When should a producer issue a premium receipt for a life insurance application?

When should a producer issue a premium receipt for a life insurance application?

• A. Before the application is filled
• B. At the time of policy delivery
• C. When the initial premium has been paid with the application
• D. Only after underwriting approval

Answer: (C)

Issuing a premium receipt at the time the initial premium has been paid with the application is standard practice in life insurance. This action provides immediate acknowledgment to the applicant that their payment has been received and is associated with their application for coverage. The premium receipt serves several purposes: it confirms the payment, indicates that the insurance company has received it, and establishes a binding effect on the policy, depending on the specific terms outlined by the insurer. Delivering a premium receipt at this point is also beneficial for the applicant. It helps alleviate concerns regarding the status of their application and secures their insurability during the underwriting process. If for any reason the application is later declined or the coverage is not finalized, the receipt provides evidence of payment, which can possibly influence how the initial premium is handled. In contrast, issuing a receipt before the application is filled does not align with industry practices because no monetary transaction has occurred. Providing a receipt at the time of policy delivery may be too late, as it would disconnect the premium payment from the application process and the binding effect it has on the insurance coverage. Lastly, only issuing a receipt after underwriting approval would also not be standard practice, as it could delay the applicant's peace of mind regarding their payment and coverage.

Issuing a premium receipt at the time the initial premium has been paid with the application is standard practice in life insurance. This action provides immediate acknowledgment to the applicant that their payment has been received and is associated with their application for coverage. The premium receipt serves several purposes: it confirms the payment, indicates that the insurance company has received it, and establishes a binding effect on the policy, depending on the specific terms outlined by the insurer.

Delivering a premium receipt at this point is also beneficial for the applicant. It helps alleviate concerns regarding the status of their application and secures their insurability during the underwriting process. If for any reason the application is later declined or the coverage is not finalized, the receipt provides evidence of payment, which can possibly influence how the initial premium is handled.

In contrast, issuing a receipt before the application is filled does not align with industry practices because no monetary transaction has occurred. Providing a receipt at the time of policy delivery may be too late, as it would disconnect the premium payment from the application process and the binding effect it has on the insurance coverage. Lastly, only issuing a receipt after underwriting approval would also not be standard practice, as it could delay the applicant's peace of mind regarding their payment and coverage.