life insurance may ensure a continuous coverage to your loved ones. Here’s how it works:

Step 1: Application

You apply for a life insurance policy, and let’s assume it involves a detailed underwriting that may lead to multiple weeks for approval.

Step 2: Premium Payment

Some insurers may offer to provide short-term coverage until the primary coverage is approved. If you choose it, you will need to pay premiums on this temporary coverage. The cost depends on coverage amount and risk factors. Prices may differ from your primary policy.

Step 3: Coverage Begins

If you die during the waiting period (the time between your application and approval), your dependents can claim the death benefit as offered on the temporary life insurance policy.

Step 4: Underwriting Review

While the temporary coverage begins, your application remains under review, and underwriters review your medical records, lifestyle habits, and personal factors like age, gender, and income to approve or decline your coverage request.

How Long Does Temporary Life Insurance Usually Last?

A temporary life insurance policy usually lasts up to 90 days. However, its actual duration depends on various factors. It may end:

If the primary policy is denied during this period
If you cancel your life insurance application.
When your primary coverage becomes active.

What Does Temporary Life Insurance Cover?

Temporary coverage is often similar to the primary policy but may vary depending on the insurance company. Some may offer an equal death benefit for the beneficiaries as the primary quote, while others may cap the coverage to a specific limit.

What’s Covered: Just as what's covered under life insurance policies, temporary policies usually offer coverage for accidental or natural death during the underwriting process, but the terms may again differ based on the insurer. The coverage may also vary based on factors like age, health, and lifestyle habits.
What’s NOT Covered: Exclusions on a life insurance policy apply if you die by suicide, if the insurer identifies false health information on your initial application, or if death is due to participation in illegal activities or a high-risk occupation, as defined in the policy terms.

How Much Does Temporary Life Insurance Cost?

Typically, the cost of a temporary life insurance policy is the same as the original quote. But in some cases, it may differ. At times, the premium for temporary life insurance could be higher than the primary coverage due to a shorter term and high risk. Also, since the underwriting process is still active, the cost for your primary policy may vary if the insurer finds any new information on your application that may impact the risk factor.

Some factors that impact the rates of your coverage are:

Coverage Amount: A higher death benefit for the beneficiaries means a higher premium cost for you.
Age: Young applicants generally get lower quotes in comparison to those who apply later in life.
Health: Your health is a major indicator of how risky it could be to insure you. Thus, the healthier you are, the better the quotes.
Lifestyle: If you smoke or frequently engage in high-risk activities, your premium costs are expected to be higher than others.

When Does Temporary Life Insurance Make Sense?

Temporary life insurance could be a good option if:

You have requested high coverage, and you expect that the insurer may take time to process it.
Your employer-provided life insurance has ended, and you want to maintain financial security until a new individual policy is issued.
You recently took on debt and want continuous coverage until the primary policy is approved in order to cover your obligations.

Temporary life insurance might not be needed if you own multiple insurance policies. Also, a temporary life insurance cannot be applied for separately, It’s only available when you apply for traditional term life insurance or permanent policies.

Pros and Cons of Temporary Life Insurance

A temporary life insurance offers a safety net with continuous coverage until your policy is approved, but it is not a long-term solution and lasts for only up to 90 days. Here are some pros and cons:

Pros of Temporary Life Insurance

You get interim protection during the waiting period of your primary policy.
Your beneficiaries can claim the death benefit if you die, even before your primary policy is active.
It offers a peace of mind and continuous coverage until the primary coverage is active.

Cons of Temporary Life Insurance

It is available only for a limited period of just 30-90 days and ends when the original coverage begins.
It ends immediately if the actual policy is denied due to any reason.
Not all insurers may offer temporary life insurance coverage.

Expert Tip

Are the Benefits of Temporary Life Insurance the Same as Term Life Insurance?

A temporary life insurance does not offer long-term coverage. It is just a bridge to ensure financial security, not a substitute. Though it does offer coverage for your family, it will end if the initial policy is denied. If you need protection for your family and your term application is denied, a guaranteed issue policy could be an option.

Noby Bakshi

Senior Director Life Underwriting

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Is Temporary Life Insurance Worth It?

A temporary life insurance policy offers coverage while you wait for the approval of your primary policy. It can be especially meaningful if you have dependents and major financial obligations. If you die, your beneficiaries can get the death benefit even before the primary policy is approved. It’s worth it for the peace of mind it offers during the life insurance application process.

Not all insurance companies may offer temporary life insurance. It’s good to do research before you apply, whether your insurer offers temporary coverage or not, to ensure continuous financial protection. Having said that, it may not add much value for those who already have multiple life insurance policies.

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FAQs on Temporary Life Insurance

No, a separate medical exam is not required to get temporary life insurance since it’s offered while your longer-term insurance application is in progress. The medical exam requirement will depend on your insurance company and the type of coverage you applied for.

No. Temporary life insurance is not automatically included with every life insurance application, and not all insurers offer it. If offered, you need to pay the initial premiums like a regular policy to keep it active.

Generally the temporary coverage begins after you submit your application, pay the first premium, or when you receive a conditional or binding receipt. The type of receipt issued also impacts the actual start date; with a binding receipt, it starts immediately, but with a conditional receipt, it starts after insurers verify the details and you qualify for the underwriting standards.

If you were to die during the temporary coverage period, your loved ones could still receive the payout, as long as the temporary coverage was active and there were no exclusions or missing information on your application.

Yes. Claims for temporary life insurance can be denied if insurers identify false or misrepresented health information or fraud, or when the cause of death falls under the policy's exclusions, such as driving under the influence or illegal activities. The exclusions may vary across insurers.

Though temporary life insurance offers short-term coverage, it’s not quite the same as a short-term insurance policy. A short-term policy can be purchased to protect against upcoming major life expenses. Temporary life insurance cannot be purchased as a stand-alone policy, it’s only offered when you apply for a traditional term or permanent policy.

A temporary life insurance policy is associated with a permanent policy. There is no provision to convert it. As soon as the primary policy is active, the temporary policy ends.