What must happen before an insurance contract takes effect?

For an insurance contract to take effect, it is essential that the first premium payment is made to the insurer. This payment is considered a vital element in the formation of the contract. Until the first premium is received, the insurer has no obligation to provide coverage, and the policy is not legally binding.

While the delivery of a policy, changes in insurability, and naming beneficiaries are important aspects of insurance management, they do not establish the contract's effectiveness on their own. Specifically, delivering the policy is an important step for the insured to receive and acknowledge the terms of coverage, but the actual insurance protection does not commence until the premium is paid. Furthermore, if an insured's risk or health status changes before payment, it can affect the terms of the insurance agreement, but this is secondary to the need for premium payment. Naming beneficiaries is also significant but comes after the contract takes effect and doesn't influence whether the contract is valid from the start. Thus, the requirement of making the first premium payment is foundational for the insurance contract to be effective.