The national Types of Life Insurance Policies guide covers term, whole life, universal and variable life, group life and credit life. This guide covers the Vermont rules that apply to those products: the group life standards in 8 V.S.A. §§ 3811 to 3823, credit life limits, and the separate license line for variable products.

Group life (8 V.S.A. ch. 103)

• Participation (§ 3811(1)). If employees pay part of the premium, at least 75% of eligible employees must elect to join. If the employer pays it all, all eligible employees must be insured.
• Grace period (§ 3813). A group policy has a 31-day grace period. Coverage continues during grace unless the policyholder gave advance written notice of discontinuance.
• Incontestability (§ 3814). The group policy is incontestable after two years from issue, except for nonpayment of premium. An insured person's statements can't be used to contest their coverage after it has been in force two years.

Conversion (8 V.S.A. §§ 3820 to 3823)

• When employment or membership ends (§ 3820), the person may buy an individual policy without evidence of insurability. They apply and pay the first premium within 31 days after group coverage ends.
• The person may choose any form the insurer customarily issues at that age and amount, except term insurance. Disability and supplementary benefits aren't included.
• When the group policy itself ends (§ 3821), a person insured for at least five years may convert. The amount may be capped at the smaller of the lost coverage, less any new group coverage, or $2,000.
• Death during the conversion period (§ 3822). If the person dies within the conversion period, the amount they could have converted is paid as a claim under the group policy, even if they never applied.
• Late notice (§ 3823). If the person wasn't told of the conversion right at least 15 days before the period ended, it is extended until 15 days after notice is given. The extension can't run more than 60 days past the original deadline.

Credit life (8 V.S.A. § 4105)

The amount of credit life insurance can't exceed the initial debt. For installment debts, it can't exceed the scheduled or unpaid balance.

Variable life

• Variable life and variable annuity products are a separate line of authority in Vermont (8 V.S.A. § 4813g(a)(5)).
• Because variable products are securities, the producer also needs securities registration.

Common exam traps

• Contributory group life needs 75% participation. Noncontributory group life must cover 100% of eligible employees.
• Group life grace is 31 days.
• The conversion window is 31 days, and term insurance isn't available on conversion.
• Conversion when the group policy terminates requires five years of coverage and may be capped at $2,000.
• A person who dies during the conversion window is paid as if they had converted.
• Variable products need the separate variable line in Vermont.