United States
Hong KongDelivering the policy, and what delivery starts
Delivery starts the free look period and is when the agent explains the policy, its riders, exclusions and any rating. Where no premium was collected at application, delivery is also when coverage begins, and the insurer normally requires a statement of continued good health at that point.
Delivery looks like the end of the process and it is really the start of two clocks. One is the free look. The other is the agent's exposure to a client who says nobody explained the exclusion.
When coverage begins, in two cases
| Premium paid with the application | No premium with the application | |
|---|---|---|
| Interim coverage | A conditional receipt applies | None |
| Coverage begins | Date of application or medical exam, whichever is later, if insurable | On delivery, with the first premium paid |
| Statement of good health | Not usually required | Required at delivery |
| Risk to the client | Low | Uninsured throughout underwriting |
The bottom right cell is the argument for collecting the premium at the application, and it is a real one. A client who pays nothing at the kitchen table is unprotected for however long underwriting takes, and that is a conversation an agent should have rather than a technicality.
The statement of continued good health
Where no premium was paid up front, the insurer has underwritten a person as they were weeks ago and is about to put the policy in force now. The statement asks whether anything has changed. If health has deteriorated in the interval, the insurer may decline to complete delivery, and the applicant is back where they started rather than covered.
That is the mechanism a stem is describing when it mentions an applicant taken ill between the exam and the delivery visit.
Delivery starts the free-look period
The free look period runs from delivery, and during it the owner may return the policy for a refund of premiums. The Texas portion of the outline lists free look under individual life and annuity policy provisions, pointing at the Administrative Code, which we do not hold, so this site does not state the number of days. What matters here is the trigger: delivery, not issue, and not application.
For annuities Texas puts the period in the Insurance Code rather than in a rule. TIC 1116.002 requires a fixed annuity contract to allow rescission with an unconditional refund of premiums for at least twenty days after the contract is delivered. That one we can quote, because we hold the chapter.
The explaining, which is the examinable part
The outline's second delivery sub-item is explaining the policy and its provisions, riders, exclusions and ratings to the client. That verb, explaining, is doing real work. Handing over a document is not delivery in any sense the exam cares about.
- If the policy was issued other than as applied for, say so and say why. A rated policy costs more or carries a modified benefit, and the client must understand what they are accepting.
- Walk the exclusions. This is the last moment before a claim at which a misunderstanding is cheap to fix.
- Confirm the beneficiary designation is what the client intended.
- Explain the free look and when it ends.
An applicant paid no premium with her application. The insurer approves the policy and the agent delivers it three weeks later. When does coverage begin?
- On the date of the application
- On the date the insurer approved the policy
- On delivery, once the first premium is paid and any required statement of health is signed
- On the date of the medical examination
Where it sits
- Section III
- Delivering the policy, two sub-items, section worth 12 questions
- Section IX
- Policy delivery and explaining the policy, in a section worth 8
- Texas portion
- Free look, under individual life and annuity provisions
- Question style
- Timeline, or what the agent must do
The opinion, and the concession
Delivery is the clearest example of the overlap between sections III and IX, and it is the reason we keep saying those two sections should be studied as one. Both list policy delivery. Both list explaining the policy to the client, in almost identical words. Twenty questions across two sections that share half their content is the best value on the general portion, and almost nobody plans their revision that way.
The concession: whether a signed delivery receipt is required, and what an insurer accepts as proof of delivery, are carrier practices. Texas puts the free look period in the Administrative Code, which we have not harvested, so we cannot give you the number of days from a source we hold. We would rather say that than print a figure we cannot show you the origin of.
Common questions
When does the free look period start?
On delivery of the policy to the owner, not on issue and not on application. During it the owner may return the policy for a refund of premiums paid. The period for life policies in Texas is set in the Administrative Code, which this site does not hold and therefore does not quote.
What is a statement of continued good health?
A declaration signed at delivery, where no premium was collected at application, confirming that the applicant's health has not changed since underwriting. If it has, the insurer may decline to complete delivery, so the applicant is not covered rather than being covered on worse terms.
Does handing over the policy complete delivery?
Not for the exam's purposes. The outline pairs delivery with explaining the policy, its provisions, riders, exclusions and ratings to the client. Delivery is a conversation as much as a handover, and it is the last cheap opportunity to correct a misunderstanding before a claim.
How long is the rescission period on a Texas annuity?
The Insurance Code requires a fixed annuity contract to allow rescission with an unconditional refund of premiums, including contract fees and charges, for at least twenty days after delivery, at TIC 1116.002. Variable and modified guaranteed contracts are addressed separately in the same section.