Life Insurance Information Dictionary

Date of Issue

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The Dictionary of Insurance Terms and Definitions

A policy's date of issue is the date on which the policy is issued to the policy owner.  At this point, the life insurance application is approved by the insurance company and the first premium has been paid; on the date of issue, the company adds the new policy to its business and sends the policy owner the relevant documents.

A life insurance policy's date of issue is in many cases the date on which its coverage goes in force (the effective date), but by no means is it always so.  The date for coverage to start may fall after the policy is issued or even before!  Setting a life insurance policy's effective date earlier than its date of issue is called back dating, and the purpose of back dating is to save money on a long term by documenting a life insurance policy as though it was created prior to the insured's last birthday.

Documenting the start of coverage for a time when the insured was younger decreases the life insurance rates which the policy owner must pay (because it decreases the policy's age basis), but setting the start of coverage for a date before the policy actually existed creates an expense for several months' coverage which, because it is in the past already, is of no value per se.  In general, unless the insured were to die soon, the lower life insurance rates should outweigh the expense of paying the extra months' premiums.

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