Arkansas Life and Health Insurance Practice Exam

If the premium is not collected at the time of the application, what may result?

1. Policy processing delays

2. Higher premiums

3. Coverage delay or denial

4. Additional underwriting requirements

The correct answer is: Coverage delay or denial

If the premium is not collected at the time of the application, it may result in coverage delay or denial. This is because insurance companies typically require the initial premium payment to bind coverage and initiate the policy. Failing to pay the premium upfront can lead to a delay in the activation of coverage, or in some cases, the insurance company may choose to deny coverage altogether until the premium is paid. This emphasizes the importance of timely premium payments in securing insurance coverage. Options A, B, and D are incorrect because they do not directly address the specific consequence of not collecting the premium at the time of application, which is the potential for coverage delay or denial.