On February 3, Marcus completes a life insurance application, submits the initial premium payment, and receives an approval receipt from his producer. Marcus completes the required medical examination on February 7, and the results indicate he is in excellent health. Tragically, Marcus suffers a fatal accident on February 11 before the insurer's underwriting department has reviewed his file. On February 14, the underwriter opens the file and confirms Marcus would have been approved as a preferred risk. How will the insurer respond to a death claim filed by Marcus's beneficiary?
- The insurer will deny the claim and refund the initial premium because coverage under this specific receipt does not begin until the application is formally approved by the insurer.Cevap
- BThe insurer will pay the full death benefit because coverage became effective retroactively on February 7, the date the required medical examination was completed.
- CThe insurer will pay the full death benefit because the producer's acceptance of the initial premium established immediate unconditional coverage.
- DThe insurer will pay the full death benefit because the underwriter determined that Marcus met all underwriting requirements and would have been approved.
Cevap
The insurer will deny the claim and refund the initial premium because coverage under this specific receipt does not begin until the application is formally approved by the insurer.
An approval receipt stipulates that coverage only becomes effective after the application has been formally approved by the insurer. Since Marcus died before the underwriter had the opportunity to approve the application, no contract was in force at the time of his death. The fact that he was healthy and would have been approved does not override the specific legal condition of an approval receipt. The insurer's only obligation is to refund the initial premium.
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Initial Premium and Premium Receipts