Rhode Island Life Insurance Practice Exam

What item is given to an applicant if the insurer is bound to the coverage as of the date of application?

1. Temporary insurance receipt

2. Standard receipt

3. Conditional receipt

4. Final receipt

The correct answer is: Conditional receipt

The item given to an applicant when the insurer is bound to coverage as of the date of application is the conditional receipt. A conditional receipt is issued by the insurer when an applicant pays the premium at the time of application. It signifies that coverage might be in effect from the date of application if certain conditions are met, such as the applicant being insurable according to the insurer's underwriting standards. This means that the insurer agrees to offer coverage as long as the conditions outlined in the receipt are satisfied, which typically pertains to the applicant's health and underwriting decisions. In contrast, other types of receipts, such as a temporary insurance receipt, might provide coverage for a short period while the application is being processed but do not guarantee coverage from the application date. A standard receipt usually indicates a regular processing of the application without assurance of immediate coverage, and a final receipt is issued only after policy approval and payment of premiums, confirming coverage has begun. Thus, the conditional receipt uniquely assures the applicant that coverage has commenced, contingent upon meeting specified criteria.