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The Curious Bag
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An applicant for life insurance may receive a conditional receipt for coverage. This takes place after the applicant satisfies the insurer's requirements to begin the application process.
Conditional Life Insurance Receipt
A conditional receipt for life insurance is the temporary issuance of coverage to the applicant by the insurer. After reviewing the application, the insurer can issue or deny the policy.
Benefits
Having a conditional receipt for life insurance means that the insurance company can pay the death benefit if the applicant passes away during the application process.
Considerations
The applicant must submit payment equal to the first premium amount. This is to accompany the completed application.
Misconceptions
If the insurer approves the applicant for life insurance, coverage will not start the date the application was accepted. The policy will become effective either the date of the premium payment or when the last of the underwriting requirements were met.
Warning
Although a conditional receipt has been issued, the insurance company has the right not to pay the benefit if the applicant's death occurs during the review process. This can happen if the insurer determines the applicant would not have qualified for insurance.
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