Link each underwriting and premium payment scenario with its legally correct outcome regarding policy delivery and effective dates.
- Initial payment for a health insurance policy is submitted with the paperwork; a mandatory physical is completed three days later.Coverage activates on the date the physical examination was concluded, assuming the risk is acceptable.
- A life insurance application is submitted without payment; the agent arrives to hand over the approved policy to a healthy client.Coverage requires collection of the first payment and a signed document verifying continued insurability.
- Initial payment for a life policy is made and a conditional receipt given; the applicant suffers a fatal accident before approval but was fully insurable.Coverage is retroactively honored, and the death benefit is issued because all underwriting criteria were met.
- An application for disability income coverage is submitted without payment; the agent discovers the client has been hospitalized prior to delivery.Coverage cannot take effect; the agent must not leave the contract with the client.
Answer
The correct pairings appropriately align conditional receipt rules (which provide retroactive coverage based on the application or exam date) with collect-on-delivery rules (which mandate a Statement of Good Health and premium payment at delivery).
Each scenario correctly applies the legal distinction between conditional receipts (where consideration is given upfront) and policies issued without an initial premium (which strictly require a Statement of Good Health upon delivery).
Step-by-Step Solution
Key Concept
Effective Date and Statement of Good Health