Examkin

Question

Difficulty: EasyEffective Date and Statement of Good Health

Arrange the following milestones in the correct chronological order for a life insurance transaction where the applicant does NOT pay the initial premium at the time of application.

  1. 1The applicant completes and submits the life insurance application without a premium payment.
  2. 2The insurer's underwriting department approves the risk and issues the policy.
  3. 3The producer meets with the applicant to deliver the issued policy.
  4. 4The producer collects the initial premium and obtains a signed Statement of Good Health.
  5. 5The life insurance coverage officially becomes effective.

Answer

The correct sequence is: Application submitted (no premium) -> Policy underwritten and issued -> Policy delivered -> Premium collected and Statement of Good Health signed -> Coverage becomes effective.
In cases where the initial premium is not paid with the application, the applicant is essentially inviting the insurer to make an offer. The insurer makes the offer by issuing the policy. The applicant accepts the offer by paying the premium upon delivery. However, the insurer requires a signed Statement of Good Health at delivery to ensure the risk has not worsened during the underwriting process. Only after all these steps are complete does the coverage take effect.

Step-by-Step Solution

1
Identify the starting point of the transaction.
The applicant submits the application without the initial premium.
Every insurance transaction begins with an application.
2
Determine the insurer's internal process.
The insurer underwrites and issues the policy.
The insurer must evaluate the risk before generating a contract.
3
Identify the next physical step in the transaction.
The producer delivers the policy to the client.
The policy must be presented to the client to proceed with final requirements.
4
Determine what must happen at delivery for a Collect on Delivery (COD) application.
The producer collects the initial premium and a signed Statement of Good Health.
Without an initial premium paid at application, the insurer requires proof that the applicant's health is unchanged before accepting payment.
5
Identify the final outcome.
Coverage becomes effective.
All contractual requirements (offer, acceptance, and consideration) are now complete.

Key Concept

Effective Date and Statement of Good Health
Rate this question

Topics

Effective Date and Statement of Good Health

More questions from this topic