Can back dating be the right practice for buying insurance?

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The back dating in insurance is the common practice and there is nothing wrong in doing so. The insurance companies offer this service to its client as the legal offering and may also benefit the policy holders to some extent. The back dating is possible with insurance and may be the great advantage if it was also available in other investment markets. Though, it sounds really good, this is not practically possible.

The insurance companies have come up with many plans that allow the policy buyer to get the insurance policy of any date in the current financial year. This back dating practice may not offer any apparent benefit as provided by the stock market but the policy holder may have many benefits of back dating as mentioned here.

  • The insurance with back dating can be used for the income tax purpose. The tax payers can save on income tax with many benefits offered by government on insurance premium payment under different sections.
  • The policy holder can pay quarterly premium and get the benefit for the full year with back dating. This may sound very convenient and beneficial to those who want to save on income tax and have financial crisis. The benefit of investments can be availed directly without actually making the investment.
  • Some insurance companies may decide the premium on the basis of the age of the policy buyer. The age is calculated from the birth date of the insured till the date of policy purchase. The back dating will reduce the premium as the age will come out to be low in this case.

The above benefits are good enough for benefits but if you are planning to avail this policy purely for life insurance then back dating will reduce your protection by certain months.

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