Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Unlike property and casualty insurance, life insurance cannot be put into temporary effect through a binder. Instead, coverage generally begins when:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Bindings (binders) are used in property and casualty insurance to provide immediate temporary coverage, but life and disability insurance generally cannot be bound. A life policy is not in force until the insurer approves the application, the policy is delivered to the owner, and the first premium is paid. An exception is the conditional receipt, which may provide temporary coverage if the applicant meets certain conditions, such as being insurable under the policy's rules on the date of the application.
Why the other options are wrong
- B) An oral statement by the agent cannot create life insurance coverage; delivery of the policy and payment of premium are required.
- C) Signing the application alone does not put coverage in force if no premium is paid and no policy is delivered.
- D) Mailing the policy without premium payment does not activate coverage.
Memory hook
Life has no binders: deliver the policy, collect the premium, or use a conditional receipt.