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Life Insurance

What are Life Insurance Waiting Periods?

Life insurance waiting periods slow down access to death benefits to survivors after your death. Waiting periods exist for a reason—understanding how waiting periods work helps to set your expectations for death benefits.

Life Insurance Waiting Periods

If you’re preparing to go on a trip or are nervous about dying suddenly and leaving your family without funds, a waiting period for life insurance can be concerning. Does an insurance policy pay a death benefit if you bought the insurance yesterday and died in an accident tomorrow? What if you die from natural causes? These are all fair questions with complicated answers. Read on to find out more if you hope to find life insurance that pays out immediately.  

What Is a Waiting Period for Insurance? 

Generally, a waiting period is a time you must wait before your life insurance covers a claim after your death. If you die during a waiting period, your beneficiaries won’t receive the death benefit defined in the insurance policy. A waiting period may also be known as a qualifying period. 

For example, imagine a plan that has a two-year waiting period. If you die before two years pass, your survivors may not receive the full death benefit but simply a refund of the premiums you paid.  

Why Do Life Insurance Plans Have a Waiting Period?

Life insurance plans have waiting periods to discourage people from committing fraud. This could happen in a few ways. For example, if an individual lies on their application by stating they have no severe health issues but actually has a history of serious medical concerns, such as cardiac arrest. 

Or, a person buys life insurance knowing they’ll die soon of a deadly illness they don’t plan to disclose to the insurer. The insurer needs time to investigate those applying for insurance. Also, insurers hope to discourage people from buying insurance when they know they’re dealing with a terminal illness or committing suicide. 

Types of Life Insurance With a Waiting Period

Life insurance types that may have different waiting periods include: 

  • Group life insurance
  • Term life insurance 
  • Whole life insurance
  • Final expense insurance 
  • Burial insurance 

Life insurance can go by various names. For example, final expense insurance is often a type of whole life insurance. 

How Long Is the Waiting Period for Life Insurance Coverage?

Waiting periods vary by life insurance type. For example, employer-provided life insurance plans usually begin coverage immediately or after a short period of employment. Term and whole life insurance may have a waiting period during the application stage but not after approval. However, some types of whole life insurance, such as final expense coverage, may have a two-year waiting period before you can get the final death benefit.

Ask your insurance agent, “When does life insurance begin?” regarding your coverage and payout.  Ask if there’s a waiting period for your life insurance or specific situations to which the waiting period applies. Then read your life insurance policy to ensure you understand the waiting period. 

Pending Application Waiting Period

How soon does life insurance take effect? Insurers often require waiting periods during the insurance application process. During this time, the insurer reviews your application to weigh your past health history and information and works to figure out whether they can extend an offer to insure you. 

You may be asked to provide your vital statistics, undergo a medical exam, and answer questionnaires about your physical and mental health history. The insurance company will work to verify this information with third parties, such as your physician. This process can take a while. If you die during this period, your survivors won’t receive a death benefit. 

Death Benefit Waiting Period

A death benefit waiting period may be called a “contestability clause” in your life insurance policy. This clause will explain that your insurance company can reject a claim on your death for two years for specific reasons. For example,  if you commit suicide or lied on the application. 

State laws and your particular policy help determine how long the death benefit waiting period lasts and what it excludes—in most cases, no more than two years. However, knowingly lying on an application about a preexisting health condition could lead to the insurer challenging your death benefit even if past two years, as it could constitute fraud. 

What Happens if You Pass Away During the Waiting Period? 

If you pass away during the approval or application waiting period, it’s improbable that the insurer will pay any death benefit to your survivors. Your surviving family members would be responsible for paying for daily living expenses (such as the mortgage) or your funeral, for example. This could create financial hardship, particularly if your death was unexpected—often what people hope to avoid.  

How To Avoid the Waiting Period 

If you pass away during any insurance policy’s waiting period, your family won’t receive any death benefit or other financial support. To avoid this problem, investigate these options: no exam life insurance, accidental death life insurance, and policies offering accelerated underwriting

Look for Companies That Offer Accelerated Underwriting 

When you apply for insurance, the insurer typically uses the information you provide and a medical exam to determine your “insurability.” In short, how risky you might be to the insurer. This process is essential if you’re taking out a large amount of life insurance. Or if you’re a much older and potentially higher-risk individual. The assessment process can extend the waiting period as you wait for the investigation and assessment to wrap up.  

Some insurers waive underwriting requirements for certain applicants, particularly those between ages 18 and 60 and those seeking term life insurance policies between $100,000 and $1 million. Other companies accelerate underwriting by not requiring a medical exam for certain applicants or using other data to assess risk, such as: 

  • Profession 
  • Credit scores
  • Marital status and family size
  • Grocery shopping habits
  • Gym memberships
  • Wearable technology 

Buy No Exam Life Insurance 

No-exam life insurance doesn’t require a medical exam with a physician (as others might). However, this insurance may still ask health-related questions on a questionnaire to determine risks and rates and will likely still undergo underwriting to determine whether you’re a risk the insurer wants to take on. 

A type called “guaranteed acceptance insurance” or “final expense insurance” may or may not even ask health questions. However, these policies almost always have a two-year waiting period, also called a “limited benefit period.” The only death benefit paid during this period could be a refund of your policy payments plus interest. This insurance is usually only offered to certain people and for minimal amounts. For example, a policy might only be available to those between 50 and 85 for no-waiting period insurance amounts up to $25,000. 

Explore Accidental Death Benefits 

If you need an affordable insurance policy without a waiting period, investigate accidental death insurance policies available to you. An accidental death benefit provides your insured sum to loved ones if your death results from a covered accident. This means it won’t pay a death benefit if you pass away from a health condition (like cancer). Accidental death insurance policies may be sold as an add-on to another insurance policy or as a stand-alone policy and are typically very affordable. 

You might find this life insurance with no waiting period through travel insurance companies or to workplace employees or credit union members. Many accidental death policies don’t restrict health conditions or occupations or require a waiting period. However, insurers may limit policy amounts—for example, you might only be able to buy up to $300,000 in insurance—or the policy may only be available for those in a particular age band, such as between 20 and 60.