What occurs if the premium is late but the conditional receipt was issued?

When a conditional receipt is issued, it indicates that a life insurance applicant is provisionally covered pending the underwriting process. However, if the premium payment is late, the terms of the conditional receipt imply that no coverage is provided until the first premium is collected. This means that even though the insurance company may have intended to offer coverage based on the conditional approval, the failure to submit the premium on time results in a lack of active coverage.

The essence of a conditional receipt is that it creates a temporary agreement based on the timely submission of the first premium. If this payment does not occur, regardless of the receipt, it voids any potential coverage that might have been effective. Therefore, not paying the premium as required leads directly to the conclusion that no insurance coverage is in force.

Consequently, understanding the implications of late payments in relation to conditional receipts is critical, as it underscores the importance of adhering to premium payment schedules to maintain coverage.