A conditional receipt is issued when the premium is submitted with the application.

• A. Yes
• B. No
• C. Only if premium is paid with the application
• D. Only for replacement polices

Answer: (A)

When you apply for life insurance and include the initial premium, the insurer usually issues a conditional receipt. This receipt creates temporary coverage from the application date (or the date the premium was paid) while underwriting is completed, with the understanding that the policy will be issued only if the underwriting result is acceptable. If the policy is issued, the coverage backdates to the application date; if not, there is no coverage. So the statement—that a conditional receipt is issued when the premium is submitted with the application—is correct. If the premium isn’t submitted with the application, you generally don’t receive this conditional coverage.