Certified Financial Consultant (CFC) Practice Exam

What would be the effective date of an insurance policy if an applicant paid the initial premium and then submitted to a medical exam five days later?

1. The date the policy was issued

2. The date of medical exam

3. Five days after the application

4. The date the initial premium was paid

The correct answer is: The date of medical exam

The effective date of an insurance policy, in this scenario, is determined by the sequence of events that occurred. When an applicant pays the initial premium, it is common for the insurance company to provide coverage immediately or on the same date as the premium payment. However, this is contingent upon the completion of all necessary underwriting processes, including medical examinations. In this specific case, even though the initial premium was paid upfront, the policy's effective date hinges on the results of the medical exam. The issuance of coverage is typically conditional upon satisfactory completion of all underwriting requirements, which include the medical exam. Therefore, the policy cannot be effectively active until the insurer has assessed the medical information, which will be determined at the date of the medical exam. This means that the effective date is tied to the completion of the medical exam, as the insurer must review this information to finalize the risk assessment and ensure that the applicant meets the underwriting criteria before the policy is officially active. Thus, the policy's effective date is the date of the medical examination.