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Know All About Backdating in Life Insurance Policy

Published On Jun 25, 2021

A life insurance policy provides life coverage to the life assured and subsequently death benefits to the nominee when the life assured dies. The premium rate is decided through various factors like age, the annual income of the life assured, the sum assured etc. However, if you feel that you could have gotten a better premium rate if you had purchased the policy a few months before, you can rewind the clock through the process of backdating. Read on to know more in detail. 

What is Backdating?

Backdating refers to the process through which the life assured can change the purchase date of the policy to a date a few months before if he/she believes that it will help generate benefits. However, it should be kept in mind that the change of date has to include the agreement of the insurer as well. Moreover, the life assured has to pay the total premium rate of the backdated period along with the interest, at once. However, most insurance providers do not charge interest if the backdated duration is less than a month. 

The following example can help you understand the procedure in a better way. Suppose you purchased a life insurance policy on 24th June 2021, but you feel that the premium amount would have been lower if you had purchased it on the 24th April 2021. You can backdate the policy with the mutual agreement with the insurer. 

Advantages of Backdating

Here is the list of some benefits of backdating your life insurance policy.

1. Lower Premium Rate

As mentioned above, the age of the life assured plays a significant role in determining the premium rate. The higher the age, the higher the premium rate. The insurer generally contemplates the closest age of the life assured. Suppose the life assured purchased a policy at the age of 37 years 6 months, then his age will be considered to be 38 years. On the other hand, if he purchased the policy at 37 years 5 months, his age will be considered as 37 years. So, if you backdate the policy by a month, you might be able to get a lower premium rate according to the age of 37 years.

2. Early Maturity Benefits

The life assured can get early maturity benefits through backdating. Suppose he/she purchases a policy in March 2021 and backdates it to November 2020, the maturity benefits of the 20-year-old endowment policy can be reaped a year before in  November 2040 than the initial date in March 2041. The same benefits can be enjoyed in a money-back policy. 

3. Increases Affordability

The policy purchased by a seasonal worker or a seasonal businessman in the off-season can be backdated to the peak season to ensure the affordability of the life insurance policy when it will be renewed next time. Moreover, the backdating can also help get tax benefits on premium rate under Section 80C of the Income Tax Act if the life assured backdates the purchase date to the period before filing his/her taxes. 

4. Celebrate Milestones

The life assured can also backdate the policy if he/she wants it to coincide with a special day like a birthday, anniversary or any significant achievement or a milestone of their life so that they remember to pay the premium. 

When Should Backdating be Avoided?

Here is the list of certain situations when backdating should be avoided.

1. Young Age

Backdating is often helpful to people who purchase a life insurance policy after the age of 40 years, as premium rates are higher for that age range. Thus, they can save some money on premium through the tool. However, the premium rate for people between 20-25 years is generally similar. So, backdating is not practical for them. 

2. Term Insurance Policy

The benefit of backdating is only beneficial on the endowment plans and money-back policies. In the case of a term insurance plan, the life coverage on the backdated duration is rendered pointless.

3. Scarcity of Funds

The backdating involves the payment of the total premium amount along with interest at one go. The situation can be troublesome if you are short on savings or funds.


It is advisable to exercise the tool of backdating if you are sure that you will be able to obtain additional benefits or savings as you will have to pay a premium plus interest fee if the backdating duration is more than a month. Hence, you should evaluate all the pros and cons before making any decision. You can even consult an insurance agent or a financial advisor to make a more reasonable decision. 

Also read - Life Insurance Opportunities for Millennials

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard. 

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