How life policy provisions, nonforfeiture options, dividend and settlement options and riders work in general is covered in the national Life Policy Provisions, Options and Riders guide. North Dakota sets its required provisions in N.D.C.C. 26.1-33-05, with prohibited provisions in 26.1-33-06 and nonforfeiture in 26.1-33-18. Its life disclosure and advertising rules are in N.D. Admin. Code 45-04-01 and 45-04-10. Several North Dakota rules differ from what you'll see in other states, starting with a one-year suicide limit and a 20-day free look.

Required provisions (26.1-33-05)

Suicide (26.1-33-37)

Suicide is no defense once the policy has been in force one year. A contrary provision is void, and the insured's sanity or insanity doesn't matter.

Other North Dakota rules

• Free look (26.1-33-02.1). The purchaser may return a life policy within 20 days of delivery for a premium refund. The notice goes on or is attached to the first page.
• Premium refund at death (26.1-33-05(13)). Unearned premium is refunded at death. Term, flexible-premium policies and cases where the insurer has a valid defense are exempt.
• Prohibited provisions (26.1-33-06). A policy may not:
  • be backdated more than six months before the application, or
  • limit the time to sue to less than five years.
• Nonforfeiture (26.1-33-18). A cash surrender value is required after three full years of premiums on ordinary insurance (five on industrial). A paid-up benefit is available on request within 60 days after the due date.
• Nonparticipating policies must say so (26.1-33-04).
• Ownership:
  • A life policy may be transferred by assignment, will or succession to anyone, with or without an insurable interest (26.1-33-33).
  • Notice of the transfer isn't needed unless the policy requires it (26.1-33-34).
  • Beneficiary designations don't have to follow the formalities for wills (26.1-33-41).
  • The surrender value is protected from creditors to the extent state exemption law provides (26.1-33-36).

Insurable interest (26.1-29-09.1)

• Insurable interest must exist when the contract is made. It needn't exist at death.
• Anyone may insure their own life for the benefit of any person.
• Who has an insurable interest:
  • close relatives, through a substantial interest from love and affection
  • others with an economic interest in the insured's continued life, not one that grows from the insured's death
  • parties to a buy-sell agreement
  • an employer or trustee named as beneficiary, but only with the employee's written consent
  • a charity, with the insured's written consent
• If someone without an insurable interest collects, the insured's executor may recover the proceeds.

Disclosure and advertising

Buyer's Guide and policy summary (45-04-01)

• They're given before the initial premium is accepted. With a refund provision of at least 10 days, they may come with or before policy delivery instead.
• The policy summary is titled "Statement of Policy Cost and Benefit Information."
• The rule doesn't apply to annuities, credit life, group life, ERISA plans or variable life.
• Failing to provide them is an omission that misrepresents the policy.

Sales presentations (45-04-01-05)

• The agent must say they're a life insurance agent and give the insurer's full name.
• Titles like "financial planner" can't imply fee-based advice unless that's true.
• Dividends are never guaranteed and must be described that way.
• Guaranteed and nonguaranteed values may be combined only if they're also shown separately.

Advertising (45-04-10)

• Both the insurer and the agent are responsible for an ad.
• An ad must make clear the product is life insurance.
• Paid testimonials must be disclosed.
• An ad can't suggest a connection with a government program.
• Ads are kept four years, or until the next exam report if that's longer.

Replacement. North Dakota has no general life replacement regulation. Annuity replacements are reviewed under the annuity best interest law. See the North Dakota Annuities guide.

Common exam traps

• Suicide is excluded for no more than one year in North Dakota, not two.
• The life free look is 20 days. A&H is 10 days, and Medigap and LTC are 30.
• Reinstatement is available within three years. Policy loans are required after three years.
• Interest on death proceeds runs from the date of death.
• An insurable interest is needed at issue, not at death.