In the context of life insurance, “backdating” refers to setting the policy issue date to an earlier date, within a limit set by the insurer, to “save age.” This makes the policy effective earlier, causing all policy-related dates (for example, conversion expiry date, termination date) to occur sooner. The policyholder must pay premiums retroactively from the backdated start date. The primary purpose of backdating is to lower the issue age, which may reduce the annual premium.
Key aspects of backdating include:
Earlier effective date
Policy is effective from an earlier date.
Premium adjustment
Retroactive premiums must be paid.
Lower issue age
Can result in a lower annual premium.
Restricted use
Generally allowed only to reduce the issue age, depending on the insurer.