On August 10, a client completes a life insurance application, pays the full initial premium, and is issued a conditional insurability receipt. The insurer requires a standard medical examination, which the client schedules for August 15. Unfortunately, the client dies suddenly on August 12 before the medical exam takes place. Based on the rules of a conditional receipt, what is the insurer's liability regarding the death claim?
- The insurer will deny the claim and refund the initial premium because the required medical exam was never completed.Cevap
- BThe insurer will pay the full death benefit because the premium was collected and a receipt was issued on August 10.
- CThe insurer will pay the claim because the death occurred before the insurer could formally reject the application.
- DThe insurer will deny the claim but is legally entitled to retain the initial premium as an underwriting fee.
Cevap
The insurer will deny the claim and refund the initial premium because the required medical exam was never completed.
The correct answer identifies that under a conditional insurability receipt, if a medical exam is required, coverage does not begin until the date of that exam. Because the applicant died before the exam took place, the conditions of the receipt were not met. Consequently, there was no coverage in effect at the time of death, and the insurer must deny the claim and refund the premium.
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Conditional Receipts and Effective Date of Coverage