Question

"A producer provided a conditional receipt to an applicant who paid the first premium with the application. The applicant died before a policy was issued. If the insurer denies the claim, which party would have to prove the reasons for its actions if the claim was challenged?"

Answer 1

Answer:

The insurance company, because the applicant was covered by the policy.

Explanation:

Once a conditional receipt is given, the applicant is immediately covered. The issuing of a conditional receipt provides immediate coverage starting from the date the application was made and the premium was paid. Only if the applicant didn't pass the underwriting requirements for the policy, would the policy not be in effect. For example, if the applicant must pass a medical examination, the coverage begins only after the applicant passes the medical examination.

Therefore the insurance company must provide the reasons why they denied the claim.