Validation period is the amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams, and other expenses associated with the issuance of the policy.
To an insurance company, the length of a validation period is important because it indicates when an insurance product becomes profitable or starts contributing to surplus.
The length of the validation period varies with the policy and the associated costs.
An insurance company can shorten the duration of the validation period by decreasing the cost of a new policy issuance, charging a higher premium for the policy, or both.
Validation is one way of trying to reduce the number of errors in the data being entered into your system.