What happens when an insurance policy is backdated?

• A. The policy's premium is increased
• B. The policy's effective date is earlier than the present
• C. The policy becomes portable
• D. The coverage period is shortened

Answer: (B)

Backdating means setting the policy’s effective date to a date in the past. This makes the coverage start earlier than today, and the premium is based on the insured’s age at that earlier date (often resulting in a lower premium). It also allows retroactive coverage within a permitted window (commonly up to six months).

So, the correct idea is that the policy’s effective date is earlier than the present. The other statements don’t describe what backdating does: it doesn’t inherently make the policy portable, it doesn’t shorten the coverage period, and it isn’t about increasing the premium.