What does a conditional receipt provide to the applicant?

A conditional receipt serves as a temporary agreement between the insurer and the applicant, indicating that coverage may become effective contingent upon the applicant meeting certain requirements, primarily a satisfactory assessment of insurability. It is issued after the applicant has submitted an application and paid the initial premium, but before the insurance company has officially approved the policy based on its underwriting process.

When a conditional receipt is issued, it provides coverage that is effective only if the applicant is ultimately found to be insurable based on the insurer's criteria. This means that if the applicant meets the necessary health and risk factors as evaluated by the insurer, the policy will take effect retroactively to the date of the receipt. Therefore, the applicant is not guaranteed immediate coverage, as that coverage is dependent on the company's assessment of their risk after reviewing their insurability.

The conditional nature of the receipt emphasizes the importance of the underwriting process, which includes the evaluation of health histories and other risk factors, ensuring that the insurer is protected against unforeseen claims that could arise from an uninsurable applicant.