Life & Health Insurance Practice Exam 2026 - Free Practice Questions and Study Guide

Acceptance of an insurance contract offer is defined by the issuance of a policy. When an insurer issues a policy to a potential insured, it signifies that the insurer has agreed to the terms laid out in the application and has formally accepted the risk associated with providing coverage to that individual or organization. The issued policy serves as the legal document that outlines the agreement between the insurer and the insured, confirming that the insurer will provide the specified coverage in exchange for the payment of premiums.

While a signed application indicates the applicant's willingness to accept the terms of coverage, it does not itself complete the acceptance process; it is merely an expression of intent. A verbal agreement lacks the legal formality and enforceability that comes with a written contract. Similarly, a policy endorsement modifies an existing policy but does not constitute acceptance of the initial offer. Thus, the issuance of the policy represents the true acceptance of the insurance contract offer.