Life insurance is essentially an agreement that a specific sum of money should be paid a specific way to named beneficiaries upon the death of a person whose life has been insured. One kind of life insurance is term life insurance, also known as temporary insurance.

Unlike other forms of life insurance, term life stipulates that payments will only be made to the beneficiaries of the deceased if the death occurs with a specifically stated period of time. The agreement only lasts for a fixed or specified term, to be considered automatically null and void the moment the insured survives the period or term.

Whether temporary or permanent, life insurance is merely to protect the family left behind by the deceased from financial worry, but rather more appropriately characterized as a form of investment and security to protect the beneficiaries from financial hardships occasioned by the death of the insured. Indeed, comforting the beneficiaries with an inheritance, as a consolation prize for the loss they suffered as a result of the death of the insured is not what life insurance delivers because human life is without precise economic measure or value.

Term life insurance typically costs less than a long term life insurance because of the short period of time the person will be insured. Premiums for term insurance policies are lower and often have a higher death benefit than most. This is because insurance companies are banking on statistics that the insured will not pass away during the term of the contract.

The amount of premiums that must be paid for a life insurance policy is heavily determined by the work of an underwriter. What an underwriter does is try to determine the suitability of a person for life insurance. Underwriters will consider several things such as current state of health, credit standing, medical history, family background, psychological state and occupation to test the probability that the prospective insured will pass away during the length of the term.

Chronic and fatal diseases such as heart defects, high blood cholesterol, tuberculosis and the like often make it hard to get life insurance, the person is either declared uninsurable or is given very high premiums and a low death benefit. This is because the insurance company believes the person may pass away before he pays the equivalent of his death benefits.

Other factors that could result in a high premium rate are risky professions, age, and a family background for poor health as well as psychological and mental health issues. Adding other bonuses or additional benefits called riders may also increase the amount of premiums that need to be paid for life insurance.

For term insurance, the company has a good probability that the insured will not pass away during the length of the specified term. That is why term policies are considered some of the most affordable life insurance policies available in the market.

Term insurance is often used by people who do not want to commit to a long term life insurance plan, or those who are embarking on something new, like an overseas trip, which they fear may be dangerous. Term insurance is an affordable way to provide temporary protection for someone’s loved ones.

The effective date is an important part of the life insurance enrollment process for many reasons. Of course the biggest impact is that it dictates when you are actually covered for protection. Most people may think “What does it matter…now or a few weeks from now”. Unfortunately, we have seen situations where it does matter and the result can be catastrophic especially in light of the fact that the insured person was in process to purchase life insurance. It’s almost depressing in such a situation which is why we recommend our clients to enact the temporary life insurance featured offered by most carriers. So what’s involved?

First, it’s different from carrier to carrier but let’s look at some common elements of temporary life insurance. There’s usually a quick medical questionnaire to address the more serious health issues that might prevent you from qualifying even for temporary life insurance. The amounts allowed are usually capped at a certain amount. It may be less than the full policy that you are applying for or there may just be a hard cap on the amount which you can receive temporary life for. For example, if you’re applying for $1M in life benefit, temporary life may not be available.

The life policy effective date is usually the signature date on the temporary life insurance application and agreement. This may be different from the full life insurance application date. There’s also commonly a stop date during which this temporary life exists. This means that if the stop date is 90 day maximum, the coverage will not extend beyond 90 days after the effective date. Again, this is meant as a temporary life insurance benefit just to cover you while you’re in underwriting for the full policy. It’s not designed to go beyond that point. It’s also not in addition to your underwritten policy and/or other life insurance benefits. This means they will subtract other policy benefits due to you from the total amount of temporary life insurance for which you apply.

If you are approved for your fully underwritten life insurance policy, that policy will generally replace the temporary life insurance policy and premiums paid will be applied to the fully insured policy on a pro-rated basis. Standard clauses such as mis-representation, fraud, and suicide are usually contained in the temporary life application and agreement.

Payment is an important part of the life insurance contract and temporary life is no different. Some applicants will submit their completed application but no payment if allowed by the carrier. This usually means that the proposed insured is not protected during the underwriting process. The underwriting process can take weeks if not months so we strongly recommend that you submit payment with your life insurance application. You have at least a 10 day free look period from when the carrier delivers a policy to you to can cancel the policy never effective for a full refund so there’s no reason not to. You never want to be in that situation where the unforeseen happens and you pass away during the underwriting process without the protection of temporary life insurance. As a good life insurance agent, we can’t let you take this un-needed risk.

However, a short-term health plan will allow you to be covered as soon as the day after your application is approved. Your policy can include coverage for dependents such as your wife and children.  And, depending on your plan, certain transplants may also be covered, as well as home health care including at-home services from a registered nurse or health aide.

If you are concerned that your temporary medical insurance plan does not cover the cost of preventive care, however, then you may want to supplement it through a cash-only medical practice. Under this type of medical practice, which is also known as direct pay, patients pay a fixed fee for services rendered, which can be paid by credit card or check. Although these practices generally cater to the uninsured, patients with insurance coverage, such as those with health plans that have high-deductibles that only kick in for major health expenditures, are also welcome.

The idea behind a cash-only practice is to provide affordable health care by offering fixed, reasonable rates for all patients, rather than high rates for the uninsured and discounted rates for covered patients. It is also a better business model for many doctors, since by not participating in health insurance networks they can dispense with the extra staff necessary keep track of patient billings and claim processing, thus cutting down their overhead.

In order for you to avail of the services of a cash-only medical practice, you will usually have to become a member of the group. You will then be charged fixed fees based on the length of your visits. Many doctors, however, are founding their own direct pay practices without becoming members of a formal network. Many of these practices also offer consultations through phone or e-mail, making it more convenient for patients to get the answers to simple health questions without a personal visit; however, they will still be billed for the exact amount of time it took to address their health problem, just like an in-office visit. Some cash-only doctors will also make house calls but for a higher charge than a personal or online consultation.

These practices are a good way for people with temporary insurance coverage to get affordable routine care, particularly since limited-term health plans allow you to see any physician or health care professional that you want.