Connecticut Life Producer Practice exam

When does an insurance policy typically go into effect?

1. When the policy is signed by the insured

2. When the first premium is paid and the policy is delivered

3. When the insurance company approves the application

4. When the application is submitted

The correct answer is: When the first premium is paid and the policy is delivered

The insurance policy typically goes into effect when the first premium is paid and the policy is delivered. This is an essential aspect of insurance contracts, as a policy's validity is often contingent upon both of these actions. Once the insurer receives the completed application, they may review it and make a decision regarding approval. However, just submitting the application does not establish coverage. The policy itself is only enforceable when the applicant has paid the initial premium, which demonstrates their intent to enter the contract and engage in the coverage agreement. Delivery of the policy also serves to formally present the terms of coverage to the insured, confirming that they acknowledge and accept these terms. This process ensures that both parties—the insurer and the insured—are clear about the responsibilities and expectations outlined in the policy.