The national guide covers term, whole life, universal and variable policies and how they work. The South Dakota questions in this area are mostly about group life rules in SDCL 58-16, especially conversion. This guide covers those rules and South Dakota's illustration rules.

Group life eligibility and certificates

• If employees don't contribute, a group life policy must cover all eligible employees, except those whose evidence of insurability isn't satisfactory (58-16-6).
• Group coverage may be extended to employees' spouses and minor children (58-16-18).
• Supplemental life may be bought at the employee's option, subject to the insurer's underwriting (58-16-4).
• Each insured person gets an individual certificate describing the coverage and who receives benefits (58-16-38).
• An insured may assign their rights under group life, including the right to name the beneficiary (58-16-38.1).

Required group life provisions

Conversion (SDCL 58-16-39 to 58-16-41)

• When employment or membership ends: the person may get an individual policy without evidence of insurability.
  • They must apply and pay the first premium within 31 days after the group coverage ends.
• Plan choice: any form the insurer customarily issues at that age and amount, except term insurance.
• When the group policy itself ends: people who were insured for at least 5 years before the termination date have a conversion right (58-16-40).
• Death during the conversion period: the amount the person could have converted is paid as a claim under the group policy, whether or not they applied (58-16-41).

Illustrations (ARSD 20:06:38)

• The illustration rule doesn't apply to (20:06:38:02):
  • variable life
  • annuities
  • credit life
  • policies with no illustrated death benefit over $10,000
• A policy form marketed without an illustration can't use one before the first policy anniversary (20:06:38:03).
• An illustration can't call a policy "vanishing premium" (20:06:38:05). It also can't suggest that nonguaranteed elements are guaranteed.
• A signed copy of the illustration is delivered no later than when the application is submitted (20:06:38:13).
• Illustrations are kept until 3 years after the policy is no longer in force (20:06:38:16).
• The insurer uses the NAIC Life Insurance Buyer's Guide (ARSD 20:06:10:30). The guide must be provided before the initial premium is accepted (SDCL 58-33A-9).

Common exam traps

• Group conversion window: 31 days. The person can choose any plan except term.
• When the group policy ends, conversion requires 5 years of prior coverage.
• Group life grace period: 31 days. The individual life grace period is 30 days.
• An illustration can never say "vanishing premium."