Policy delivery and explaining the contract

Delivery finishes the sale

Underwriting ends when the insurer issues the policy, but the producer's job is not over. The policy still has to reach the policyowner, any outstanding requirements still have to be met, and the owner still has to understand what was bought. Handled well, policy delivery protects the client, the insurer and the producer. Handled badly, it is where misunderstandings, lapses and complaints begin.

What counts as delivery

Actual (physical) delivery is putting the policy into the owner's hands, ideally in person so the producer can walk through it.

Constructive delivery happens when the insurer gives up control of the policy with the intent to be bound: for example, mailing it to the policyowner, or releasing it to the producer without conditions. Once that happens, the policy is considered delivered even if the owner has not yet seen it. If the insurer releases the policy to the producer subject to conditions (such as collecting the first premium or a statement of good health), delivery is not complete until those conditions are met.

In Florida, subject to the insurer's premium requirements, every policy must be mailed, delivered or electronically transmitted to the insured or the person entitled to it no later than 60 days after coverage takes effect. Electronic delivery is allowed in the circumstances the law describes, and for many lines it counts as delivery unless the insured tells the insurer, in writing or electronically, that they do not agree to it.

Collect what is still outstanding

If the application was submitted without the initial premium, coverage generally does not begin until the premium is paid. At delivery the producer:

1. Collects the initial premium and gives a receipt.
2. Obtains a signed statement of good health from the insured, confirming there has been no change in health or insurability since the application was signed. If the insured's health has changed, the producer does not deliver the policy and returns it to the insurer.
3. Obtains signatures on any amendments or on acceptance of a policy that was issued other than as applied for (a rating, an exclusion rider or a different benefit amount). A modified policy is a counteroffer; the applicant is free to accept or reject it.
4. Obtains a signed delivery receipt, which documents the date of delivery and so fixes when the free-look period starts.

Explain the contract

The producer should review the policy with the owner, not just hand it over:

• Coverage and amount: what the policy pays, to whom and when.
• Riders, endorsements and any rating or exclusion, and why they were added.
• Premium: amount, mode and due dates, and the grace period.
• Owner, insured and beneficiaries: confirm they match what the client intended.
• The application attached to the policy: ask the owner to check that the answers are complete and correct, because the application becomes part of the contract.
• The free-look period: the owner may return the policy within the stated period for a full refund of premium.

A policy is read as a whole. Florida law says every insurance contract is construed according to the entirety of its terms and conditions, as amplified, extended or modified by the application and by any rider or endorsement.

Why it matters

Explaining the contract at delivery confirms the sale was suitable, reduces lapses and "buyer's remorse" cancellations, and builds the relationship that leads to future business and referrals. Leaving without explaining the policy invites later claims that it was misrepresented.