The national guide covers standard life provisions, nonforfeiture and settlement options, beneficiaries, and riders. California has several rules that differ from most states and from the national model:

• a 60-day grace period
• a lapse-notice designee
• a free look of 10 to 30 days, rising to 30 days at age 60
• a nonforfeiture benefit after one year

Free look (CIC 10127.9, 10127.10)

• The free look starts at delivery. Delivery is by registered or certified mail, personal delivery or first-class mail with a signed receipt, or other approved means. If the insurer uses other means, it bears the burden of proving delivery (CIC 10113.6).
• Group life policies and certificates offered to people 65 or older carry a 30-day examination period (CIC 786).

Grace period and lapse notices (CIC 10113.71, 10113.72)

• Individual life policies have a grace period of at least 60 days, and it doesn't run concurrently with any period of paid coverage.
• If the insured dies during the grace period, the overdue premium is deducted from the death benefit.
• A notice of pending lapse is mailed at least 30 days before termination.
• Before issue, the applicant may name a designee to receive lapse notices. The insurer reminds the owner of this right every year.

Incontestability and nonforfeiture

• A policy is incontestable after two years in force during the insured's lifetime, except for nonpayment (CIC 10113.5).
• A reinstated policy can be contested on the reinstatement statements for the same period.
• Nonforfeiture: a paid-up nonforfeiture benefit is required after premiums have been paid for one full year (CIC 10160).

Accelerated death benefits (CIC 10295 and following)

• An accelerated death benefit may not be marketed as health, accident, or long-term care insurance.
• It must offer a lump-sum option on a qualifying event.
• Agents must be able to explain how it differs from LTC insurance.
• Selling a rider that requires personal care services triggers LTC training requirements (CIC 10234.93).

Settlement and beneficiary rules

• A policy paying in installments may include a spendthrift clause, which keeps the beneficiary from assigning installments before they're due (CIC 10132).
• Insurable interest:
  • A person may insure their own life and name anyone as beneficiary.
  • Relatives have an insurable interest through love and affection; creditors and others through economic interest.
  • For life insurance, the interest must exist when the contract is made (CIC 10110, 10110.1).
  • STOLI is prohibited.

Illustrations and cost comparisons

• An illustration must be labeled "life insurance illustration" (CIC 10509.955).
• A cost comparison that ignores the time value of money must be paired with one that recognizes it (CIC 10509.970).

Replacement (CIC 10509 and following)

• Each application includes statements by the applicant and the agent on whether a replacement is involved.
• The Notice Regarding Replacement is given no later than the application, signed by both, and left with the applicant along with all printed materials used.
• The replacing insurer notifies the existing insurer within 3 working days. The existing insurer has 20 days to try to conserve the policy.
• Penalties: at least $1,000 for an agent's first violation, and $5,000 to $50,000 for knowing or repeat violations.
• A pattern of "no replacement" answers on applications that turn out to be replacements creates a presumption that the agent knew.
• Group and credit life are exempt.

Group life (CIC 10200 and following)

• Group life may be issued at rates below individual rates.
• It may exclude losses from war, military service, or aviation (CIC 10206.5).
• Conversion: apply within 31 days after coverage ends, without evidence of insurability, at attained-age rates, up to the group amount. Death during the 31 days pays the convertible amount (CIC 10209).

Common exam traps

• California's life grace period is 60 days. Lapse notices go out 30 days before termination, and a designee may receive them.
• The free look is 10 to 30 days, or 30 days at 60 or older. The senior age here is 60, not 65.
• Nonforfeiture benefits start after one year of premiums.
• The replacing insurer notifies the existing insurer within 3 working days.