Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

An issued policy constitutes acceptance of an insurance contract offer because it represents the insurer's agreement to the terms proposed in the application. When a policy is issued, it indicates that the insurance company has evaluated the application, performed necessary underwriting, and agreed to provide coverage under the specified terms and conditions.

This process binds both parties to the contract—the insurer is obligated to provide coverage as outlined in the policy, while the insured is expected to adhere to the terms, including payment of premiums. The issuance of the policy signifies that the insurer accepted the risk, making it the definitive act of acceptance.

Other options, such as a verbal agreement or signed underwriting approval, do not fully establish the binding nature of the insurance contract. Verbal agreements are not enforceable in insurance, and while underwriting approval is an important step, it does not finalize the terms of the contract. The payment of the first premium is also an important act, but it typically follows the acceptance reflected by the issuance of the policy. Therefore, the issuance of the policy is the clearest indicator of acceptance in the insurance process.