Backdating refers to the practice of pre-dating the time at which the policy-holder bought the policy. Suppose Sanjay buys a policy on June 14.

The policy is said to have been backdated if the insurance company and Sanjay (parties to the contract) together agree to officially show that the policy was purchased on, say, January 14.

Backdating is legally permissible, and is used to lower the premium commitment or time the incidence of outflow.