What type of receipt is given to policy owners when they pay a premium at the time of application?

When a policy owner pays a premium at the time of application, they receive a conditional receipt. This type of receipt indicates that the insurer has received the premium payment and that coverage may become effective as of the date of application or the date of the receipt, depending on whether the applicant is ultimately approved for coverage. The key aspect of a conditional receipt is that it establishes a temporary coverage until the insurance company has completed its underwriting process and decided on the acceptance of the application.

If the insurer later determines that the applicant is not insurable, the coverage that was potentially in effect upon receipt will be void, and the premium will be refunded. This creates a scenario where the policy owner has some immediate protection while waiting for the underwriting decision.

Other types of receipts, like a full receipt, approval receipt, or preliminary receipt, either indicate a different level of assurance regarding coverage or do not adequately communicate the conditional nature of insurance contracts during the application process. Thus, the conditional receipt effectively bridges the gap between application and policy issuance.