of insurance arose immediately upon receipt by the insurer of the completed application accompanied by the premium payment, subject to the insurer's right to terminate the agreement if it subsequently found the applicant to be unacceptable, or whether the acceptance of the applicant as an insured was a condition precedent to the existence of the contract. The form in Ransom contained the following clause: "`If the first premium is paid in full in exchange for the attached receipt signed by the Company's agent when this application is signed the insurance shall be in force, subject to the terms and conditions of the policy applied for, from the date of Part I or Part II of this application, whichever is the later, provided the Company shall be satisfied thatapplicant is offered a choice of either paying his first premium when he signs the application, in which event `the insurance shall be in force ... from the date ... of the application,' or of paying upon receipt of the policy, in which event `no insurance shall be in force until ... the policy is delivered.'" (Id. at p. 425.) Citing Gaunt v. John Hancock Mut. Life Ins. Co. (2d Cir.1947) 160 F.2d 599, 601, we stressed that an application must be construed as it would be understood by a lay person. We concluded that such a person would have assumed from reading the contract that he would receive immediate coverage in exchange for the early payment of his money and that he would not understand that he