Understanding Conditional Receipts in Life Insurance

What Is a Conditional Life Insurance Receipt?

A conditional life insurance receipt is a temporary document issued by an insurer to an applicant upon submission of a life insurance application and payment of the initial premium. It provides conditional coverage until the insurer completes the underwriting process and approves or denies the application.

What Would Happen If a Life Insurance Applicant Is Given a Conditional Receipt?

If an applicant receives a conditional receipt, they may be granted temporary coverage under specific conditions. If the applicant dies before the policy is officially issued, the insurer may pay the death benefit—provided the applicant met all underwriting requirements at the time of application. However, if the insurer later denies the application, the coverage under the conditional receipt may be voided.

How Does a Conditional Receipt Work in Life Insurance?

A conditional receipt binds the insurer to provide coverage from the date of application, but only if the applicant qualifies for the policy as initially applied for. If the insurer imposes additional requirements (e.g., higher premiums due to health risks), the conditional receipt may no longer apply, and coverage only begins after final approval.