Ace the Chartered Life Underwriter Challenge 2026 – Secure Your Success and Dominate the Exam!

When a life insurance applicant receives a conditional receipt, it indicates that the insurer acknowledges the applicant's payment and that coverage may begin under certain conditions, often pending the approval of the application. If the applicant were to die the next day, the claim would be paid if the application is approved.

This reflects the principle that the insurer is bound to provide coverage as outlined in the conditional receipt, provided the applicant met all underwriting requirements during the application process and the risk was acceptable to the insurer. The critical factor is the approval of the application, as the terms of the receipt typically stipulate that coverage will become effective once the application is approved, retroactive to the date of the conditional receipt.

Therefore, the outcome hinges on whether the insurer is satisfied with the applicant’s health status and underwriting criteria as stated in the application. If the application is subsequently approved, the insurance company will pay the claim; if it is denied, then the coverage doesn’t go into effect, and therefore, the claim would not be payable.