Temporary Life Insurance

Temporary life insurance is a type of coverage that is available while you wait for approval for your life insurance policy. It’s a short-term policy that provides you with benefits in case something happens while you wait for your insurer to complete the underwriting process.

In This Article:

• What Is Temporary Life Insurance?
• Temporary Life Insurance vs. Term Life Policy
• Is a Temporary Life Insurance Policy Different From an Annual Renewable Term Policy?
• How Long Does a Temporary Life Insurance Policy Typically Last?
• What Kind of Benefits Can You Get With a Temporary Life Insurance Policy?
• Do All Life Insurance Policies Come With a Temporary Life Insurance Policy?
• How Do You Know If You’re Getting Temporary Coverage?
• How Much Does a Temporary Life Insurance Policy Cost?
• FAQs
• Conclusion

A life insurance policy is an important asset you should invest in to protect your family. Should you pass away unexpectedly or become unable to meet your family’s financial needs due to an illness or disability, your life insurance policy will help your loved ones cover expenses such as a mortgage, college tuition, or the cost of a burial.

A life insurance policy is an important asset that you should invest in to protect your family and loved ones. If you were to pass away unexpectedly, your life insurance policy will help your loved ones cover expenses such as mortgage payments, college tuition, the cost of a burial as well as much more.

There are different types of life insurance policies available, which can make the process of shopping for life insurance daunting. Let’s take a closer look at temporary life insurance.

What Is Temporary Life Insurance?

Temporary life insurance is a type of coverage that is available while you wait for approval for your life insurance policy. It’s a short-term policy that provides you with benefits in case something happens while you wait for your insurer to complete the underwriting process.

It’s a way of filling a coverage gap if you previously had a life insurance policy via an employer or decided to terminate your coverage with your previous insurer.

The great thing about temporary life insurance is that you can get coverage right away after submitting your application and providing your payment information to your new insurer.

Your temporary life insurance policy will last until the end of the underwriting process. Your insurer will assess your risks during this process and get back to you with a decision and a final price for your policy.

The purpose of a temporary life insurance policy is to protect your loved ones while you wait for the insurer to process your application. Should you die unexpectedly before the insurer approved or rejected your application, your loved ones will receive a death benefit thanks to the temporary policy.

Temporary Life Insurance vs. Term Life Policy

Temporary life insurance and term life policies are two types of policies that remain valid for a specific period. However, there are some important differences to consider.

A term life policy provides you with coverage for 15 to 30 years depending on the policy you choose. You’ll have to go through an application process that typically includes a phone interview and a medical exam before coverage can start.

When your term life policy comes to an end, you can decide to let the coverage go or renew it. Some insurers will also give you the possibility of turning your term life insurance policy into a permanent policy.

While both types of policies are valid for a specific period, a temporary life insurance policy is much shorter. Plus, it’s a type of coverage you can get without completing a medical exam.

However, you won’t be able to renew a temporary policy since this type of coverage will turn into the policy you initially applied for once the insurer makes a decision.

Is a Temporary Life Insurance Policy Different From an Annual Renewable Term Policy?

An annual renewable term life insurance policy is a type of term life coverage that lasts a year. One of the benefits of this type of policy is that the insurer guarantees you’ll be able to renew your coverage for a certain number of years.

An annual renewable policy can be a good option if you need temporary coverage while you look for a new job. However, the insurer will calculate the yearly premium again when the renewal date comes around, which means it can be difficult to predict the future cost of this coverage.

A temporary life insurance policy is different since it provides you with coverage over the span of a few weeks while an insurer reviews your application. If you want more time to shop around for life insurance, it can make sense to purchase an annual policy instead of relying on temporary coverage.

How Long Does a Temporary Life Insurance Policy Typically Last?

The duration of a temporary life insurance policy can vary from one insurer to another. However, in most cases, your coverage will extend until the insurer makes a decision about your application.

You’ll typically get coverage for two to three months. If your insurer approves your application, your temporary policy will come to an end once you receive your final offer and pay your first premium.

If the insurer decides to reject your application, the temporary coverage should end once they share this decision with you. The temporary coverage will also end if you decide to withdraw your application.

Note that the temporary coverage will go into effect once you submit an application. Typically, you’ll have to contact an insurer and share a few details about your medical history and lifestyle to get a quote. You’ll then speak with an agent who will ask more questions.

The next step is to fill out an application and submit it. If the insurer offers temporary life insurance coverage, this policy will go into effect once you send the application.

The insurer will then ask you to complete a medical exam. It’s a short exam during which a healthcare provider will ask questions and screen you for a number of health issues that could affect coverage.

It can take a while to get an appointment and have the insurer review the outcome of this exam. Once you’ve completed this step, the insurer will start underwriting the policy. If something happens to you before you can complete this exam, your loved ones will receive benefits thanks to the temporary policy.

During this process, a specialist will review your application and use advanced methods to assess the risks you represent for the insurer. The underwriter will determine whether the insurer can offer you coverage and what your premiums will be.

Underwriting is a complex process that can take a few weeks. The temporary policy will protect you during the entire duration of this process.

What Kind of Benefits Can You Get With a Temporary Life Insurance Policy?

Most insurers offer temporary coverage for death benefits. A death benefit is a payout that your loved ones will receive if you were to die unexpectedly. Death benefits usually represent seven to ten times your annual income.

The amount of the death benefit will usually reflect the amount you’re applying for. However, some insurers have a limit in place for the temporary policies they offer, which means the death benefit of your term or whole life policy might exceed the coverage you’re getting under the temporary policy.

In most cases, the beneficiaries will receive the death benefit as a one-time payout. You can choose to have this benefit paid out to a person or to your estate, which can be a good option if settling your estate would entail paying creditors.

Whether the benefit goes to a person or to your estate, up to 10,000 CAD will be taxable.

While you can add coverage for chronic or terminal illness when you purchase a life insurance policy, your temporary policy might not necessarily offer this type of benefit. It’s a question you should ask before submitting your application.

Keep in mind that the same limitations that apply to other types of life insurance coverage also apply to temporary life insurance policies.

For instance, if you lie about your health during the application process, the insurer can deny a claim that your temporary policy would have otherwise covered. Under Canadian law, life insurance providers can deny claims if a policy recipient dies by suicide within two years of purchasing coverage, which means that a temporary policy won’t cover death by suicide.

Do All Life Insurance Policies Come With a Temporary Life Insurance Policy?

The answer is no. Not every insurer offers this perk, and you might not get temporary coverage with every type of policy that an insurer offers.

Because the underwriting process is typically shorter for policies with accelerated underwriting or for policies that only cover final expenses, you probably won’t get a temporary policy if you apply for this type of coverage.

The level of coverage you’re applying for can also influence where you’ll get temporary coverage. If you’re applying for one of the premium levels of coverage, the insurer will more than likely include a temporary policy.

However, if you’re opting for a budget-friendly policy with less coverage, it’s unlikely that the insurer will offer temporary coverage.

The good news is that you can usually purchase a temporary policy as an add-on.

How Do You Know If You’re Getting Temporary Coverage?

Not all life insurance policies come with temporary coverage to protect you during the application process. There are two ways of finding out if you’re getting this temporary coverage.

Ask About Temporary Coverage Before Applying

When you shop for life insurance, the first step you’ll take is typically to request a quote from an insurer. You’ll have to share a few details about yourself, your medical history, and the amount of coverage you want.

The insurer will get back to you with a quote and you can decide to go ahead with the application process if the quote makes sense for your budget.

The next step will be to have a representative or salesperson contact you. This person will discuss the policy you applied for in detail and will also answer all your questions.

While it’s important to ask questions about the whole life or term life policy you want to purchase, you should also ask about temporary coverage. The representative will be able to tell you whether you’ll get this type of coverage, how long it will last, and the amount of the death benefit included under this temporary policy.

If the policy you’re applying for doesn’t include temporary coverage, now is a good time to ask if you can purchase a temporary life insurance policy as an add-on and to find out how much it will cost.

Review the Fine Print Before Signing the Application

After you complete the phone interview with an insurance agent, you’ll have to fill out the application. You’ll have to answer a series of questions about your health and your lifestyle.

The application will also include details about the policy you’re applying for. You should read this information to find out more about the amount of coverage you’re getting and what the policy covers.

The fine print should also include information about any temporary coverage. You should read the fine print to find out whether you’re getting temporary coverage, how long this policy will last, and how much it covers.

Don’t hesitate to contact your insurance agent before signing the application to ask questions about anything you read in the fine print.

How Much Does a Temporary Life Insurance Policy Cost?

You might be able to get temporary coverage at no cost if you apply for a premium life insurance product. However, depending on the type of life insurance you’re applying for, there might be a fee for temporary coverage.

The cost of a temporary policy depends on the amount of coverage you’re getting. With the average monthly premiums for life insurance ranging from 34 CAD to 70 CAD, you should expect to pay 68 CAD to 210 CAD for temporary coverage.

FAQs

Here are a few additional things to know about temporary life insurance.

Do you get your money back at the end of the temporary life insurance policy?

The answer is no. Return-of-Premium life insurance is a type of coverage where the insurer gives you a part of your money back when the policy ends. If you pay for temporary life insurance, you won’t get this premium back.

Is temporary life insurance free?

Some insurers will offer temporary coverage as a perk that comes with a premium policy. However, you will have to pay a fee if this type of coverage is optional.

How long does temporary life insurance protect you?

Temporary life insurance policies last two to three months. However, these policies end once the insurer makes a decision about your application, which takes four to six weeks in most cases.

Conclusion

A temporary life insurance policy is a good option if you want to start protecting your loved ones right away. There is no need to get this type of coverage if you currently have a life insurance policy that will end soon or if you’re applying for a product with a short application process.

Everyone else should consider getting temporary coverage since it’s affordable and can keep your loved ones safe should something happen to you before the insurer can process your application. For more information on temporary life insurance you can always contact us or book a call with one of our licensed agents.