How does backdated life insurance work?

You may not realize how important your age is to the cost of your life insurance premiums until you’re buying a policy. You may find that signing up three months prior would have saved you considerably. Thankfully, your insurer probably offers backdated insurance — a chance to go back in time up to six months and get the best premium available to you.

But backdating your policy isn’t free, and you’ll need to do some quick calculations to make sure what you’ll save is worth more than the cost to backdate.

What is backdated life insurance?

Insurers may let you backdate your life insurance policy up to six months if doing so will give you a lower premium.

For example, if you purchase life insurance before age 40, your premiums are less than after you turn 40. So, for the lower premium, you may choose to “backdate” by paying for the months between when you actually sign up and when you were 39.

Is backdated life insurance legal?

Yes, backdating a life insurance policy is perfectly legal as long as the person you’re creating the policy for is still alive. Insurance exists so that you have coverage in place in case anything happens. Legally, you must have an already established policy before an incident for it to be covered.

Why do insurance companies allow backdating?

There’s no risk to the company if you backdate your policy. Unlike with home insurance, where backdating could mean that it would have to cover damage that happened within the backdated months, with life insurance, there’s no risk of having to pay out on a claim for that time. Instead, it’s an opportunity to collect months of premiums from before you signed up, while only losing a small percentage in your age-related discount over the life of the policy.

When you might need backdated life insurance

The most important factor in deciding if a backdated policy is right for you is how much you’ll save. For example, John is 39 years and nine months old and holds a rate at $115 for his monthly life insurance premium.

If he signed up three months prior, he could have paid a monthly premium of $100. In order to get the discount, he would need to pay three months in premiums to backdate his policy.

In this example, he’s paying $300 to save $15 per month, which may seem like a lot. But he’ll break even in 20 months. And, if he lives to be 80, he’ll have saved $7,200 on his life insurance premiums over his lifetime.

But if his savings would only be $5 per month, he may want to reconsider. In that scenario, it would take him five years just to make up the difference, and paying $300 up front to save $2,400 over the span of 40 years, may not seem worth it.

Get a backdated life insurance policy

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Name	Product	Issue age	Minimum Coverage	Maximum Coverage	Term Lengths	Medical Exam Required
Prudential		18 - 75 years old	$100,000	$10,000,000	10, 15, 20, 30 years	Yes	Customize your term life insurance with a long list of life and disability riders. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Transamerica		18 - 75 years old	$25,000	$10,000,000	10, 15, 20, 25, 30 years	Depends on policy	Purchase a policy worth anywhere from $25,000 to $10 million, with the option to skip the medical exam. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
MassMutual		18 - 80 years old	$2,000	$10,000,000	10, 15, 20, 25, 30 years	Depends on policy	Purchase term life insurance up to age 80 with Finder's #1 ranked company. Get a free quote from this A+ rated insurer on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
AIG		20 - 85 years old	$5,000	$2,000,000	10, 15, 20, 25, 30, 35 years	Yes	Buy term life insurance all the way up to age 85, and choose a policy that lasts up to an incredible 35 years. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
John Hancock		18 - 65 years old	$25,000	$1,000,000	10, 15, 20 years	Depends on policy	Score a low rate on term life insurance with discounts and rewards for your healthy habits. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Guardian		18 - 75 years old	$250,000	$5,000,000	10, 15, 20, 30 years	Depends on policy	Buy a policy with a generous death benefit and one of the longest lists of unique riders. Get a free quote from this top brand on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Lincoln Financial Group		18 - 80 years old	$100,000	$1,000,000	10, 15, 20, 30 years	Depends on policy	Dress up your term life coverage with a wide range of riders and buy a policy up to age 80. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Pacific Life		18 - 65 years old	$50,000	$1,000,000	10, 15, 20, 25, 30 years	Depends on policy	Buy term life insurance in $50,000 increments to perfectly fit your needs and budget. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Brighthouse		18 - 75 years old	$1,000,000	N/A	1, 5, 10, 20, 30 years	Yes	Protect your family with up to $1 million in term life insurance with optional long-term care coverage. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Principal		20 - 65 years old	$200,000	$5,000,000	10, 15, 20, 30 years	Yes	Apply for term life insurance online and get quotes and approval in 48 hours. Get a free quote from this top company on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Mutual of Omaha		18 - 68 years old	$2,000	$500,000+	10, 15, 20, 30 years	Depends on policy	Buy as little as $2,000 or as much as $5 million in life insurance even if you've been denied for your risky hobbies. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
SBLI		18 - 60 years old	$100,000	$20,000,000	10, 15, 20, 25, 30 years	Not required for policies under $500,000	Apply for a policy worth up to $20 million, and skip the medical exam for policies under $500,000. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Protective Life		18 - 65 years old	$100,000	$10,000,000	10, 15, 20, 25, 30, 35, 40 years	Yes	Secure your family's financial future with a term life insurance policy lasting up to an amazing 40 years. Get a free quote on Policygenius.	Go to site More Info	Compare	loading Fetching your data...
Legal & General		20 - 75 years old	$100,000	$10,000,000	10, 15, 20, 25, 30, 35, 40 years	Yes	Score competitive rates on term life insurance up to rarely seen 40-year terms. Get a free quote from this lenient company on Policygenius.	Go to site More Info	Compare	loading Fetching your data...

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Bottom line

Backdating your policy can be a great way to avoid the industry’s practice of using your nearest age to set your premiums. But whether you save money depends on how much you have to pay to backdate your policy and what your age-based discount will be. To make sure you’re getting the best deal, shop around and compare your other insurance options.

Frequently asked questions about backdated life insurance

• Can I backdate a term life insurance policy?

  Yes, but your calculations for how much you’ll save becomes even more important. If your policy covers a ten-year term and, using the above example, you’ll only save $5 per month by backdating, it may not be worth it.

• Can I backdate my life insurance to take advantage of a lower-priced policy that the company no longer offers?

  No. Once a life insurance product is discontinued, it is no longer available, regardless of the company’s backdating guidelines. If you see an opportunity to save, take advantage of it while it’s still on offer.

• Can I backdate more than six months?

  Six months is typically the standard, but the amount you are allowed to backdate your policy can also be determined by state law. For example, Ohio only allows you to backdate a life insurance policy by three months.