Can A Life Insurance Policy Ever Become Effective Without Collecting The First Premium?
Posted February 8, 2010 – 10:17 pm in: structured settlements FAQInsurance and its subtleties pisses me off! Can a policy ever become effective without collecting the first premium?
Tags: Become, Collecting, Effective, Ever, First, Insurance, Life, Policy, Premium, Without
5 Comments
No.
An insurance policy is a type of CONTRACT. Legally, a contract isn’t a real contract, until both parties have put in their part of the deal.
YOUR part, is the money. The insurance company’s part, is their binding promise. If you pay your money, and the company hasn’t givin a binding promise, well, the contract is not in force. If the company gives the binding promise, and you haven’t paid the money, it’s still not in force.
BOTH PARTS of the contract have to be met before it’s active.
Nope that is a specific right of the insurance company.
You have to provide consideration for your side of the deal. There are policies where they allow you to put off payment of the premimum but in this case it is actually a loan and you will be paying interest on the delay of payment. Also there is the possiblility of binding coverage prior to collection of payment but even then if you should have a claim (you die the next day) they will reduce the benefit by the premimum. (this is VERY rare and almost always excluded in the policy)
This is a very good question. My understanding is an insurance or assurance policy is a contract between the parties the insurer and insured. The policy document is the contract of terms and conditions.
A short -term insurer could agree to deduct the premium on th 15th of each month for the calendar month. Technically if an event occurred before the 15th of that month the insurer would be obliged as per contract to pay. This could also be the case for life assurance.
Your policy will clarify this.
Insurance coverage (life) rules and regulations are set–when you apply for coverage an effective date is found on your policy, check it out.
Not unless your name is Dale Earnhardt.