Life License Qualification Program (LLQP) Practice Exam

When is the insurer's coverage effective under a conditional receipt?

1. Immediately after application

2. After the medical examination

3. When payment is made

4. Upon approval of the application

The correct answer is: After the medical examination

Under a conditional receipt, the insurer’s coverage becomes effective after the medical examination has taken place, provided the insured meets the conditions outlined in the receipt and the insurer deems the application acceptable. This type of receipt indicates that coverage is not fully in effect until certain requirements, including medical underwriting or examinations, are satisfied. In this context, the conditional receipt serves as a temporary coverage mechanism while the insurer evaluates the application and any pertinent medical data. This means that until the medical examination is completed and any necessary criteria are met, the coverage remains contingent rather than fully effective. The other scenarios, such as coverage being effective immediately after application, at the time of payment, or upon approval of the application, do not accurately reflect how a conditional receipt functions. Each of those situations overlooks the significance of the medical examination process as a condition for the initiation of coverage.