What is the document called that an applicant for insurance may receive after paying the initial premium, indicating that coverage begins if the policy is approved?

The document an applicant receives after paying the initial premium, which indicates that coverage begins if the policy is approved, is known as a conditional receipt. This type of receipt serves as an interim acknowledgement that the insurer has received the initial premium and that coverage will be effective, subject to the insurer's approval of the application. It is very important as it assures the applicant that they have some level of coverage pending the final underwriting decision.

The conditional receipt typically stipulates that if the insurance company accepts the application as submitted, coverage will be in effect from the date of the receipt, or another designated date as specified in the document. This is crucial for applicants as it provides a sort of guarantee of coverage during the evaluation period.

In contrast, other documents such as a policy declaration or insurance certificate serve different functions. The policy declaration outlines the terms of the insurance policy once issued, while a binding receipt provides immediate coverage without any conditions, which is not the case for a conditional receipt.