The national guide explains the standard life policy provisions, nonforfeiture and dividend options, settlement options, beneficiaries, and riders. Alaska puts many of these into statute, in AS 21.45 for individual life policies and AS 21.48 for group life. The Alaska exam asks for the exact periods: grace, incontestability, suicide, free look, reinstatement, and loan rates. Learn the numbers below and the reason each one exists.

Required provisions in an individual life policy

The first page also carries a notice that the insurer will provide factual information about the policy's benefits and provisions on written request.

Incontestability versus exclusions. The incontestable clause bars only a contest of the policy's validity. The insurer can still apply a permitted exclusion, such as an aviation exclusion, at any time (AS 21.45.160). A reinstated policy can be contested for misstatements in the reinstatement application for the same period that applied after original issue (AS 21.45.270).

Suicide and other permitted exclusions

AS 21.45.250 bars exclusions based on the manner of death or the insured's status, except a listed few:

• war or military service
• aviation
• specified hazardous occupations
• residence outside the U.S. and Canada
• suicide within two years of issue, sane or insane

When death falls under a permitted exclusion, the insurer must still pay at least the policy reserve, adjusted for loans and dividend credits. It cannot simply refund premiums if that is less.

Nonforfeiture

Under Alaska's standard nonforfeiture law (AS 21.45.300):

• A cash surrender value must be available once premiums have been paid for three full years.
• The owner has 60 days after the due date of the defaulted premium to choose cash or a paid-up option. If no choice is made, the paid-up nonforfeiture benefit named in the policy takes effect automatically.
• The insurer may defer paying a cash surrender value for up to six months after the policy is surrendered.

Proceeds and settlement options

• When paying a death claim, the insurer may deduct unpaid premium for the current policy year and any policy loan with interest (AS 21.45.290).
• A life insurer may hold proceeds under a settlement agreement and may protect them from the creditors of beneficiaries other than the policyholder (AS 21.45.280).
• Before a beneficiary chooses a retained asset account, the insurer must disclose that it is not FDIC-insured but is protected by the state guaranty association, and that interest may be taxable (3 AAC 26.860).
• A minor aged 16 or older may give a valid receipt for up to $3,000 a year in life or annuity payments (AS 21.42.290).

Illustrations and riders

• If a basic illustration is used and the policy is applied for as illustrated, a copy signed by the applicant goes to the applicant at application and to the insurer. If the policy is issued with different values, a revised illustration goes with the policy (3 AAC 28.830).
• A life policy with a long-term care rider must come with a policy summary explaining how the LTC benefits interact with the death benefit (AS 21.53.060).
• Waiver of premium, accidental death, guaranteed insurability, and accelerated death benefit riders work as described in the national guide.

Replacement

• A replacing life policy or annuity must give the owner 30 days to return it for a refund (3 AAC 26.805).
• When the replacement is with the same insurer or an affiliate, the new policy's incontestability and suicide periods are reduced by the time already elapsed under the old policy, up to the replaced amount.

Group life (AS 21.48)

Common exam traps

• The life free look is 10 days. The 30-day period applies to replacements, Medigap, and LTC.
• Incontestability is two years with only a nonpayment exception. Don't add a fraud exception.
• Suicide exclusion: two years, with at least the reserve payable.
• Reinstatement: three years, interest capped at 6%.
• Group life grace is 31 days; individual life grace is 30 days or one month.
• A conversion policy may be any form except term.