Monday, August 1, 2016

A Good Reminder: Conditional Receipts vs. TIA's

When you take money with a life application, some carriers use a Conditional Receipt while others use a Temporary Insurance Agreement (TIA) to bind insurance coverage during the underwriting process, subject to the terms of the agreements.  However, taking money with the app is in the best interest of the client because it is the only way to have potential coverage at some point during the underwriting process.  Without money, there is definitely no coverage until the policy has been issued and all delivery requirements have been satisfied.
Coverage under a Conditional Receipt is conditional on the person being insurable, and often at the
“applied for” class.  Otherwise, there is either no coverage under the receipt, or a reduced amount. It's important to read the fine print on this receipt because the definitions and benefit limits vary from carrier to carrier.

The amount of coverage under a TIA is not usually conditional on being insurable at the "applied for" class.  The amount of coverage under the agreement is typically the same, even if the offered class differs.  Coverage continues until the insurance carrier refunds the money or accepts the risk and issues a policy. Again, it's important to read the fine print on this agreement because the definitions of coverage and benefit limits vary from carrier to carrier. 
In all cases, an agent should not accept money or provide the client with a TIA or Conditional Receipt if there is reason to believe the client is not insurable.