Martin submitted an application for a life insurance policy but did not include the initial premium payment. Two weeks later, the insurance company approves the risk and sends the printed policy to his producer for personal delivery. When the producer meets with Martin to hand over the policy, which action is required to officially put the coverage into effect?
- Collect the initial premium and have Martin sign a document confirming his health condition has not changed since the application date.Answer
- BUse implied authority to activate the policy immediately and allow Martin a 30-day grace period to pay the first premium.
- CInform Martin that the insurer's act of issuing the policy serves as full legal consideration to activate the contract.
- DCross out the original date on the application and write in the current delivery date without requiring Martin's initials.
Answer
Collect the initial premium and have Martin sign a document confirming his health condition has not changed since the application date.
When an applicant does not pay the initial premium at the time of application, the policy does not go into effect upon underwriting approval. To successfully activate coverage during personal delivery, the producer must collect the initial premium and obtain a signed statement confirming that the applicant's health has not changed since the original application was submitted.
Step-by-Step Solution
Key Concept
Policy Delivery Requirements Without Initial Premium