Sequence the following events in the correct chronological order to demonstrate the legal outcome when an applicant, who was issued an approval receipt, dies during the underwriting process.
- 1The producer collects the initial premium alongside the application and issues an approval receipt to the prospective insured.
- 2The prospective insured completes the mandatory medical examination required by the insurance company.
- 3The prospective insured suffers a fatal injury before the home office underwriter reviews the application.
- 4The insurer denies the beneficiary's claim for the death benefit because the application was never approved.
- 5The insurer refunds the unearned initial premium to the deceased applicant's estate.
Answer
The correct sequence begins with the issuance of the approval receipt, followed by the medical exam, the applicant's death before approval, the denial of the claim, and finally the refund of the initial premium.
An approval receipt explicitly states that coverage does not begin until the application is approved by the insurer at the home office. Unlike a conditional insurability receipt (which provides retroactive coverage to the date of the medical exam if the applicant is found insurable), an approval receipt offers no temporary or retroactive coverage during the underwriting period. Therefore, when the applicant dies before the application is approved, the insurer has no legal liability to pay the death benefit and must simply refund the collected premium.
Step-by-Step Solution
Key Concept
Approval Receipts
Estimated Time:1m 0s