Conditional Receipt and Policy Delivery Case Questions

An applicant pays the first premium and receives a conditional receipt. The receipt says coverage begins on the later of the application date or medical-exam date only if the applicant would have been insurable at the applied-for rate. Underwriting later finds the applicant met that standard. What is the best conclusion?

1. A. The receipt’s conditions may establish coverage as of the stated date, subject to its exact wording.
2. B. Coverage began automatically for every amount requested, regardless of insurability.
3. C. No receipt can ever provide temporary coverage.
4. D. Coverage begins only after the first claim is submitted.

The same receipt requires the applicant to be insurable at the applied-for rate. The insurer’s evidence shows the applicant would have been declined on the application date. What is the likely result under the stated receipt?

1. A. The conditional coverage requirement is not met, so the receipt does not create coverage under its stated test.
2. B. The full face amount is payable because a premium was collected.
3. C. The agent may approve the risk after death.
4. D. The insurer must issue at the requested rate.

An applicant submits a signed application but pays no premium. The insurer later approves the application and mails a policy. The applicant dies before paying the first premium or accepting delivery. What should be examined?

1. A. The application alone always proves coverage.
2. B. Policy terms, delivery requirements, payment, acceptance, and any temporary coverage agreement determine whether the offer became effective.
3. C. The beneficiary’s relationship controls effective date.
4. D. Any mailing of a policy automatically backdates coverage.

The applicant requests preferred-rate coverage. The insurer issues a policy with a higher standard premium and sends an amendment requiring the applicant’s acceptance. What is the best analysis?

1. A. The issued policy automatically covers at the requested preferred rate.
2. B. The insurer made a different offer or counteroffer, and acceptance and effective-date requirements must be met.
3. C. The agent can ignore the amendment.
4. D. The application premium guarantees the preferred rate.

A policy is delivered after underwriting with a form requiring the insured to confirm that health has not changed since application. The insured’s condition worsened before delivery and the insured signs the form inaccurately. What should the agent do?

1. A. Tell the insured to sign because delivery always makes the policy effective.
2. B. Stop and report the change accurately to the insurer; the delivery condition and application must be handled truthfully.
3. C. Change the medical date on the application.
4. D. Ask the beneficiary to sign instead.

A conditional receipt covers only if underwriting approval occurs within 45 days, and otherwise expires under its text. The insurer takes 60 days to decide. What should be checked?

1. A. Whether the receipt’s express period expired and whether another agreement or policy effective-date rule applies.
2. B. The receipt automatically renews forever while the application is pending.
3. C. A 45-day receipt always creates one year of coverage.
4. D. The agent may extend the insurer’s receipt unilaterally.

The insurer and applicant agree to backdate the policy’s issue age to save premium, but the insured dies before the proposed delivery date. What is the correct focus?

1. A. Backdating automatically proves coverage existed on the earlier date.
2. B. Determine the actual contract effective-date conditions, acceptance, payment, and any temporary receipt; an age backdate does not alone prove coverage.
3. C. The death benefit is always doubled.
4. D. The beneficiary can select an effective date.

A receipt limits temporary coverage to $100,000 even though the application requests $500,000. The applicant dies before the policy is issued. If the receipt conditions were met, what amount is potentially covered under that receipt?

1. A. Up to the receipt’s stated $100,000 limit, subject to all conditions.
2. B. The full $500,000 request automatically.
3. C. No amount because the requested face amount was higher.
4. D. Whatever amount the agent promised verbally.

The receipt says the effective date is the date of application or required medical exam, whichever is later, if the applicant would have been insurable. The exam was scheduled but never completed before death. What is the best answer?

1. A. Apply the stated later-of formula and other receipt conditions; do not assume the scheduled exam equals a completed exam.
2. B. The application date always controls, regardless of the receipt.
3. C. A scheduled exam proves preferred insurability.
4. D. The beneficiary may complete the exam after death.

A consumer applies for replacement coverage and cancels the old policy before the new insurer accepts the application. The application included no temporary receipt. What is the main risk?

1. A. There may be a gap because the new policy is not necessarily in force before acceptance and effective-date conditions are met.
2. B. The new policy always covers from the first discussion.
3. C. The old policy automatically reinstates if a new policy is denied.
4. D. The replacement notice itself creates new coverage.

The applicant gives a premium check to an agent, but the check is not deposited and the receipt box is blank. The insurer denies that a premium receipt was issued. What records matter?

1. A. The agent’s and insurer’s records, whether the agent had authority to receive premium, the application, and the exact receipt language.
2. B. Only the applicant’s recollection.
3. C. The beneficiary’s bank account.
4. D. The policy illustration alone.