West Virginia State Life Insurance Practice Exam

What must a producer collect for non-medical insurance coverage to take effect the same day?

1. A signed application and the initial premium

2. A health examination and the initial premium

3. A verbal agreement and the initial premium

4. Only the signed application

The correct answer is: A signed application and the initial premium

To activate non-medical insurance coverage on the same day, it is essential for a producer to collect both a signed application and the initial premium. The signed application confirms the applicant's intent to purchase the insurance and provides necessary personal and health-related information for underwriting. Collecting the initial premium demonstrates the applicant's commitment to the policy and ensures that there is financial backing to the coverage being issued. In contrast, simply having a health examination or just a verbal agreement would not suffice. A health examination typically pertains to more extensive medical coverage and may delay the issuance of the policy until results are received. A verbal agreement lacks the legal binding nature of documented consent, which is crucial in insurance transactions. Finally, just the signed application without the premium does not fulfill the requirement for the immediate effect of coverage, as financial consideration is mandatory for policy activation. Therefore, the combination of both a signed application and initial premium is necessary to ensure that the coverage is effective the same day.