What is the main purpose of a conditional premium receipt?

The main purpose of a conditional premium receipt is to determine the applicant's insurability. When a conditional premium receipt is issued, it indicates that the insurer is willing to consider coverage for the applicant, pending the assessment of their risk profile. This type of receipt allows the company to start the underwriting process while giving the applicant some level of assurance that, if accepted, they will have coverage effective from the time of receipt, assuming they meet the insurer's underwriting criteria.

This temporary receipt does not guarantee that a policy will be issued; rather, it acts as an acknowledgment that the applicant's risk profile will be evaluated based on information provided during the application process. If the underwriting review indicates that the applicant is insurable according to the company's standards, coverage will become effective. If not, the coverage may be denied. Therefore, the main function is indeed to facilitate the determination of the applicant's insurability while providing some level of interim reassurance.