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What Is a Life Insurance Waiting Period?

Updated: Oct 7, 2023
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The life insurance waiting period is a set timeframe after you sign up for a policy. Certain benefits of the policy have yet to be active during this time. If the insured individual passes away within this period, the insurance company typically refunds the premiums paid but does not pay out the full death benefit.

Knowing how the waiting period works is important for anyone considering life insurance, as it directly impacts the policy's effectiveness and the financial security it offers to loved ones.

How the Waiting Period in Life Insurance Works

The waiting period in life insurance is a specific period when some benefits are not yet available. It serves as a risk management tool for insurance companies. This mechanism helps insurance companies avoid immediate payouts, especially in cases where the insured might have a known terminal illness or other high-risk factors.

The duration of the waiting period can vary widely and is influenced by several factors:

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    Age of the Policyholder

    Older applicants often encounter longer waiting periods. This is because they are statistically more likely to pass away sooner, posing a higher risk to the insurance company.

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    Type of Policy

    Term life insurance policies usually have shorter waiting periods than whole or universal life policies. Term policies are also more straightforward and less risky for insurers, hence the shorter waiting time.

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    Health Status

    If you have pre-existing medical conditions, you may face an extended waiting period. Insurance companies need time to assess the additional risks associated with your health.

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    Underwriting Process

    Policies that go through a full underwriting process often have shorter waiting periods. This is because the insurance company has a more comprehensive understanding of the risks involved, thanks to medical exams and detailed questionnaires.

What if the Insured Passes Away During the Waiting Period?

Beneficiaries may not receive the full death benefit if the insured individual passes away during the waiting period. Most insurance companies will refund the premiums that have been paid up to that point. Some policies may offer a partial payout, calculated as a percentage of the death benefit, to help cover immediate costs like funeral expenses.

When choosing a policy, it's important to understand that the waiting period is an important feature. It impacts not just the person buying the insurance but also the loved ones who are the intended beneficiaries. It's a key consideration when selecting a life insurance policy.

Types of Waiting Periods in Life Insurance

Various types of waiting periods are commonly found in life insurance policies, and each serves a specific purpose. These waiting periods are designed to protect the financial interests of the insurance company while also providing a structure that allows the insured to understand when their benefits become fully active. Knowing the types of waiting periods can guide you in choosing a policy that best suits your needs.

  • Pending Application Period: This is the time it takes for the insurance company to process your application and either approve or deny it. During this period, you're not yet covered by the policy.

  • Contestability Period: This is a common waiting period that usually lasts for two years after the policy is issued. During this time, the insurance company has the right to investigate any claims made. They can even deny a claim if false information was provided during the application process.

  • Suicide Clause: Most policies have a suicide clause that lasts for two years. If the insured dies of suicide within this period, the policy will not pay out the death benefit, although premiums paid may be refunded.

  • Pre-Existing Condition Waiting Period: If you have known health issues when applying, the insurance company might impose a specific waiting period for such conditions. The length varies by policy and condition, and it dictates when you can receive benefits related to that condition.

  • Death Benefit Period: This is the time between the start date of the policy and when the full death benefit becomes payable. It is often similar to the contestability period but can vary depending on the policy's terms.

How to Navigate Life Insurance Waiting Periods

A proactive approach can make the process more manageable. Here's a step-by-step guide to help you navigate life insurance waiting periods effectively.


Read the Policy Terms

The first step is to read the terms and conditions of your policy thoroughly. Look for sections that detail the waiting periods and what they mean for your coverage.


Consult an Insurance Advisor

Although this step is optional, talking to an insurance advisor can provide personalized guidance on how different waiting periods may affect you. They can also help you compare various policies to find one that best suits your needs.


Compare Policies

Don't settle for the first policy you come across. Take the time to compare different policies, paying close attention to their waiting periods. Some may offer shorter waiting periods but come with higher premiums.


Understand the Implications

Know what happens if the insured passes away during the waiting period. This will help you plan for any financial gaps that may occur during this time.


Check for Exceptions

Some policies may offer exceptions to waiting periods under certain conditions, such as accidental death. Knowing these can provide additional peace of mind.


Review Periodically

Make it a habit to review your policy periodically to ensure it still meets your needs, especially concerning waiting periods.

How to Avoid the Life Insurance Waiting Period

While it's not always possible to entirely avoid a waiting period, there are methods to lessen its duration or impact. Knowing these strategies can help you get the coverage you need more quickly.

  • Accelerated Underwriting: This approach expedites the approval process, potentially shortening the waiting period. Accelerated underwriting uses algorithms and databases to assess risk rather than relying solely on medical exams and lengthy questionnaires.

  • Group Policies: Group life insurance policies are often provided by employers and usually have shorter or no waiting periods. However, the coverage may be less comprehensive than individual policies.

  • Traditional Underwriting: Opting for a policy that undergoes a full underwriting process can sometimes result in shorter or no waiting periods. This is because the insurer gains a more detailed understanding of the risks involved.

  • Immediate Coverage Plans: Some insurance providers offer plans that begin immediately but may come with higher premiums. These are ideal for those who need coverage urgently for specific reasons.

Frequently Asked Questions About the Life Insurance Waiting Period

About Melissa Wylie

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Melissa Wylie is a Content and SEO Manager at MoneyGeek. Melissa has worked in the financial content space since 2018 and has spent much of that time focused on all things small business.

Prior to joining MoneyGeek, Melissa held SEO positions at Bankrate and LendingTree. Melissa’s work has also appeared on LendingTree-owned websites ValuePenguin and MagnifyMoney.

Melissa began her career at American City Business Journals in 2015 as a reporter for the company’s women-focused publication Bizwomen. Melissa has a Bachelor of Arts in Journalism from the University of North Texas. Melissa relies on her foundation in journalism to craft content that simplifies complex financial topics to help everyone feel confident when making decisions with their money.

Melissa's other work can be read on LendingTree and Bizwomen.