What does a Conditional Receipt indicate?

A Conditional Receipt is a crucial document in the insurance application process, functioning as a temporary agreement between the insurer and the applicant. When an applicant submits their insurance application along with the first premium payment, the producer or agent can issue a Conditional Receipt. This receipt confirms that the insurer has received the application and the premium.

While the receipt signifies that the application is under review, it does not guarantee immediate approval of the policy; it merely indicates that the process is in motion. The actual effectiveness of the policy is contingent upon the insurer's review and acceptance of the application. Therefore, the Conditional Receipt serves as acknowledgment of submission, allowing the applicant to have provisional coverage until the policy is officially issued or denied. This is why the correct response highlights that it shows receipt of the application and premium rather than directly indicating approval or policy activation.