When does a policy become effective after an agent gives a conditional receipt to a client?

The policy becomes effective when the conditions of the receipt are met, reflecting the principle of conditional receipts in insurance. A conditional receipt typically serves as a temporary coverage agreement, indicating that the insurer will provide coverage from the date the receipt is issued as long as certain stipulated conditions are satisfied.

For instance, these conditions often include the successful completion of medical underwriting or the applicant meeting health requirements. If the conditions are not met, then the policy does not go into effect. Thus, this option highlights the contingent nature of coverage under a conditional receipt, demonstrating how insurance agreements are anchored in the fulfillment of specified preconditions prior to policy activation.

This concept underlines the importance of understanding the specifics of what a conditional receipt entails, especially for those new to insurance policies.