Marcus applies for a life insurance policy and a claim is eventually paid out under a conditional insurability receipt. Arrange the following events in the correct chronological order to demonstrate how the conditional receipt provides coverage when an applicant dies before the policy is formally issued.
- 1Marcus completes the application, pays the initial premium, and receives a conditional insurability receipt.
- 2Marcus completes the mandatory medical examination required by the insurer.
- 3Marcus dies in a fatal accident before the insurer completes the underwriting process or issues the policy.
- 4The insurer reviews the medical results and determines Marcus was insurable as a standard risk on the exam date.
- 5The insurer pays the full death benefit to Marcus's designated beneficiary.
Answer
The correct sequence is: Application and premium payment, followed by the Medical examination, then the unexpected Death, the Post-mortem underwriting determination, and finally the Claim payment.
For a conditional insurability receipt to result in a claim payment when death occurs prior to policy issue, the applicant must first pay the initial premium and complete any required medical exams. The insurer will then complete the underwriting process post-mortem. If the applicant is found to have been insurable on the date of the application or medical exam (whichever is later), the coverage becomes retroactively effective to that specific date, requiring the insurer to pay the claim.
Step-by-Step Solution
Key Concept
Conditional Insurability Receipts and Retroactive Coverage