What Does Binding Receipt Mean?
A binding receipt is a document given to the insured by the insurance company that is proof of coverage, effective only if the initial premium is paid. However, even if the insured dies without complete payment of the policy, the company is still liable to provide some, if not all, of the benefits.
Insuranceopedia Explains Binding Receipt
A receipt is usually an acknowledgment of payment, but a binding receipt is different in that it acknowledges the role of the insurer: to provide coverage. This role will only be fulfilled on one condition: that the insured makes his or her first payment. Once this is done, the insurer commits to the coverage, even if it is still processing the official insurance contract. If the insured dies without having paid the entire amount to the insurance company, the insurer is still obliged to provide coverage, even if it is limited in scope.