Quick Facts About Backdating Insurance Policies

Is Backdate Insurance Illegal?

Backdating an Insurance Policy, by definition, is the practice of placing a calendar date on any document that is earlier than the date on which the document was actually written. In some cases, it is completely legal. In other cases, no. Let’s see how backdating insurance policies affect different aspects of auto insurance, health insurance and life insurance.

Backdating Car Insurance Policy

Resigning an auto insurance policy is illegal and something that no reputable insurance company or agent will ever do. How could that be? Because it implies that you have coverage on your vehicle before you actually do it. If you can do this, no one will buy car insurance until after the accident has occurred. That would have the effect of turning the auto insurance industry’s risk assessment-based business model on its head. Soon, there will be no auto insurance industry and we will all be paying for damages and injuries ourselves. Lawsuits are sure to skyrocket, clogging up our already overburdened court system.

The only people who will benefit from that are court attorneys. Okay, that’s an extreme result. Closer to home, consider this: backing out of a car insurance policy is an insurance scam. If you are caught doing so, you risk being fined or imprisoned, as do agents who agree to do so.

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Backdating Life Insurance Policy

What you pay for a life insurance policy is based in part on your age at the date of issue. The insurance company will use your actual age or your closest age based on your closest date of birth.

It is legal to roll back a life insurance policy by 6 months to help you get the lowest rate allowed for that age. While it could theoretically save you money, you need to be aware that you will have to pay a premium for the months covered by the countdown date. You’ll need to calculate it to see if the overall savings realized for your retirement is greater than the cost of the additional monthly premium.

Of course, any attempt to purchase an outdated life insurance policy on your deceased Aunt Minnie is a fraud. But you know it.

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Backdating Health Insurance Policy

With regard to health insurance, pushing back the effective date of the policy can be used to make your age in question eligible for lower premiums. That can be a good thing. State laws differ in their policies regarding backsliding health insurance policies, so you should check with your state insurance commissioner. Some states will allow backdating, but limit the amount to six months.

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Important Points about Backdating and Health Insurance

  1. If you are divorced and do not notify the insurance company so that your ex can remain covered under your policy, your ex may be charged for medical claims paid by the insurance company up to the date of divorce.
  2. If you are laid off or laid off, it is against the law for your former employer to back out of your health care insurance termination. It’s a scam and you can sue to recover all costs you incurred on medical bills during the period you think you were covered.
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Take it home

Can the insurance policy be backdated? Yes, it depends. Deferring your insurance policy can be a great way to avoid using your closest age to set your premiums.

Keep in mind that you must calculate how much you will save between your payment to back up your insurance policy and the age-based discount you get.

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