AD Banker Comprehensive Practice Exam

What is the most effective way to ensure that an applicant will accept a policy when issued?

1. Collect the initial premium upon policy delivery

2. Deliver the policy with a gift certificate to a local restaurant

3. Offer to pay the first premium for them

4. Have the applicant pay the initial premium at the time of application

The correct answer is: Have the applicant pay the initial premium at the time of application

The most effective way to ensure that an applicant will accept a policy when issued is by having the applicant pay the initial premium at the time of application. This approach signifies the applicant's commitment to the policy since their financial investment is already made. By paying at the time of application, the applicant often feels a stronger obligation to complete the process and accept the policy once issued. Moreover, this method minimizes the chances of the applicant changing their mind or hesitating to accept the policy upon delivery, as they have already engaged in a tangible commitment. When the initial premium is collected upfront, it can also facilitate a smoother application and underwriting process, as the insurer has already initiated the financial transaction. Other methods, like collecting the initial premium upon delivery or offering incentives like gift certificates, may not effectively secure the applicant's commitment, as they can lead to delays or reluctance in finalizing the purchase.