Life insurance interim cover

Life Insurance Interim Cover

What is life insurance interim cover?

In order to address the problem of drawn out application processes, life insurance providers have introduced some modifications to their policy features to make the application process more streamlined and client-friendly.

One of these features is called interim cover, which is also known as limited acceptance cover. This insures you temporarily while your application is still being underwritten or waiting to be approved, removing any gap where you otherwise would of been without cover.

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How does interim cover and life insurance work?

As its name suggests, interim cover is a stop-gap feature of a policy that insures you while you are applying for life insurance. Not all policies will offer interim cover, so make sure you study the product disclosure statement (PDS) carefully or contact your provider directly to confirm this feature is available.

Typically interim cover will insure you for 90 days, which is usually more than sufficient to complete the underwriting process, and will cease when any of the following occurs:

  • The provider approves your policy application.
  • The provider rejects your policy application.
  • If you do not accept the policy terms by the required date.
  • If you voluntarily drop out of the application process.
  • Once you reach the 90th day of your interim cover period.

You should also be aware that the 90 day period is rarely, if ever, extended by life insurers, even if the underwriting process extends beyond that time frame.

What are the benefits of interim cover?

  • Instant cover. You are insured from the moment you apply for your policy, which means there isn't a period of limbo when you are without any cover.
  • Pre-existing conditions. Interim cover can be especially useful for people with pre-exisiting medical conditions, as their underwriting process can take a significantly longer amount of time.

When will interim cover not be applied?

You will not be eligible for interim cover under the following circumstances:

  • If you have had previous life insurance policy applications rejected, deferred or postponed by either the provider you are applying to or by other providers.
  • If you are currently maintaining a similar life insurance policy with either the provider you are applying to or with a different provider.
  • If you currently have a seperate application pending for a policy that provides a similar level of cover (including interim cover), with either the same provider or another provider.
  • If you have submitted your life insurance policy application to the provider with incomplete or missing details.

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Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
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Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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