The national guide covers the standard life policy provisions, nonforfeiture, dividend and settlement options, and riders. Indiana's rules come from several sources:

• IC 27-1-12-6: required life provisions.
• IC 27-1-12-8: prohibited provisions.
• IC 27-1-12.3: policy loans.
• IC 27-1-12-43: the free look.
• 760 IAC 1-16.1: replacement.
• 760 IAC 1-24: the buyer's guide.
• 760 IAC 1-48: accelerated benefits.

National concepts in brief

• Nonforfeiture options: cash surrender, reduced paid-up and extended term.
• Dividend options: cash, reduce premium, accumulate at interest, paid-up additions.
• Accelerated death benefits: pay part of the death benefit early to a terminally ill insured.

Required provisions (IC 27-1-12-6)

Prohibited provisions (IC 27-1-12-8)

• Limiting the time to sue to less than three years after the claim accrues.
• Backdating a policy more than six months before the application.
• Forfeiture for an unpaid loan without at least 30 days' mailed notice to the insured and any assignee.

Loans, free look and claims

• Policy loan interest (IC 27-1-12.3-2):
  • Either a fixed rate of no more than 8%, or an adjustable rate under the statutory formula.
  • The adjustable rate is reset at least yearly but no more than quarterly.
  • Changes of less than ½% are not made.
• Free look (IC 27-1-12-43):
  • 10 days after the policy is received, for a full refund of all money paid.
  • The policy may be returned to the insurer, the producer, or any agent of the insurer.
  • Credit life is excluded; individual variable life is included.
• Replacement free look: a 20-day unconditional refund right (760 IAC 1-16.1-6).
• Interest on death claims: interest is owed if payment isn't made within 30 days of the death. It is figured from the date of death, at no less than the rate paid on proceeds left on deposit (IC 27-1-12-35).
• Testamentary trustees: proceeds payable to a trustee under a will are paid within 60 days of proof of probate. They aren't part of the estate and aren't subject to the insured's debts (IC 27-1-12-16).

Beneficiaries, consent and insurable interest

• Insurable interest must exist when the policy takes effect, not at death (IC 27-1-12-17.1(e)).
• Employer-owned life insurance: the employee consents if given written notice and they don't object within 30 days.
• STOLI is an unfair and deceptive act (IC 27-8-19.8-20.1).
• HIV testing for underwriting requires disclosure and written consent. A positive result requires two ELISA tests and a Western Blot (760 IAC 1-39-5).

Replacement (760 IAC 1-16.1)

What counts as a replacement:

• conversion to reduced paid-up or extended term;
• borrowing or withdrawing more than 25% of the cash or loan value.

Exempt: credit life, group life, pension plans, and contractual conversions.

Duties:

• Agent: presents the "Important Notice Regarding Replacement of Life Insurance" no later than when the application is taken, and leaves copies of all sales proposals.
• Replacing insurer:
  • sends the existing insurer a copy within 3 working days;
  • gives a 20-day refund right;
  • keeps records for 3 years or until the next exam, whichever is later.
• Existing insurer: if it tries to conserve the policy, it sends a policy information summary within 20 days.

Buyer's guide and advertising

• Buyer's Guide and Policy Summary (760 IAC 1-24):
  • Given before the first premium is accepted.
  • If the policy has a 10-day unconditional refund right, they may be given with the policy instead.
  • Failing to provide them is treated as a misrepresentation.
• Producer identification: the agent identifies as a life insurance agent and names the insurer.
• Misleading labels (760 IAC 1-13):
  • Calling a policy an "investment plan" or similar is prohibited.
  • Calling the premium a "deposit" is prohibited.
  • Dividend illustrations must say dividends aren't guaranteed.

Accelerated benefits (760 IAC 1-48)

• Qualifying conditions: a condition that drastically limits life span (for example, 24 months or less), extraordinary medical intervention, permanent institutional confinement, or listed serious illnesses.
• Nature of the benefit: these are life insurance benefits, mainly a mortality risk.
• Paying the benefit:
  • A lump-sum option is required.
  • The use of the money can't be restricted.
  • Any assignee or irrevocable beneficiary must sign an acknowledgment.

Group life (IC 27-1-12-37, 27-1-12-42)

• Noncontributory employee groups must cover all eligible employees, except those who reject in writing.
• Association groups need at least 100 members at the start, must be organized for a purpose other than insurance, and must have existed for at least two years.
• Late conversion notice: if notice of the conversion right isn't given at least 15 days before the period ends, the period is extended to 15 days after notice, but never more than 60 days past the original deadline.

Common exam traps

• Indiana dividends start by the end of the fifth policy year, not the third.
• The free look is 10 days (all money paid), or 20 days on a replacement.
• A policy can't be forfeited for an unpaid loan without 30 days' notice.
• The replacing insurer notifies the existing insurer within 3 working days.
• Association group life needs 100 members and 2 years of existence.