Practice Quiz

Health and Life Insurance

Category - Annuities & Policies

Start a Study Session Sign up for Question of the Day
Alex receives a conditional receipt after paying the initial premium with his policy application. The next day Alex submits a clean bill of health report to his insurance agent. Later that night, Alex is killed in a hit and run accident while out jogging. What is the insurance agency’s responsibility in this instance?
  1. Return the premium to Alex’s estate.
  2. Pay the claim less the initial premium
  3. Only pay a percentage of the claim
  4. Pay the full claim.
Explanation
Answer: D - The insurance agency will pay the full claim. Alex purchased a conditional receipt which is based on the acceptance after underwriting. Because Alex had a clean bill of health prior to dying, there would be no reason to decline the application. Conditional receipts require one of the following to occur: if the policy would have been issued, the proceeds are paid to the beneficiary named; if the policy would not have been issued, the premium would be returned.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz