When does a life insurance policy typically become effective?

• A. When the insured signs the application
• B. When the policy is issued
• C. When initial premium is collected and the policy is issued
• D. When the policy is delivered

Answer: (C)

Coverage becomes effective once the insurer has issued the policy and the initial premium has been collected. The policy is a binding contract only after underwriting, issuance, and payment of the first premium, which activates the coverage. Simply signing the application or delivery alone doesn’t start coverage because no contract is in force until the policy is issued and paid for.