Under an insurability-type conditional receipt, if the applicant is found insurable on the date of application and dies before the policy is acted upon, what is the result?

Under an insurability-type conditional receipt, if the applicant is found insurable on the date of application and dies before the policy is acted upon, what is the result?

• A. No coverage attaches.
• B. Coverage attaches retroactively.
• C. Coverage attaches only at policy delivery.
• D. Coverage is canceled.

Answer: (B)

In this scenario, the test hinges on how an insurability-type conditional receipt works. If the applicant is found insurable on the date of the application, the coverage attaches retroactively to that application date—even if the policy hasn’t been issued yet. The death benefit would be payable as if the policy were in force from the date of application, for the amount applied for (assuming the death occurs while the coverage would have been in force and the applicant was indeed found insurable). So, when the applicant dies before the policy is acted upon, the result is that coverage attaches retroactively to the application date. This is why the correct outcome isn’t “no coverage,” nor does it wait until delivery, nor is it canceled simply because the policy wasn’t issued.

In this scenario, the test hinges on how an insurability-type conditional receipt works. If the applicant is found insurable on the date of the application, the coverage attaches retroactively to that application date—even if the policy hasn’t been issued yet. The death benefit would be payable as if the policy were in force from the date of application, for the amount applied for (assuming the death occurs while the coverage would have been in force and the applicant was indeed found insurable).

So, when the applicant dies before the policy is acted upon, the result is that coverage attaches retroactively to the application date. This is why the correct outcome isn’t “no coverage,” nor does it wait until delivery, nor is it canceled simply because the policy wasn’t issued.