Validation Period

What Does Validation Period Mean?

The validation period refers to the length of time during which premiums must be paid on an insurance policy to cover the expenses associated with that policy. Once the validation period ends, the insurance company begins to generate an actual profit from the policy it sold.

Insuranceopedia Explains Validation Period

There are several costs that the validation period must cover, such as commissions, medical exams, and investigations. The policy will only start generating profit for the insurance company once the premium payments have accounted for all these costs. Validation periods are also known as break-even periods. Measuring these periods is crucial for insurance companies as it helps them determine how long it will take before they start making a profit from a policy.