What does a binding receipt provide after a policy application is submitted?

A binding receipt is an important document that indicates the insurer's promise to provide coverage under certain conditions after a policy application has been submitted. When a binding receipt is issued, it establishes immediate interim insurance for the applicant, which means that coverage is in effect from the moment the receipt is provided, regardless of whether the final policy has been issued or accepted.

This type of receipt allows the applicant to have protection during the period when the insurer is reviewing the application and conducting the necessary underwriting processes. Essentially, it confirms that the applicant is covered during this interim period, which offers peace of mind until the policy is formally issued or ultimately declined.

In the context of traditional life insurance, this is especially important because applicants often want assurance that they are protected during the waiting period before they receive formal confirmation of coverage. Thus, the option that states "immediate interim insurance until the policy is issued or declined" accurately describes the primary function and purpose of a binding receipt.