Which type of insurance coverage is rarely used today and becomes effective upon application approval?

The type of insurance coverage that is rarely used today and becomes effective upon application approval is known as an approval receipt. This type of receipt serves as a temporary agreement between the insurer and the applicant, indicating that the insurer will provide coverage once the application has been reviewed and accepted.

The approval receipt is significant because it creates a binding contract as soon as the application is approved, which provides the applicant with immediate coverage until the policy documents are physically issued. Essentially, it assures the applicant that they will be covered from the moment their application meets the insurer's requirements.

Other types of receipts, such as temporary receipts and provisional coverage, typically provide coverage only under certain conditions or for a limited time before the policy is officially issued, which is not the case with an approval receipt. Thus, the approval receipt represents a more finalized commitment from the insurer, albeit still contingent on the successful completion of the application process.