Question 29

Insurance becomes effective on delivery of the policy to the insured and payment of the initial premium to the producer.

The insurance becomes effective when the policy is delivered to the insured and the initial premium is paid to the producer. This ensures that both the policyholder and the insurer have fulfilled their initial obligations.

A) after medical examination is completed

This option is incorrect because the effectiveness of the insurance policy is not solely dependent on the completion of a medical examination. The policy becomes effective upon delivery and payment, regardless of the examination status.

B) after it is approved by the insurer's underwriters

Option B is incorrect as well. While underwriting approval is important for the policy, it does not trigger the policy's effectiveness. The policy must be delivered and the initial premium must be paid for it to take effect.

C) on delivery of the policy to the insured and payment of the initial premium to the producer

This option is correct. The life insurance policy becomes effective when it is delivered to the insured, and the initial premium is paid to the producer, fulfilling the contractual obligations of both parties.

D) on delivery of the policy to the insured and receipt of the initial premium in the home office

This option is incorrect because it specifies that the initial premium must be received in the home office, which is not necessary for the policy to become effective. The payment can be made to the producer at the time of delivery.

Conclusion

The correct answer, option C, clearly outlines the conditions under which a life insurance policy becomes effective. The other options fail to recognize the importance of both delivery of the policy and payment of the initial premium to the producer, which are essential steps in the process. Thus, option C is the only one that accurately describes when the insurance takes effect.