Free Life Policy Provisions Options and Riders Study Guide
Arkansas Life exam — Life Policy Provisions Options and Riders.
The national guide explains the standard life policy provisions, nonforfeiture and dividend options, settlement options, and riders. Arkansas's required individual life provisions are in Ark. Code 23-81, group life is in 23-83, and accelerated benefits are governed by Rule 60.
Required provisions in an individual life policy
| Provision | Arkansas rule |
|---|---|
| Grace period | 30 days, or one month of not less than 30 days at the insurer's option. If the insured dies during the grace period, the overdue premium is deducted from the proceeds (23-81-104) |
| Incontestability | Incontestable after two years in force during the insured's lifetime, except for nonpayment of premium. The insurer may omit a "fraud in the procurement" exception. Disability and accidental death benefit provisions may be excluded from the clause (23-81-105) |
| Entire contract | The policy plus any attached application. Absent fraud, application statements are representations, not warranties (23-81-106) |
| Changes to the policy | The policy may say agents can't change or waive its terms. If so, changes are made only by an endorsement or rider signed by an authorized officer (23-81-106(b)) |
| Misstatement of age | Benefits are adjusted to the correct age. If age was overstated, the policy may instead refund the excess premium (23-81-107) |
Accelerated death benefits (Rule 60)
- A qualifying event includes a medical condition expected to sharply limit life span, for example to 24 months or less, or a condition requiring extraordinary medical intervention.
- The product's title must include "accelerated benefit." It may not be described or marketed as long-term care insurance.
Replacement
- Before urging a client to surrender a life policy for a new one, the producer gives a written, dated comparison memorandum signed by producer and insured (23-66-307).
- Insurer and producer keep the memorandum five years. Violations are a Class A misdemeanor.
- Replacing a policy without following this law, or without objectively showing a benefit to the insured, is churning (23-66-206).
Group life (23-83)
| Rule | Arkansas figure |
|---|---|
| Conversion after coverage ends with employment | Apply and pay within 31 days, without evidence of insurability (23-83-117) |
| Converted amount | No more than the group coverage that ended, less new group coverage obtained within 31 days |
| Conversion premium | The insurer's customary rate at the person's attained age and current risk class |
| Late notice of the conversion right | If notice isn't given at least 15 days before the period ends, the person gets an additional period (23-83-122) |
| Death during the conversion period | The convertible amount is paid as a group claim (23-83-119) |
| Facility of payment | Up to $10,000 may be paid to a person who incurred funeral or last-illness expenses (23-83-115) |
Guaranty protection
The Arkansas Life and Health Insurance Guaranty Association covers up to $300,000 in life death benefits and $300,000 in annuity present value per life (23-96-101 and following).
Common exam traps
- The grace period is 30 days or one month.
- The incontestable period is two years. Arkansas lets the insurer omit the fraud exception.
- A misstated age can lead to a refund of excess premium when age was overstated.
- Accelerated benefit products can't be sold as LTC insurance.
- Group conversion: 31 days, no evidence of insurability, premium at attained age.
Practice Life Policy Provisions Options and Riders questions All Life topics
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
