North Carolina Life Insurance Practice Exam

The coverage for a life insurance policy begins upon delivery of the policy and payment of the initial premium. This means that if the applicant does not pay the initial premium at the time of application, the insurer will not provide coverage until the policy is received by the applicant and the premium is paid.

In life insurance, the initial premium is critical for binding coverage. Until both the policy is delivered and the premium is paid, the policy is not active. If an applicant signs the application, that alone does not constitute binding coverage; it is just the first step in the underwriting process. Similarly, while a Statement of Good Health may be required to establish insurability or confirm that the applicant's health has not changed since application, it does not trigger coverage without premium payment and policy delivery. Therefore, the timing of both elements—policy delivery and premium payment—is essential for coverage to commence.