LLQP Life Insurance · Component 3.1 · 25% of the exam
A 'conditional receipt' or 'conditional premium receipt' given when the first premium accompanies the application means:
- AThe agent guarantees acceptance of the application, since the insurer has accepted the premium through the agent who collected it
- BThe premium is non-refundable, since the insurer has provided coverage from the date the receipt was issued
- Coverage may be effective from the application date if the applicant is insurable at standard rates
- DCoverage is guaranteed from the date of the receipt, whatever the outcome of the underwriting process
Correct answer: C) Coverage may be effective from the application date if the applicant is insurable at standard rates
A conditional receipt is different from a TIA: coverage exists only if underwriting would have approved the risk as applied for. If the applicant dies during underwriting and would have been declined, nothing is paid. The agent must know which type the insurer uses.
Why the other options are wrong
- AAgents cannot guarantee acceptance.
- BPremiums are refunded if the application is declined.
- DCoverage is conditional, not guaranteed.
Exam tip
Conditional receipt = coverage only if insurable as applied for. TIA = coverage during underwriting subject to its own conditions.
Common mistake
Describing a conditional receipt as immediate, unconditional coverage.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.