Under the no initial premium with the application rule, when must the premium be collected?

Under the no initial premium with the application rule, when must the premium be collected?

• A. Upon Delivery Of Application
• B. At Policy Delivery
• C. With The Next Renewal
• D. Never

Answer: (A)

Under this rule, you don’t collect the premium with the application. The premium is due when the policy is delivered to the insured, so coverage only becomes binding once payment is received. The correct choice reflects that timing: the premium is collected at the moment of delivery. This aligns with the idea that no initial premium is needed with the application itself. The other options don’t fit because waiting until the next renewal, never paying, or requiring payment at application would violate the rule and how it protects both parties by tying coverage to payment.

Under this rule, you don’t collect the premium with the application. The premium is due when the policy is delivered to the insured, so coverage only becomes binding once payment is received.

The correct choice reflects that timing: the premium is collected at the moment of delivery. This aligns with the idea that no initial premium is needed with the application itself. The other options don’t fit because waiting until the next renewal, never paying, or requiring payment at application would violate the rule and how it protects both parties by tying coverage to payment.