Definition: A Temporary Insurance Agreement (TIA) is a contract indicating that the insurance company is willing to provide temporary insurance coverage.
Purpose: To offer immediate coverage since underwriting a full insurance policy can take weeks to months.
Why Temporary Insurance?
Underwriting Time: The underwriting process for a full policy includes medical, financial, and lifestyle assessments, which can take 2-3 weeks or up to 2 months.
Immediate Coverage: Clients may not want to wait for full underwriting and prefer immediate coverage.
Issuing a TIA
Authority: Agents can issue a TIA before full underwriting based on their assessment of the client's information.
Health Questions: Clients must answer 4-5 general health questions honestly.
Requirements:
Negative answers to health questions indicating no issues.
Completion of the original insurance application.
Submission of one month's premium.
Conditions and Limitations
Death Benefit: Paid if the client dies during the underwriting period, provided they would have been insurable after full underwriting.
Non-issuance: If the policy is not approved after full underwriting, no death benefit will be paid.
Coverage Limits: The TIA covers the lesser of the applied insurance amount or a company-specific cap (e.g., $200,000 or $500,000).
TIA in Effect
Suicide Clause: No death benefit if suicide occurs within the first 2 years, applicable to the TIA.
Duration: The TIA lasts until the earliest of:
60-90 days after issuance.
Issuance of the original policy.
Notification of application denial by the company.
Agent's Role
Assessment: Agents must assess the situation and decide if issuing a TIA is appropriate based on medical and underwriting information.
Client Communication: Explain coverage details and conditions clearly to the client.
Decision Making: If risk factors or exclusions are anticipated, it may not be advisable to issue a TIA.
Conclusion
The TIA provides immediate coverage with specific conditions and limits, and agents have the responsibility to assess and communicate its applicability effectively.