West Virginia State Life Insurance Practice Exam

What must a producer collect for coverage to take effect on a non-medical insurance application?

1. Signed application and initial premium

2. Medical examination and initial premium

3. Initial premium only

4. Signed application only

The correct answer is: Signed application and initial premium

For coverage to take effect on a non-medical insurance application, it is essential for the producer to collect both a signed application and the initial premium. The signed application serves as a formal request for insurance, confirming the applicant’s intent to obtain coverage and providing the insurance company with necessary information about the applicant’s risk profile. Collecting the initial premium is equally important because it signifies the applicant’s commitment to the policy. Without the payment, the insurer has no financial stake in providing the coverage, and thus, the policy cannot be activated. The combination of these two elements—a signed application and the initial premium—constitutes a binding agreement between the insurer and the insured, enabling the insurance coverage to commence. Other options omit one of these critical components, either leaving out the initial premium, which is necessary for the policy to be valid, or neglecting the signed application, which formalizes the insurance request. Therefore, both elements are required for effective coverage initiation.