Life License Qualification Program (LLQP) Practice Exam

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Prepare for your Life License Qualification Program (LLQP) Exam. Study with flashcards and multiple choice questions, enhanced with hints and explanations. Master the content to excel in your exam!

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If an individual fails to pay the initial premium, what happens to the insurance application?

The application becomes void
The application is kept for future reference
The application is processed without coverage
The application is forwarded to the underwriter for review

The correct answer is: The application becomes void

When an individual fails to pay the initial premium, the insurance application becomes void. This is because the payment of the initial premium is often a condition for the policy to take effect. The initial premium signifies the applicant's commitment and acceptance of the insurance contract, and without this payment, the insurer has no obligation to provide coverage. The other options imply different situations regarding the handling of the application after the premium is not paid. However, in standard insurance practices, if the initial premium is not received, there is typically no binding contract or coverage in place, leading to the application being rendered void. The insurer cannot hold or process the application without the necessary payment that establishes the policy's validity. Thus, the correct answer emphasizes the necessity of premium payment as a fundamental aspect of activating an insurance policy.