2.6 - Policy Delivery

Question 1

Policy Delivery

Answer 1

When the insurer determines that an applicant is an acceptable risk, the insurer will send the policy to the producer for delivery to the insured. It is the producer’s responsibility to deliver the policy and collect any premiums that were not paid at the time of application. The producer should explain the policy to ensure the policyowner/insured understands the benefits, including any ratings, endorsements, exclusions, and riders

Question 2

Constructive or legal delivery - (Policy Delivery)

Answer 2

Occurs only if the premium was paid at the time of application. Once the insurer issues the policy, a legal contract has been formed because the policy becomes the acceptance. Once the insurer mails the policy to the producer, it is considered constructively or legally delivered by the insurer. It is still the producer’s responsibility to obtain delivery signatures and explain policy benefits to the policyowner/insured.

If a policy is not approved as applied for, the insurer may make a “counteroffer” to the applicant. The insurer may issue a policy with a surcharge (higher rating) or exclusions to the policy. The producer must hand-deliver the policy to the applicant to collect any additional premium, explain the changes in coverage and premium, and reinforce the value of the contract.

When the initial premium is not paid with the application, the producer must collect the premium before coverage can begin. The producer must also get a signed Statement of Good Health from the applicant/insured at the time of policy delivery that verifies that the insured has not suffered injury or illness, had any surgeries, or been admitted to a hospital since the application date. If the applicant is not in good health, the policy should be returned to the insurer for further underwriting.

Policy delivery will be accomplished by:
- Personal delivery, with signed receipt of delivery

• Registered or certified mail with a signed receipt of delivery