Which type of conditional receipt is likely to result in policy issue after the applicant for coverage has died?

Which type of conditional receipt is likely to result in policy issue after the applicant for coverage has died?

• A. I only
• B. II only
• C. Both I and II
• D. Neither I nor II

Answer: (B)

Conditional receipts create temporary life insurance while underwriting is in progress. The key difference between the two forms is how and when the coverage attaches and whether the insurer will issue the policy if death occurs before the policy is actually issued. With the first type, coverage tends to attach at the time of receipt but is contingent on the policy being issued under the same terms the applicant applied for. If underwriting later changes the terms or the policy is not issued, the temporary coverage can end. So if the applicant dies before the policy is issued, there isn’t a guaranteed path for issuing the policy based on that receipt. The second type ties the temporary coverage more directly to the actual issuance of the policy. If the policy is ultimately issued, coverage is considered in force from the receipt date; this makes it more likely that, even if death occurs before formal issuance, the insurer will issue the policy and honor the death benefit if underwriting would have allowed the issuance. That’s why this form is the one most likely to result in a policy being issued after the applicant dies. So, the type that is likely to result in a policy being issued after the applicant dies is the second type.

Conditional receipts create temporary life insurance while underwriting is in progress. The key difference between the two forms is how and when the coverage attaches and whether the insurer will issue the policy if death occurs before the policy is actually issued.

With the first type, coverage tends to attach at the time of receipt but is contingent on the policy being issued under the same terms the applicant applied for. If underwriting later changes the terms or the policy is not issued, the temporary coverage can end. So if the applicant dies before the policy is issued, there isn’t a guaranteed path for issuing the policy based on that receipt.

The second type ties the temporary coverage more directly to the actual issuance of the policy. If the policy is ultimately issued, coverage is considered in force from the receipt date; this makes it more likely that, even if death occurs before formal issuance, the insurer will issue the policy and honor the death benefit if underwriting would have allowed the issuance. That’s why this form is the one most likely to result in a policy being issued after the applicant dies.

So, the type that is likely to result in a policy being issued after the applicant dies is the second type.