Should You Say ‘yes’ to TIA’s?
When applying for life insurance in Canada, there can be a gap between submitting your application and the policy being officially in force. This is where Temporary Insurance Agreements (TIAs) come into play, offering interim coverage during this waiting period.
What is a Temporary Insurance Agreement?
A TIA is a binding contract between you and the insurance company, providing temporary life insurance coverage while your application is being processed. This agreement is typically in effect from the moment you submit your application and pay the initial premium, lasting until the insurer makes a final decision on your application.
Why TIAs Matter
TIAs are essential because they offer peace of mind during the underwriting process. The average underwriting time can vary between 2-8 weeks. Some policies can be issued within a day and others can take up to 6 months. With a TIA in place, you have temporary coverage, ensuring that if the worst were to happen, your beneficiaries would receive a death benefit even before the final policy is approved.
Key Features of TIAs
Immediate Coverage: Coverage starts as soon as your application and initial premium are submitted.
Limited Benefit Amount: The coverage amount under a TIA is often limited, typically to a specified maximum, which may be lower than the coverage you applied for.
Temporary Duration: The agreement lasts until the insurer makes a decision on your application, either approving, rating, or declining it.
Conditional Coverage: Coverage under a TIA is subject to the terms and conditions of the policy you're applying for, including any exclusions or limitations.
Carrier Dependent: It's important to note that the terms of a TIA can vary from carrier to carrier. Each insurance provider may have different conditions and limitations, so it's crucial to review the specific details of your agreement and have your advisor explain it thoroughly.
How to Qualify for a TIA
Qualifying for a TIA is generally straightforward. You'll need to complete the life insurance application, pay the initial premium, and answer a few additional questions related to your health and insurability. It's important to be honest and accurate in your responses, as any misrepresentation can void the TIA and your coverage. Please note, this coverage is typically only available at the time of application. Once the application is submitted, the offer is off the table.
Conclusion
Temporary Insurance Agreements play a crucial role in bridging the coverage gap while your life insurance application is under review. They offer a sense of security, knowing that your loved ones are protected during this interim period. As always, it's important to consult with a knowledgeable insurance advisor to fully understand the terms and benefits of a TIA in your specific situation.