When is a term life policy considered effective?

A term life insurance policy is considered effective when the policy document is delivered to the insured and the premium is paid. This is because the delivery of the policy signifies that the insurer has formally accepted the risk and is agreeing to provide coverage. Until both the policy is delivered and the premium payment is made, there is no legally binding contract between the insurer and the insured.

When the policy document is delivered, the insured is also given an opportunity to review the terms and details of the coverage. The requirement of premium payment further solidifies the agreement, as the insurer is compensated for the risk being taken on by issuing the policy. Thus, coverage genuinely begins at this point, when the insured has fulfilled both actions.

Other scenarios, like submitting an application or receiving the first premium, do not establish coverage legally. An application merely starts the process and indicates intent to purchase, but it is not binding until the policy is delivered and paid for. Underwriting approval is a step necessary to assess risk, but coverage does not commence until the aforementioned conditions are met.