Understanding life insurance regulations in your state will allow you to know how these regulations impact you and your family.
Life insurance is regulated at the state level. This means each state has different laws when it comes to how life insurance is regulated. Each state attempts to pass laws it thinks are fair and will provide consumers with the best choices in life insurance. Regardless where you live, there are common regulations that appear in many states concerning the sale of life insurance.
10-Day Free Look Period
Many states impose a 10-day free look period. For example, New York imposes such a rule. It allows consumers to purchase a life insurance policy and look over the contract for 10 days to decide whether or not the consumer wants to keep the policy. If the consumer does not want the policy, he can return it for a refund of the premiums he has paid.
Grace Period
If you miss a premium payment, most states mandate a grace period of 30 to 31 days where you will be allowed to make your premium payment without your coverage lapsing. If you fail to make the premium payment within this time period, your insurance policy will lapse.
Death Benefit Claims
Most states have regulations on how long an insurance company has to pay death claims. In most states, this time period ranges from 30 to 60 days. If an insurance company fails to make payment within this period of time, interest accumulates on the death benefit or some other benefit accrues to the beneficiary until the death benefit is paid.
Exclusions
Exclusions on life insurance policies are generally allowed for suicide and dangerous activities. A two-year suicide exclusion means that if you buy a life insurance policy and commit suicide within the first two years of the policy, the insurance company does not have to pay the death benefit. Instead, they must refund the premiums you've paid to your beneficiary. A dangerous activity exclusion works the same way but applies to death from dangerous activities like sky-diving or auto-racing.
Tags: life insurance, insurance company, insurance policy, premium payment, dangerous activities, death benefit
