Which statement is true about conditional receipts?

Conditional receipts are a type of receipt issued by insurers to applicants who have applied for a life insurance policy, which indicates that coverage will be activated under specific conditions. The primary condition typically involves the payment of the initial premium. This means that for the insurance coverage to take effect, the applicant must submit the initial premium payment at the time of application. The insurer effectively acknowledges that if the applicant meets these conditions, coverage will begin as specified.

The statement emphasizing the requirement of the initial premium payment is correct as it underscores the essential nature of the conditional receipt, indicating that payment is a prerequisite for potential coverage activation. Without the initial payment, the conditions for coverage cannot be fulfilled, making this understanding crucial for anyone involved in the insurance application process.