Alex receives a conditional receipt after paying the initial premium with his policy application. The next day Alex submits a clean bill of health report to his insurance agent. Later that night, Alex is killed in a hit and run accident while out jogging. What is the insurance agency's responsibility in this instance?

Question

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The insurance agency will pay the full claim. Alex purchased a conditional receipt which is based on the acceptance after underwriting. Because Alex had a clean bill of health prior to dying, there would be no reason to decline the application. Conditional receipts require one of the following to occur: if the policy would have been issued, the proceeds are paid to the beneficiary named; if the policy would not have been issued, the premium would be returned.

Alex Receives a Conditional Receipt After Paying the Initial Premium