Tennessee Insurance Practice Exam 2025 – All-in-One Resource for Exam Success!

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What kind of receipt is issued if coverage begins immediately upon application approval with the initial premium submitted?

Conditional receipt

Binding receipt

A binding receipt is issued when coverage begins immediately upon application approval and when the initial premium is submitted. This type of receipt confirms that the insurer is obligated to provide coverage as long as the information provided on the application is accurate and meets the company's underwriting requirements.

With a binding receipt, the insured has immediate coverage regardless of the completion of formal underwriting processes, as long as the insurer accepts the application. This allows individuals to have peace of mind knowing they are covered right away. In contrast, a conditional receipt may offer temporary coverage under specific conditions, which means coverage is not established until certain requirements are met. A temporary receipt typically signifies that coverage will begin only after conditions are met, while a final receipt indicates that all premium payments and policy issues have been resolved.

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Temporary receipt

Final receipt

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