Basically, a conditional receipt is a receipt given for percentage payment accompanying a claim for insurance. If the application is accepted as applied for, the coverage is efficient as of the date of prepayment, or the time on which the last of the guarantee requests, such as health examination, had been performed. In addition, candidates could even get a conditional receipt for life insurance from an insurer. This temporary arrangement between the insurance company and the candidate is effective throughout the application procedure.
Furthermore, in life and health insurance, proof of a temporary contract compels an insurer to give coverage as long as the premium payment goes with the application. This would allow the insurance company enough time to check and process the policy, and to either issue or decline coverage for that reason. For instance, the applicant passed away before a policy was given out, the company would usually pay for the death payment, provided that the policy would have been given to the applicant.
In some cases, the conditional receipt promises coverage even if your health changes after you get it. However, in a lot of cases, before you get a policy, according to the majority of states’ insurance laws, a number of companies would not allow an agent to accumulate premium or offer a conditional receipt if the policy is larger than a particular amount. More often than not, the amount would usually be $250,000.
In addition, the conditional receipt defends the policy holder from companies which could not pay for their claims. If this case happens, in order to decline payment, the company should have notified the person, in writing, that there would be no coverage available. One more condition in the terms of coverage about the conditional receipts or binding receipt is that if it would say you have got to have a physical examination before coverage is effective, but, due to some unfortunate events, you passed away before the said examination, then no coverage would be given to you.
One misinterpretation regarding a conditional receipt is that it does not guarantee any payment if you make a material misrepresentation on the policy, and you passed away. A material misrepresentation would sometimes include a lie about your condition of health or about your lifestyle. When applying to get coverage, you have to be completely honest with regards to how you live, and what your health state is.
We all know that possessing an insurance policy is of great importance to us. Although we do not at all times get the rewards for it, we would be happy to know that if ever we pass away, our families would benefit from it in a great deal. Financial and/or physical status should not hinder you from purchasing an insurance policy. Additionally, when getting insurance, we must never fail to ask for and secure our receipts. The receipts will serve as proofs that our families, which our family would present to the insurance company to avail of the benefits entitled for them.