2.1.1 Offer and Acceptance
Offer and acceptance is completed when a premium payment accompanies the offer made by the proposed insured or applicant and the insurer accepts the offer. Typically, the effective date of the policy would be the date the payment was accepted.
If a premium payment has accompanied the offer and the insurer rejects the offer, the insurer may make revisions (and return the premium payment) and make a counter-offer to the applicant. Then the ball's in the applicant's court to accept the terms and conditions of the counteroffer.
If the insurer accepted an offer that was not accompanied by a premium payment, and the premium payment was collected at the time the policy was delivered to the applicant, the effective date would be the date the insurer issued the policy - not the date the premium payment was made.
The effective date of a policy is the date the insurer accepts an offer by the applicant "as written."
On September 9, Katie made an application for life insurance that her agent submitted a day later without a premium payment. On September 21, the insurer issued the policy as applied for and on September 24, the agent delivered the policy and collected the initial premium. On what day was the contract offer made?
September 21st - If an applicant does not submit an initial premium with the application, he or she is inviting the insurance company to make a contract offer. The insurer can respond by issuing a policy (the offer) that the applicant can accept by paying the premium when the policy is delivered.
