Arkansas Life and Health Insurance Practice Exam

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What happens if a producer fails to collect the premium at the time the application is completed?

  1. The application is voided

  2. The applicant must undergo another medical examination

  3. Coverage cannot go into effect

  4. The premium will be higher if paid later

The correct answer is: Coverage cannot go into effect

If a producer fails to collect the premium at the time the application is completed, the coverage cannot go into effect. The premium payment is a crucial part of the insurance contract, and without the premium being paid, the insurance company has no obligation to provide coverage. This emphasizes the importance of ensuring that premiums are collected in a timely manner to activate the insurance coverage as intended.

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