If you want to choose a template at the time of record creation, set the template option to Always prompt for template or Prompt for template.
When you select Prompt for template, the system will prompt you for a template the first time you create a record during the session. For subsequent records, the system will remember the most recent template used during record creation. If you want to be prompted each time a new record is created, select the Always prompt for template option.
If you use this option and have selected a list of Preferred Templates, only those templates will display in the list for each record type.
