What happens to coverage rights when a binding receipt is issued?

When a binding receipt is issued, it signifies that the insurer has accepted the application and that coverage is effective immediately, even while the underwriting process is still ongoing. This means that as long as the premium payment has been made, the insurance company provides coverage to the applicant right away, thereby offering a layer of protection until the final underwriting decision is made.

In the context of life insurance, this is significant because it assures the applicant that they have immediate coverage, removing the uncertainty that typically accompanies the wait for approval following an application. It creates a contractual obligation for the insurer to provide coverage under the terms specified in the receipt until a formal decision about the policy is made. Thus, option B accurately reflects this immediate and guaranteed coverage during the underwriting period.