Conditional receipt

A conditional receipt is a document an insurer issues when an applicant pays the first premium along with the application. It promises that coverage can take effect before the policy is formally issued, but only if certain conditions are met. Its purpose is to cover the gap of weeks or months while underwriting is underway.

The most common type is an insurability receipt: coverage is effective from the date of the application (or of the medical exam, if later), provided the applicant turns out to be insurable as applied for under the insurer's normal rules. Hypothetical example: an applicant pays the first monthly premium, completes the exam and dies in a car accident two weeks later. If his records and lab results show he would have qualified, the insurer pays the claim even though the policy was never issued; if he would have been declined, it refunds the premium instead.

Conditional receipts usually cap the amount of coverage and exclude applicants who answer yes to certain health questions. Many insurers now use a temporary insurance agreement with similar terms, and a rarer binding receipt provides coverage until the insurer acts on the application. Read the conditions rather than assuming you are covered; see temporary insurance while your application is pending and the life insurance application process and timeline.