What Does It Mean To Have “Conditional Receipt” When You Apply For Life Insurance?

sponsored by Midland National

It’s never fun having a discussion as a family or with a financial professional to figure out how much life insurance you need.   Most people dread this conversation as much as going to buy a new car because you are going to always feel like the insurance agents are ready to pounce on making a sale.  As long as I’ve been doing this, I have still yet to hear a surviving spouse tell me that they bought too much life insurance.

In many married couples, it is still usually one spouse who drives the conversation about how much life insurance the family needs.  Usually it is the major breadwinner of the family.   Recently, I heard yet again another sad story from a surviving spouse whose husband passed away way before his time.  When I learned a little more about the situation, she revealed that he had been approved for a large sum of life insurance a few years back but didn’t take it because he felt he could get a better rating.   A couple of years later, he reapplied for life insurance and actually got a better rating.  However, after being wishy washy over which policy to take when he was approved, he never made a decision to take any of the policies and left the family without any life insurance because he died.  The face amount of insurance had actually been approved, but he just didn’t accept and pay for the policy to put it in force.

This is where the term ‘conditional receipt’ becomes a very important conversation that most families glance over when they apply for life insurance.    When you take an insurance application, naturally there is going to be a period from the time you sign the application until the date the application actually gets approved.   In between those dates, you’ll have to do a phone interview, likely take a blood sample, EKG, etc. depending on the amount of insurance you apply for at that time.  Typically, the insurance company will ask for certain records from all of your physicians so they can do the best job possible in ascertaining what rating you should get for the life insurance.

You have the option at the time of the application to submit a first month’s premium or submit no premium at all.  The important part to attaching an initial premium called ‘conditional receipt’ is that if the policy gets approved (it must get approved and not just be in underwriting) and you die prior to the policy being delivered, it will still be considered binding by the insurance company due the fact that you submitted the premium for the first month (or year) along with the application.  A reminder here to check the exact meaning with each insurance company when you apply for life insurance.  Imagine that the policy is approved and waiting delivery as referenced in the case above.  The family would still qualify to get the death benefit simply over floating a small chunk of change.

Not only is it important to get yourself a life insurance agent who understands the importance of conditional receipt, but also it reminds me that as you put your insurance in force with a life insurance company, it is important to have one with stability that is able to pay the claims when you actually need them paid.  A good example is a company such as Midland National Life Insurance Company  which has been around since 1906 and is more than 110 years old. Learn about Midland National – a company that offers term insurance, whole life insurance, universal life insurance, and indexed universal life insurance.

I would recommend that you always submit an initial amount with the policy if you are serious about the insurance because you can never know what unforeseen circumstances could arise between application and delivery.   This small amount could make a huge difference for your family should something prematurely happen to you, so consider doing ‘conditional receipt’ the next time you apply for life insurance.

oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.

TED JENKIN IS SECURITIES LICENSED THROUGH INVESTACORP, INC. A REGISTERED BROKER/DEALER MEMBER FINRA, SIPC.  ADVISORY SERVICES OFFERED THROUGH INVESTACORP ADVISORY SERVICES, INC. A SEC REGISTERED INVESTMENT ADVISORY FIRM. Linked sites are strictly provided as a courtesy. Investacorp, Inc., and its affiliates, do not guarantee, approve nor endorse the information or products available at these sites nor do links indicate any association with or endorsement of the linked sites by Investacorp, Inc. and its affiliates.    Oxygen Financial, Inc and Ted Jenkins are not employees of Midland National Life Insurance Company.  The opinions and ideas expressed by them are their own and not necessarily those of Midland National or its affiliates.  Midland National does not endorse or promote these opinions and ideas nor does the company or agents give tax advice.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed as to accuracy. All presentations are for agent representative use only and cannot be used, in whole or part, with consumers.

About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

Read More About Ted Here

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor regarding your individual situation. 

Background and qualification information is available at FINRA's BrokerCheck website.

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