If an applicant signs up for a policy and dies in an accident before the policy is issued, what will the insurance company pay if they were a normal risk?

When an applicant signs up for a life insurance policy and subsequently dies in an accident before the policy is issued, the insurance company is typically obligated to cover the death benefit if the applicant was considered a normal risk at the time of application. This means that they were in good health and did not present any hazards that would warrant a denial of coverage.

In such cases, the insurer often recognizes the good faith of the applicant by agreeing to pay out the face amount of the policy that would have taken effect upon issuance. This is true as long as the insurer had not yet formally declined coverage or imposed any conditions. Therefore, the correct choice reflects the idea that the insurer acknowledges the intent to provide coverage, fulfilling their contractual obligation as if the policy were in force at the time of death.

The alternatives do not align with this standard practice in the insurance industry. For instance, the options regarding liability or just a refund of premium do not take into account the contractual obligation implied by the application process when a normal risk is involved.