The national guide explains the standard life provisions (entire contract, incontestability, grace, reinstatement, suicide, misstatement of age), nonforfeiture and dividend options, settlement options and riders. This page covers the rules Connecticut sets in Conn. Gen. Stat. 38a-430 to 38a-458, the replacement regulation (Regs. 38a-435) and the life solicitation and illustration rules (Regs. 38a-819).

Policy delivery and the free look

• Free look: a life policy must say it can be returned within 10 days after receipt. A returned policy is void from the beginning (38a-436).
• Variable life: the free look is also 10 days, and the grace period is at least 31 days for scheduled-premium policies (Reg. 38a-433-4).
• Buyer's Guide and policy summary: delivered before the initial premium is accepted. If the policy has a 10-day unconditional refund provision, they may be delivered with the policy instead (Reg. 38a-819-36).
• Copy of the application: if the insurer fails to provide a copy within 30 days of a request, it is permanently barred from using errors or misrepresentations in the application as a defense (38a-437).
• Plainly expressed terms: no agreement about the contract is valid unless it is plainly expressed in the policy (38a-446). Forms, applications and riders must be filed and approved before use (38a-430).
• Backdating: a policy can't be dated more than six months before the application if that would give the applicant a younger age (38a-442).

Values, loans and proceeds

• Nonforfeiture: a cash value is required after three full years of premiums (five for industrial). The owner can elect paid-up insurance within 60 days after the defaulted premium's due date (38a-439).
• Paid-up notices: the insurer sends notice when a policy becomes fully paid up, then a status notice every five years. Single-premium and universal life policies are excluded (38a-441).
• Policy loan interest (38a-444):
  • fixed at no more than 8%, or
  • adjustable, capped at the higher of the published monthly average or the cash-value rate plus 1%. Adjustable rates are reset at least every 12 months but no more often than every 3 months.
• Annuities: an insurer may defer paying an annuity cash surrender benefit for up to six months, with the Commissioner's written approval (38a-440).
• Interest on death claims: paid at the rate the insurer pays on proceeds left on deposit, starting no later than 10 days after death (38a-452).
• Creditor protection: a beneficiary takes the proceeds free of the insured's creditors, unless the policy was bought to defraud them (38a-453).
• Beneficiaries:
  • If a trustee beneficiary doesn't qualify, proceeds go to the contingent beneficiary. If there is none, they go to the insured's estate (38a-451).
  • Educational, religious and charitable organizations may be named regardless of financial interest (38a-450).

Exclusions, riders and accelerated benefits

• Military service: a policy may not exclude war or military service for active service members, except for accidental death benefits such as double indemnity (38a-430(b)).
• Accelerated benefits:
  • A qualifying event includes a condition expected to cause death within a relatively short time, such as 12 months (38a-457).
  • These products may not be marketed as long-term care insurance (Reg. 38a-457-5).
  • A required disclosure statement must accompany them.
• LTC riders: a producer may sell a life policy or annuity with long-term care benefits only if licensed for both life and health (38a-458(d)).
• Group life: ownership rights may be assigned, subject to policy restrictions. The insurer is bound once it receives written notice (38a-455).

Replacement (Regs. 38a-435)

• The producer:
  • presents and reads the replacement notice no later than when the application is taken
  • has the applicant and producer sign it
  • leaves a copy, and copies of all sales material, with the applicant
• The replacing insurer:
  • notifies the existing insurer within five business days
  • gives the owner a 10-day right to return the new policy for an unconditional full refund
  • keeps replacement records for five years or until the next examination, whichever is later
• The existing insurer provides an in-force illustration or policy summary within five business days of the owner's request.
• Financed purchase: using an existing policy's values to buy a new one within the window from four months before to 13 months after the new policy's effective date.
• Credit life and certain other transactions are exempt.

Illustrations and solicitation

• Illustrations are labeled "life insurance illustration". Words like "vanish" or "vanishing premium" are prohibited (Reg. 38a-819-61).
• Non-guaranteed values must carry a statement that they aren't guaranteed and could be more or less favorable (Reg. 38a-819-62).
• If no illustration was used at the sale, the producer certifies that in writing and a conforming illustration goes out by delivery. If the policy is issued differently from the one illustrated, a "Revised Illustration" is signed (Reg. 38a-819-64).
• Producers:
  • Before the presentation, the producer identifies himself as a producer and names the insurer (Reg. 38a-819-37).
  • A producer may not use titles that suggest an advisory business unless that is true.
  • Any mention of dividends must say they aren't guaranteed.

Exam traps

• 10-day free look, and the same 10 days on a replacement. Only Medigap and Partnership LTC get 30 days.
• An insurer that fails to provide a copy of the application within 30 days of a request loses its misrepresentation defense.
• Backdating is limited to six months. Fixed loan interest is capped at 8%.