If the policy is backdated to September 14 (the day before the applicant's birthday), he or she can take advantage of lower rates.The disadvantage of life insurance premiums that are backdated is that the individual must pay for coverage as of September 14 in this example.
The person is paying for coverage that didn't officially start until the policy was issued, which is September 30.
In effect, he or she is paying for a couple of weeks worth of premiums and getting no benefit whatsoever.
Here is an example of how backdating can benefit a person who is looking for coverage: A person applies for coverage on September 1.
His or her birthday is September 15 and the insurance policy is approved and issued on September 30.
Life insurance age is determined one of two ways, either by age nearest (which birthday are you closest to), or actual age (your age at your last birthday).
By law you can backdate a life insurance up to 6 months to save age in order to get the lower cost per thousand that pertains to that age.Depending on when the application for coverage was made, the insurance company will assign an age to the applicant.For example, if a person applies for coverage six months or less after his or her birthday, the insurance company may determine that his or her age is one year less than the applicant's chronological age.The company that experiences this loss can either self-insure, meaning that it pays for the loss itself, or can try to purchase a backdated liability insurance policy that will cover the loss.Insurance companies typically don’t offer backdated coverage because the loss has already occurred.When an insurance company receives an application for coverage, it considers several factors when deciding whether to issue a policy and how much to charge in premiums.