Life License Qualification Program (LLQP) Practice Exam

Which of the following documents is issued only after the initial premium is paid?

1. Application form

2. Insurance policy

3. Binding receipt

4. Conditional receipt

The correct answer is: Insurance policy

The insurance policy is the document that is issued only after the initial premium is paid. This document serves as the official contract between the insurer and the policyholder, detailing the coverage, terms, conditions, and exclusions of the insurance plan. The issuance of the policy indicates that the insurer accepts the risk and the coverage is now in effect, contingent upon the payment of the initial premium. In contrast, an application form is typically completed prior to the payment of any premium and is used to collect information necessary for underwriting the risk. The binding receipt is a type of temporary coverage that can provide immediate protection even before the full policy is issued, as long as the applicant pays the initial premium. The conditional receipt, also issued prior to policy issuance, provides coverage on certain conditions, but does not result in the permanent contract until the initial premium is paid, and the application is approved. Therefore, the key distinction lies in the fact that the insurance policy represents the completed agreement that commences only after the initial premium has been successfully processed and accepted by the insurer.