Alberta General Insurance Level 1 Practice Exam

The process of direct billing of premiums typically commences with a withdrawal equal to the first 60 days of coverage. In the context of insurance, direct billing means that the insurer sends the premium invoice directly to the policyholder rather than going through an intermediary. This process often initiates as a way to establish first payment, confirming that the policy is active and coverage is in place.

When the insurer withdraws an amount equivalent to the first 60 days of coverage, it essentially secures a commitment from the insured. This initial payment indicates that the insured has accepted the terms of the policy, thus triggering the administrative processes needed to manage the ongoing premium payments. This ensures that coverage can begin without any delay, preventing lapses in insurance protection.

While an invoice generated at the end of coverage or a notice sent to the insured are part of the communication and billing cycle, they don’t initiate the direct billing process itself. Similarly, a claim submitted by the insured relates to a request for coverage and benefits after an incident has occurred and does not relate to the commencement of premium payments.