New Jersey Life Producer Practice Exam

Which policy is designed to state the terms of coverage during the underwriting period?

1. Survivorship Life Policy

2. Conditional Receipt

3. Accidental Death Policy

4. Premium Waiver Clause

The correct answer is: Conditional Receipt

The correct answer is based on the specific role that a conditional receipt plays in the insurance process. A conditional receipt is a document given to a policyholder upon payment of the premium at the time of the application for life insurance. This receipt indicates that coverage is effective as of the date of the receipt, provided that the applicant meets certain underwriting criteria. It essentially acknowledges that the insurer has received the application and the premium and will provide coverage, pending the approval of the application after the underwriting process is complete. This mechanism allows the applicant to feel secure knowing that they have some level of coverage during the period in which their application is being evaluated, marking a significant moment in the underwriting process. Since insurance coverage generally does not begin until the policy is officially issued, the conditional receipt is vital for establishing interim coverage terms while the insurer assesses the risk associated with the applicant. Looking at the other options provides additional context. The survivorship life policy is a type of life insurance covering two individuals whose death benefits are paid upon the death of the second insured, but it does not function specifically during the underwriting period. The accidental death policy provides coverage solely in the event of death resulting from an accident, which does not address underwriting conditions directly. Meanwhile, the premium waiver clause is