What is a "conditional receipt"?

A "conditional receipt" is a temporary insurance contract that provides coverage under specific conditions while the insurer reviews the application for the permanent policy. It is usually issued when the applicant completes a health questionnaire and pays the initial premium. If the insurer ultimately approves the application and issues the policy, the coverage provided by the conditional receipt applies retroactively to the date it was issued. This gives applicants peace of mind during the waiting period, knowing they are protected under certain conditions.

The other options do not accurately define a conditional receipt. A permanent coverage plan for high-risk individuals suggests an ongoing product rather than a temporary agreement based on conditionality. A renewal option at the policy's expiration pertains to extending coverage rather than the initial stages of receiving a policy. Lastly, an agreement for a discount on premiums does not relate to the concept of a conditional receipt, since it focuses on pricing rather than the temporary nature of coverage during the underwriting process.