An applicant pays the first premium with the application and receives a conditional receipt that states coverage begins 'as of the application date provided the applicant is insurable at standard rates on that date.' The applicant dies in an accident three days later, before underwriting is complete. Under the conditional-receipt doctrine, the insurer's obligation is:

Why this is the answer

Three premium-receipt types govern interim coverage between application and issue: (1) Conditional (insurability) receipt — coverage begins on application date IF applicant is later determined insurable at the rate class applied for; if applicant dies before underwriting completes, post-mortem insurability determination controls. (2) Binding receipt — temporary coverage begins immediately and continues until the insurer formally rejects the application (less common in life; more common in P&C). (3) Approval receipt — no coverage until the insurer affirmatively approves the application, even if premium was paid. The conditional receipt is the industry standard for life insurance and protects the applicant who has paid premium against the risk of death during underwriting delay, provided insurability is established.