What is a Temporary Life Insurance Agreement (TIA)

A Temporary Insurance Agreement, or TIA, acts as a binding contract, issued by a life insurance agent, between a life insurance company and an applicant.

The agreement exposes the insurer to some degree of risk because the TIA offers temporary coverage for an applicant during the evaluation or underwriting process while the applicant is awaiting the outcome concerning his or her eligibility requirements to buy life insurance.

Temporary term insurance

For example, if an applicant is given a “temporary term insurance” agreement during the underwriting process for their life insurance application, the applicant will essentially have immediate life insurance coverage while the process of underwriting is taking place. In this scenario, the applicant will be considered covered regardless of whether he or she will actually be deemed as insurable.

If an applicant is provided with a temporary term, he or she is not actually given a type of receipt. The temporary insurance agreement (TIA) will, however, provide the applicant with insurance for a specified period of time until the policy has been issued. This essentially means that if the applicant were to die during this time, his or her beneficiary would be provided with a death benefit.

Preliminary term insurance

This is known as interim or preliminary term insurance. This may occur when an applicant is in need of immediate protection but they wish to defer the issuance of the permanent insurance policy for a period of between three and six months.

The premiums that are charged for this type of term coverage are typically based upon the applicant’s current age at the time of application. The premium for the principal life insurance policy that will eventually be purchased will be based on the age of the applicant at the end of the interim period. These types of agreements will oftentimes differ, depending on the insurance company and the specific situation.