An applicant submits an application for an individual life insurance policy but does not pay the initial premium at that time. The insurer underwrites the risk, approves the application, and issues the policy. When the producer delivers the policy to the applicant, what must be obtained before the coverage can become effective?
- The initial premium and a signed Statement of Good HealthAnswer
- BThe initial premium only
- CThe initial premium and a signed Conditional Receipt
- DA signed warranty guaranteeing all original application answers are absolutely true
Answer
The initial premium and a signed Statement of Good Health
When an applicant does not pay the initial premium at the time of application, no consideration has been given by the applicant, and no coverage is in effect during the underwriting process. For the policy to legally become effective upon delivery, the applicant must provide the required consideration (the initial premium) and sign a Statement of Good Health, which verifies that their medical condition has not changed since the original application date.
Step-by-Step Solution
Key Concept
When an initial premium is not paid with the application, the policy does not take effect until the premium is collected and a Statement of Good Health is signed at policy delivery.
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