Examkin

Question

Difficulty: MediumPolicy Delivery Methods

An applicant submits a life insurance application without paying the initial premium. The underwriting department approves the risk and issues the policy exactly as applied for. Arrange the following actions in the correct chronological sequence that the agent must follow to properly deliver the policy and activate coverage.

  1. 1Receive the approved policy from the insurer's home office.
  2. 2Personally meet with the applicant to explain the policy provisions and coverages.
  3. 3Obtain a signed Statement of Good Health from the applicant.
  4. 4Collect the initial premium payment.
  5. 5Provide a premium receipt to officially activate the coverage.

Answer

The correct sequence is: 1) Receive the approved policy, 2) Personally meet to explain provisions, 3) Obtain a signed Statement of Good Health, 4) Collect the initial premium, and 5) Provide a premium receipt.
When an application is submitted without the initial premium, the policy does not go into effect until it is delivered and the first premium is paid while the applicant is still in good health. Therefore, the agent must first receive and review the policy with the client, secure the Statement of Good Health to verify insurability has not changed, and only then collect the premium and issue the receipt to activate the coverage.

Step-by-Step Solution

1
Identify the initial state of the application process.
The applicant did not pay the initial premium, meaning no coverage was bound conditionally during underwriting.
Understanding the premium status determines the required legal documents at delivery.
2
Determine the first physical steps of delivery.
The agent receives the policy from the insurer and schedules a personal meeting to review the contract.
An agent cannot execute a delivery without the physical or electronic policy and a review of its terms with the client.
3
Establish the legal condition for collecting the premium.
The agent must obtain a signed Statement of Good Health before taking payment.
Insurers require proof that the applicant remains insurable before activating a policy that had no initial premium paid.
4
Complete the consideration and contract execution.
The agent collects the premium and provides a receipt.
Payment of the initial premium is required to finalize the contract and activate coverage.

Key Concept

Policy Delivery without Initial Premium
Rate this question

Topics

Policy Delivery Methods

More questions from this topic