Rhode Island's life policy provisions are in chapter 27-4 of the General Laws (standard provisions in 27-4-6.2, free look in 27-4-6.1, policy loans in 27-4-13.1), its nonforfeiture law in chapter 27-4.3, and its replacement and disclosure rules in 230-RICR-20-25. Rhode Island's numbers differ from many states:

• A 20-day free look.
• A 31-day grace period.
• 9% interest on death proceeds.
• A 3-year minimum period to sue.

What each provision means in general is in the national Life Policy Provisions, Options and Riders guide.

Free look (27-4-6.1)

• Individual life policies and individual annuities may be returned within 20 days of delivery for a premium refund.
• A policy returned to the insurer, or to the producer who took the application, is void from the beginning.

Standard provisions (27-4-6.2)

Grace period

• 31 days or one month, after the first premium.
• If the insured dies during grace, the claim is paid less the unpaid premium.

Incontestability

• After 2 years in force during the insured's lifetime.
• A face amount increase that required evidence of insurability becomes incontestable 2 years from the increase.
• The insurer may except disability and accidental death benefits.

Suicide

• The exclusion period may not exceed 2 years from issue.
• If suicide occurs in that period, the insurer pays at least all premiums paid, less dividends paid, debt and partial withdrawals.

Other required terms

• Misstatements (27-4-10): a misstatement voids the policy only if the misstated matter actually contributed to the event that made the policy payable.
• Lawsuits (27-4-13): a policy may not limit the time to sue to less than 3 years after the cause of action accrues.
• Policy loans (27-4-13.1):
  • For policies issued after May 25, 1982, a fixed maximum loan rate can't exceed 8%.
  • An adjustable rate is redetermined at least yearly, and no more often than every 3 months.
  • The insurer states the initial rate when it makes the loan.
• Interest on death proceeds: 9% a year from the date of death to the date of payment (27-4-26).
• Lapse notices (27-4-30): at application, the insurer tells the applicant in writing of the right to name a third party to receive notice of cancellation for nonpayment.
• Discretion clauses (27-4-28): a clause giving the insurer sole discretion to interpret the policy is void.
• Accelerated benefits (27-4-0.1): life insurance includes accelerated payment of the death benefit on terminal illness, meaning a life expectancy of 12 months or less.
• Retained asset accounts (27-4.9-4): under the Beneficiaries' Bill of Rights, the insurer must disclose a retained asset account option before paying proceeds into one.

Nonforfeiture (chapter 27-4.3)

• An ordinary life policy must provide a cash surrender value once premiums have been paid for at least 3 full years.
• An owner in default may elect a paid-up benefit within 60 days after the due date. If the owner doesn't choose, the paid-up option named in the policy applies automatically.
• The options are cash surrender, reduced paid-up and extended term. The national guide explains how each works.

Group life

• An insured person may assign incidents of ownership, such as the right to name a beneficiary, subject to the policy's terms (27-4-22).
• During a labor dispute, a collectively bargained group policy may raise individual premium rates by up to 6% (27-4-22.1).

Insurable interest and underwriting

Insurable interest (27-4-27)

• It must exist when the policy is applied for.
• Close relatives by blood or law have an interest based on love and affection.
• Parties to a buy-sell agreement have an insurable interest in each other's lives for that contract.
• With the insured's consent, a policy may be payable to a tax-exempt charity.
• If a beneficiary without insurable interest collects, the insured or the insured's estate may sue to recover.

Underwriting limits

• No rejection or rating based on a disability unless it is relevant to the risk (27-4-1).
• No rejection solely because the applicant has a prescription for an opioid antagonist (27-4-1.1).
• HIV testing needs prior written notice and authorization. A later positive test can't be a reason to cancel or nonrenew (23-6.3-16).
• Medical reports from an insurer-ordered exam go to a physician of the applicant's choice (27-4-25).

Unclaimed benefits (27-80-4)

• Insurers compare in-force policies against a death master file at least semi-annually.

Disclosure and illustrations (230-RICR-20-25-3; chapter 27-62)

Buyer's Guide and policy summary

• The Buyer's Guide is normally given before the insurer accepts the initial premium.
• Failing to deliver it is treated as a misrepresenting omission.

Presentations

• Before the presentation, the producer says they are a life insurance agent and gives the insurer's full name.
• A producer may not call themself a "financial planner" in a way that implies advice for compensation unrelated to sales.

Illustrations

• "Vanishing premium" is a prohibited term (27-62-5).
• If a policy that may be illustrated is sold without one, the producer certifies that in writing.
• A form designated as not marketed with an illustration may not be illustrated before the first policy anniversary.

Replacement (230-RICR-20-25-4)

What counts as a replacement

• Converting an existing policy to reduced paid-up insurance to buy a new one counts.
• Using values within 4 months before or 13 months after the new policy takes effect suggests a financed purchase.
• Nonconvertible term expiring within 5 years is exempt.

The producer's duties

• Present and read the replacement notice no later than when the application is taken.
• Leave copies of all sales material with the applicant.

The insurers' duties

• The replacing insurer notifies the existing insurer within 5 business days.
• The existing insurer then sends the owner a letter within 5 business days, offering information on the existing policy.

Violations

• Telling an applicant to answer "no" to the replacement question is a violation.
• Penalties can include license action, fines and forfeiting commissions.
• Churning is an internal replacement mainly to earn new commissions.

Common exam traps

• Free look: 20 days, for annuities too.
• Grace: 31 days.
• Suicide: up to 2 years; at least premiums are returned.
• Interest on death claims: 9% from the date of death.
• Misstatements void the policy only if they contributed to the loss.
• Suits: no less than 3 years.