Binding receipt is a conditional document issued when an application and premium payment are received that provides a limited amount of temporary life insurance coverage while underwriting is in process, subject to specific terms. Unlike a simple conditional receipt that promises coverage only if the applicant is ultimately approved at a qualifying rate, a true binding receipt may obligate the carrier to pay a death benefit (often capped at a stated interim amount) for covered deaths occurring during the underwriting period, even if the final underwriting decision would have been adverse. Binding receipts are carefully worded and may exclude certain risks, ages, or face amounts to control interim exposure. Not all carriers use binding receipts, and regulatory rules vary by state.

Advisors explain binding receipt terms when collecting initial premiums at application, clarifying the limits and conditions of temporary coverage. They emphasize that not all deaths will be covered"for example, if application questions were misrepresented or if the proposed insured was uninsurable under company guidelines on the effective date. CarriersTM new-business departments track binding receipt exposure carefully, and legal teams review receipt language to ensure compliance. In the event of a death during underwriting, claim departments analyze whether the binding receipt applies. Understanding binding receipts allows advisors to set realistic expectations about interim coverage while avoiding overpromising protection that the carrier is not obligated to provide.