Three Requirements

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

Good Health Requirement

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

Personal Delivery by Agent (Preferred)

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

Mail Delivery

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

Electronic 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:

Requirements

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)

How It Works

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.

Extended Free Look

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+

When Policy Differs from Application

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

With Conditional Receipt

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

Without Initial Premium

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

Modes of 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

Automatic Payment Setup

Establishing ongoing payments:
- Bank draft authorization
- Credit card authorization
- Payroll deduction
- Billing arrangements

Complete duties:

1. Confirm good health: Verify insured healthy
2. Review policy: Explain coverage, riders, exclusions
3. Explain any changes: From application
4. Free look notice: Point out free look period
5. Answer questions: Address concerns
6. Collect premium: If not yet paid
7. Obtain delivery receipt: Signature and date
8. Return receipt to company: Proof of delivery
9. Discuss additional needs: Future planning

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

• Coverage effective when: Policy issued, premium paid, delivered while insured in good health
• Good health requirement: Insured must be in same health as when applied
• Personal delivery preferred: Agent confirms health, explains policy
• Delivery receipt: Signed document acknowledging receipt
• Free look period: 10-30 days to return for full refund
• MA free look: 10 days for policies delivered in person
• Free look starts: When policy delivered or received
• Counteroffer: If policy differs from application, must explain and get approval
• Conditional receipt: May provide coverage from application/exam date if insurable
• No initial premium: No coverage until delivery + payment + good health
• Agent responsibilities: Confirm health, review policy, explain changes, obtain receipt
• Replacement: Additional requirements, longer free look, don't cancel old policy
• Federal senior protection: 30-day free look for ages 65+