State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
In California, an agent may not issue a binder for life or disability insurance. Instead, when a life applicant pays the initial premium with the application, the applicant typically receives:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California law prohibits binders for life and disability insurance. The standard substitute is a conditional receipt: if the applicant pays the first premium with the application, coverage becomes effective as of the receipt date, but only if the insurer later determines the applicant was insurable on the terms applied for. This protects the applicant against the underwriting delay while conditioning coverage on the applicant's insurability.
Why the other options are wrong
- B) No immediate binder is available for life insurance; coverage under a conditional receipt depends on a favorable underwriting result.
- C) Oral promises of coverage are not valid temporary insurance for life products, and no 60-day oral binder exists.
- D) The agent's signature alone cannot create life insurance coverage; policy issuance and the conditional receipt process are required.
Memory hook
Life insurance runs on receipts, not binders. Coverage begins when you are found insurable, not when the agent smiles.