Jeff is issued a receipt for payment of his first premium and is informed that his coverage is effective immediately, until the policy is either issued or declined by the underwriters. What type of receipt did Jeff receive with his premium payment?
Explanation
Answer: D - Jeff received a binding receipt with his premium payment. A binding receipt, or conditional receipt, makes the company liable for risk from the date of application. This receipt is usually good for 30-60 days, or until the policy is either issued or denied.
The answer says: “Binding receipt, or conditional receipt, makes…” This is confusing as the correct answer is D, yet C could also be correct.
