PSI Life Exam Practice Test

When does coverage typically begin if a life application is not prepaid?

1. On the date of application

2. On the date the policy is delivered and accepted

3. On the date of approval

4. On the date the premium is paid

The correct answer is: On the date the policy is delivered and accepted

Coverage for a life insurance policy typically begins on the date the policy is delivered and accepted, provided there are no outstanding conditions that need to be satisfied, such as the payment of the premium. This means that even if a person fills out an application and is deemed insurable, they will not be covered until they have received the actual policy documents and formally accepted the terms of the policy. In many cases, a policy may require the first premium payment to be made at the time of delivery; however, some policies may allow for coverage to start immediately upon acceptance if the premium was prepaid. Thus, it’s crucial for the insured to understand that merely filling out the application or receiving an approval isn’t sufficient for coverage to take effect. Establishing this timeframe helps clarify the expectations for all parties involved, ensuring that the policyholder knows when coverage is officially in place, which is a key concept in life insurance underwriting.