Policy delivery is the final step in the application process, establishing when coverage becomes effective and ensuring the policyowner understands the contract.
All three must be met:
1. Policy issued by insurer: - Underwriting approved - Policy printed and signed - Sent to agent or client
2. Premium paid: - Initial premium paid in full, or - Arrangements made for payment
3. Policy delivered while insured in good health: - Delivered to policyowner - Insured alive and in good health - No material change in health since application
Insured must be in same health as when applied:
Example - Coverage effective:
Application: June 1 (excellent health)
Medical exam: June 5
Policy approved: July 1
Policy delivered: July 15 (still in good health)
Coverage effective: June 5 (exam date with conditional receipt)
OR: July 15 (delivery date if no conditional receipt)
Example - Coverage NOT effective:
Application: June 1 (good health)
Approved: July 1
July 10: Heart attack
Delivery attempt: July 20
Result: Coverage does NOT take effect
Insured not in good health at delivery
Premium refunded
Best practice: - Agent delivers in person - Explains policy - Reviews coverage, riders, exclusions - Answers questions - Obtains delivery receipt - Collects premium if not yet paid
Advantages: - Confirms good health - Ensures understanding - Good customer service - Opportunity to discuss additional needs
Acceptable but less preferred: - Policy mailed to policyowner - Certified mail with return receipt - Effective when received - No personal explanation
Risk: No confirmation of good health at delivery
Increasingly common: - Email with secure link - Must have consent - Confirmation of receipt - Same legal effect
Document acknowledging receipt:
Agent obtains signature: - Date of delivery - Confirms receipt - Confirms good health - Premium payment status
Example delivery receipt:
I acknowledge receipt of Policy No. 12345678
issued on the life of [Insured Name].
I confirm that [Insured Name] is alive and in
good health as of today.
Premium: [X] Paid [ ] To be paid
Signature: _______________ Date: ___________
Returned to insurer: - Proof of delivery - Confirms coverage effective - Part of policy file
Right to cancel and receive full refund:
Mandatory in all states: - Minimum period varies by state - Typically 10-30 days - Massachusetts: 10 days (policies delivered) - Federal: 30 days (seniors 65+)
Starts when: - Policy delivered, or - Policy received (if mailed)
Policyowner can: - Return policy for any reason - No questions asked - Receive full premium refund - No surrender charges
Example:
Policy delivered: August 1
Free look period: 10 days
Expires: August 11
August 9: Policyowner returns policy
Result: Full refund of all premiums paid
Notice requirement: - Free look notice must be prominently displayed - Usually on policy cover or first page - Bold or contrasting color
Example notice:
10-DAY FREE LOOK PERIOD
You may return this policy within 10 days of
receipt for a full refund of premiums paid.
Simply return the policy to the agent or company.
No questions asked.
Longer periods for certain products:
Life insurance replacement: - May require 30 days - Extra protection for seniors
Annuities: - Typically 30 days - Federal requirement for seniors 65+
If changes made by underwriter:
Examples: - Different premium than quoted - Rated policy (higher premium) - Exclusion added - Lower face amount - Different policy type
Agent must: 1. Explain differences 2. Get applicant approval 3. Obtain new signature if material change 4. Return if applicant declines
Applicant options: - Accept as modified - Decline and receive refund - Request different changes
Example:
Applied for: $500K at standard rates ($1,000/year)
Issued as: $500K at Table C rates ($1,500/year)
Agent must:
- Explain Table C rating
- Show increased premium
- Get acceptance or rejection
Applicant can:
- Accept $1,500/year
- Accept lower amount at $1,000/year
- Decline entirely
Coverage may be effective from application/exam:
If insurable: - Coverage backdates to application or exam date - Even if policy not yet delivered - If insured was insurable at that time
Example:
Application + premium: June 1 (conditional receipt)
Medical exam: June 10
Approved: July 1
Died: June 25 (before delivery)
Claim paid: Yes
Effective date: June 10 (exam date)
Insured was insurable on that date
No coverage until delivery:
Coverage starts: - When all three requirements met - Policy delivered - Premium paid - Good health confirmed
Example:
Application: June 1 (no premium)
Approved: July 1
Died: June 25 (before delivery)
Claim paid: No
No coverage until delivery + premium payment
If not paid with application: - Agent collects at delivery - Check, money order, electronic payment - Cash (typically not accepted for large amounts)
Premium receipt: - Agent issues receipt - Temporary coverage begins - Permanent when payment clears
Establishing ongoing payments: - Bank draft authorization - Credit card authorization - Payroll deduction - Billing arrangements
Complete duties:
When replacing existing insurance:
Additional duties: - Provide replacement forms - Notice to existing insurer - 30-day free look (typically) - Side-by-side comparison - Document reasons for replacement
Do not cancel old policy until: - New policy delivered - Free look period expires - Coverage confirmed in force