Arrange the following events in the correct chronological order for a life insurance application where the initial premium is NOT paid at the time of application.
- 1The applicant completes and submits the life insurance application without an initial premium payment.
- 2The underwriter reviews the application and approves the applicant as an acceptable risk.
- 3The insurer issues the policy and sends it to the agent.
- 4The agent meets with the client to deliver the policy and explain its provisions.
- 5The client pays the initial premium and signs a Statement of Good Health.
Answer
The correct order is: Application submitted without premium, underwriter approves, policy issued, agent delivers policy, and client pays premium while signing a Statement of Good Health.
When a life insurance application is submitted without the initial premium, no temporary or conditional coverage exists. The insurer first reviews and approves the application, then issues the policy. The agent must deliver the policy to the client. Coverage only becomes effective at the very end of the process, when the client physically receives the policy, pays the initial premium, and signs a Statement of Good Health confirming their insurability has not declined since the application date.
Step-by-Step Solution
Key Concept
Application Process Without Initial Premium