Texas Life Agent Practice Exam

When does coverage begin if a producer delivers the policy and picks up a signed check along with a Statement of Continued Good Health?

1. At the time the application is completed

2. When the initial premium check is cashed

3. Upon the delivery of the policy

4. When the applicant signs the check

The correct answer is: Upon the delivery of the policy

The coverage begins upon the delivery of the policy in this scenario because it is during this process that the insurer formally accepts the policyholder's application contingent on the satisfactory payment of the initial premium. Delivering the policy signifies that the insurer is acknowledging the agreement and all conditions that were necessary for the policy to take effect. By requiring a signed Statement of Continued Good Health, the producer ensures that the applicant remains in good health since the time of application, which is a critical factor for the validity of the policy. The collection of the signed check at the time of delivery indicates the applicant's commitment to the policy and the initial premium payment, which together fulfill the requirements for binding coverage. In contrast, the beginning of coverage at the time the application is completed or when a check is signed or cashed does not take into account the conditional nature of policy delivery, which is vital for ensuring the policy's effectiveness based on the state of health at that time and the payment of the premium.