What Is a Conditional Binding Receipt?A conditional binding receipt is involved in life, health, and certain property insurance contracts; if the insured is deemed to be covered by the insurer, the coverage begins on the date the insured receives the conditional binding receipt. Show
Typically, a premium payment must be received by the insurer along with a completed acceptable application in order for the insured to obtain the receipt. This may also be called a "conditional receipt" or a "binding receipt," depending on the type of insurance. Key Takeaways
Understanding Conditional Binding ReceiptsIf a premium accompanies an application, a conditional binding receipt provides that coverage will be in force from the date of application or medical examination, so long as the insurer would have issued the coverage on the basis of the facts revealed on the application, medical examination, and other usual sources of underwriting information. A life and health insurance policy without a conditional binding receipt is not effective until it is delivered to the insured and the premium is paid. So long as the insured is going to receive the policy anyway, the insurer is obliged to cover a claim should one occur between the time the application is received and the time the policy is officially in place. If, however, the insured is denied coverage as the typical underwriting process progresses, the insurer could nullify the conditional binding receipt, even if a premium was collected. The function of a conditional binding receipt can actually be divided into two separate receipts: a conditional receipt and a binding receipt. Conditional ReceiptsThe conditional receipt is most common. Under a conditional receipt, the applicant and the insurance company form a "conditional" contract that is contingent upon the conditions that existed when an application or medication exam is completed. It provides that the applicant is covered immediately as long as they pass the insurer's underwriting requirements. It is the insurance agent's responsibility to tell the applicant they are covered on the condition they prove to be insurable and pass a medical exam if one is required. A conditional receipt gives an insurance company a window of time in which they can ultimately issue or refuse to approve the policy. If during this time, the applicant for a life insurance contract dies, the company will pay a death benefit if the policy would have been issued. Binding ReceiptsA binding receipt states an insurance policy is effective upon receipt of initial premium payment. However, should the insured die before the application is processed, benefits are fully payable, subject to limitations. The binding receipt binds an insurer to the agreement unconditionally when benefits are due up to the limits of the policy. focusNode Nội dung chính
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When the first premium is collected at the time of application for a policy the effective date of coverage?Usually, a receipt is issued when the initial premium deposit is collected. Generally, the date of the receipt would be considered the effective date of the policy. What does initial premium payment mean?Initial Premium — the amount paid at the inception of an insurance contract. When the first premium is collected at the time of application for a policy the effective date of coverage is quizlet?If the initial premium is not submitted with the application, the policy effective date is the date on which the policy is delivered, and the initial premium is paid. In this example, January 17th. How many months can a life insurance policy be backdated? A life insurance application can be backdated up to six months. When an agent collects the initial premium from the applicant the agent should issue the applicant a?When an agent collects the initial premium from the applicant, the agent should issue the applicant a? When collecting the initial premium, the agent should issue the applicant a premium receipt. What is the effective date of an insurance policy?The effective date for insurance coverage is the date that the coverage is officially active. As of the effective date of coverage, the enrollee can receive services and the insurance carrier will pay out the benefit. Effective dates are calculated using the hire date and the company's waiting period.
Which of the following is the effective date of coverage for an applicant who has been issued a conditional receipt?Insurability Conditional Receipt
If the applicant is found to be insurable, the effective date of the policy is the date on the receipt (the date the initial premium payment was received).
What is the period a policy is in force from the beginning or effective date to the expiration date?The policy owner usually is the one who pays the premium and is the only person who may make changes to a policy. Policy period - The period a policy is in force, from the beginning or effective date to the expiration date.
What is the first element of the premium in insurance?There are three important elements in the computation of premium. They are (1) mortality, (2) expenses of management, (3) expected yield on its investment.
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