APPLICATION, UNDERWRITING, DELIVERY · 5 MIN READ

Premium Receipts, Policy Delivery, and the Free Look

What happens between application and delivery depends on whether premium was collected and what kind of receipt was issued. The conditional receipt — the most common in life insurance — is issued when the producer collects the first premium with the application. Under the prevailing insurability type, coverage attaches retroactively to the date of the receipt (or the medical exam, if one is required and comes later), provided the applicant ultimately proves insurable as a standard risk for the policy applied for. If the applicant dies during underwriting and would have qualified, the claim is paid; if the applicant would have been declined, no coverage ever attached and the premium is refunded. A binding receipt (temporary insurance receipt) is stronger: it provides immediate temporary coverage from the date of receipt regardless of ultimate insurability, subject to underwriting limits, until the insurer acts. An approval receipt delays coverage until the home office actually approves the application — the weakest protection for the applicant. When no premium accompanies the application, no receipt conditions apply and coverage cannot begin until the policy is delivered and the first premium is paid. Because weeks may pass between application and delivery, the producer must obtain a Statement of Good Health (Statement of Continued Insurability) at delivery, confirming no material change in health since the application. If the applicant cannot truthfully sign, the producer must return the case to the insurer for re-underwriting rather than deliver the policy. Delivery also starts the free-look clock. The right-to-examine period — typically 10 days for new policies, and 20 or 30 days for replacement situations — runs from the date the policyowner actually receives the policy, not from the issue date or the date the insurer mailed it to the producer. A policy issued May 1 but delivered May 10 with a 10-day free look can be returned for a full refund through May 20. Producers should document delivery with a signed receipt precisely because that date controls. During the free look the owner may return the policy for a full refund of premium, no questions asked.