What happens when an insurance policy is backdated?

When an insurance policy is backdated, it means that the effective date of the policy is established to be earlier than the date on which the application is submitted or the policy is issued. This practice is often utilized to lock in lower premiums based on the applicant's age at the time of the backdated date, rather than their current age.

By setting an effective date that predates the actual application date, the insured may benefit from a lower premium rate that corresponds to a younger age, thus making the insurance more affordable. This is common in life insurance policies, where age is a significant factor in determining premium costs.

In contrast, the other options do not accurately describe the implications of backdating. The elimination period refers to the time frame an insured must wait before benefits kick in, while reinstatement rules and probation periods relate to other aspects of policy management and do not directly correlate with the backdating of a policy.