When shopping for life insurance, there are several types of policies to consider with varying coverage lengths, including temporary life insurance. This type of coverage can be a good solution while you’re applying for a more long-term plan, whether you’re applying for a permanent plan or experiencing a major life transition.
Temporary life insurance, sometimes called a temporary insurance agreement, is a type of short-term life insurance offered during the life insurance application process. If you pass away before your application is approved, the temporary policy will distribute a death benefit to your beneficiaries. In this article, we’ll explore how temporary life insurance works and review the pros and cons of this type of coverage.
How does temporary life insurance work?
When you’re trying to decide if temporary life insurance is right for you, you’ll want to have a clear understanding of how it works. You can purchase this type of coverage during the life insurance application process. Just like with your base policy, you’ll be asked health and lifestyle questions to determine your eligibility. The death benefit of your temporary policy is typically the same as the amount of coverage you’ve applied for with your base policy, and coverage begins after you’ve submitted your base policy application.
From there, you’ll have temporary coverage until one of these events occurs:
A certain amount of time passes after you file the base policy application, typically 60-90 days
You request a premium refund or terminate your application
You are declined coverage
Your policy is approved and goes into effect
Depending on the policy you choose, you may be eligible for temporary life insurance for a year, while other carriers allow you to have this type of coverage for five years. It’s important to note that this differs from standard term life insurance policies, which have term durations that are usually 10, 15, 20, 25, or 30 years.
What are the pros and cons of temporary life insurance?
Temporary life insurance can be a great solution if you’re looking for coverage during the life insurance application process, but this type of policy has certain limitations and drawbacks. Here’s an overview of the advantages of temporary life insurance:
Affordability: One of the primary advantages of temporary life insurance is its affordability. Since it doesn’t build a cash value over time and you’ll only have coverage for a limited number of months or years, it’s generally less expensive than other types of term life insurance or permanent policies.
Flexibility: Temporary life insurance policies often provide flexibility in terms of policy duration. Policyholders can select a term that aligns with their specific needs, such as the duration of the standard life insurance application process or a major life transition, like moving from one state to another.
Fast approval: Temporary life insurance plans are typically simplified issue life insurance policies, which means you can expect the approval process to happen quickly.
Alternatively, here are some of the drawbacks of choosing temporary life insurance:
Lack of renewal or conversion options: Once the term of the temporary life insurance policy expires, policyholders may not have the option to renew the policy or convert it to a permanent life insurance policy. This is why it’s a popular option during the life insurance application process or for the duration of a brief life transition and not as a replacement for a traditional term or permanent life insurance policy.
No cash value opportunities: Temporary life insurance typically does not accumulate cash value over time. Unlike permanent life insurance policies, which often feature a savings or investment component, temporary life insurance focuses solely on providing a death benefit within the specified term.
Potential coverage limits: Temporary life insurance policies may have coverage limits that could pose a disadvantage for individuals with evolving financial needs. Once the term expires, policyholders may find themselves without coverage.
You can avoid the need for temporary life insurance by applying for instant term life insurance, which is a good option for those under 60 and in generally good health.
Have questions about temporary life insurance? SelectQuote can help.
If you have questions about temporary life insurance, SelectQuote can help. We have nearly 40 years of industry experience helping people find the right life insurance for their needs. In just minutes, our proprietary technology allows us to compare rates from several of the nation’s most trusted carriers, so you feel informed throughout our streamlined shopping process.
Our licensed insurance agents will take the time to learn about your specific priorities and match you with a policy that works best for you so your loved ones can have the protection they deserve.
