Colorado Life Producer License Practice Test

If a full premium was submitted with an application and the policy was issued two weeks later, when does the policy coverage begin?

1. At the time of policy issue

2. At application date

3. Upon receipt of premium

4. At the end of the free look period

The correct answer is: At application date

The correct answer is that the policy coverage begins at the application date when a full premium was submitted with the application. This is significant in the context of life insurance policies. When a company accepts a full premium and issues the policy, it generally establishes coverage from the date of application as long as the application is approved without any modifications. This means that even though the policy might not be officially issued until two weeks later, the insurer recognizes coverage from the moment the applicant submitted the application and the full premium was paid. This practice is designed to ensure that applicants have immediate coverage in the event of an unforeseen incident occurring during the waiting period between application and policy issuance. In some instances, if there are stipulations regarding conditional receipt or specific underwriting requirements, those would dictate another start date for coverage, but typically in this scenario, the application date serves as the starting point due to the premium payment.