Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Unlike property and casualty insurance, temporary insurance coverage in life insurance is generally provided by a conditional receipt because:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In life insurance, a binder, an interim agreement providing immediate coverage in property and casualty insurance, is generally not permitted. Instead, the applicant receives a conditional receipt when paying the first premium with the application. The receipt provides coverage only if the applicant is determined to be insurable as applied for; coverage is typically effective as of the date of the application or the medical exam, depending on the receipt's conditions.
Why the other options are wrong
- B) Life policies are not issued at the counter; underwriting takes days or weeks, which is exactly why temporary coverage exists.
- C) Conditional receipts are used for individual policies, not only group policies; group members typically receive coverage under the master contract's terms.
- D) Premiums may be paid monthly or by other modes; the conditional receipt attaches to the initial premium payment but does not require full annual payment.
Memory hook
No binders in life insurance; the conditional receipt is the stand-in, and it is truly conditional.