A corporate executive applies for a comprehensive life insurance contract but does not submit the initial premium with the application. Following medical underwriting, the insurer approves the risk but classifies the applicant as substandard, resulting in a higher premium. The insurer issues the policy with an amendment reflecting the new rate and mails it to the appointed producer. Upon receiving the policy, the producer contacts the executive by phone. The executive verbally accepts the new rating and immediately wires the required premium funds to the producer's agency account. The producer then forwards the physical policy to the executive via certified mail without requiring any additional documents. Two days later, before receiving the certified mail, the executive dies in an aviation accident. Under standard insurance contract law, which of the following accurately describes the insurer's liability and the governing principle?
- The insurer is not liable for the death benefit because the executive never signed the policy amendment and a Statement of Good Health was not obtained prior to death.Answer
- BThe insurer is liable for the death benefit because constructive delivery was achieved when the executive wired the required premium, satisfying the final condition for coverage.
- CThe insurer is liable for the death benefit because the producer utilized express authority to bind the counteroffer upon verbal acceptance and receipt of the wired funds.
- DThe insurer is not liable for the death benefit because the producer was required to manually correct the original application to reflect the new premium and obtain the executive's initials prior to mailing.