The national Life Policy Provisions guide covers the standard provisions, nonforfeiture and dividend options, settlement options and riders. This guide covers the Washington rules: the provisions required by chapter 48.23 RCW, Washington's 10-day free look, the suicide limit, death claim interest, illustrations and buyer's guides, replacement, and insurable interest and consent.

Free look (RCW 48.23.380)

• An individual life policy may be returned within 10 days after receipt for a full premium refund. Returning it to the producer who sold it counts.
• A returned policy is void from the beginning.
• A refund not paid within 30 days after the return carries a 10% penalty.
• The free look doesn't apply to policies issued in connection with credit or under a conversion or policy-change privilege.
• A replacement policy gets a longer 20-day right to return (WAC 284-23-455(4)).

Required provisions (chapter 48.23 RCW)

Related rules:

• Application copy: an application can't be used as evidence unless a true copy was attached to the policy when issued (RCW 48.18.080).
• Nonforfeiture option: the owner may choose a nonforfeiture option up to 60 days after the defaulted premium was due (RCW 48.76.020). Reduced paid-up and extended term are the usual options.

Suicide and other limits (RCW 48.23.260)

An insurer may limit what it pays to an amount not less than the full reserve plus dividend additions if death results from:

• suicide within two years of issue, sane or insane
• war or military service
• aviation, under conditions stated in the policy

Death claim interest (RCW 48.23.300)

For a Washington resident, interest on the death benefit runs from the date of death. The rate is the insurer's rate on proceeds left on deposit, but not less than 8%. If proceeds aren't paid within 90 days of proof of death, interest from day 91 is that rate plus 3%.

Buyer's guide and illustrations

• Buyer's Guide (WAC 284-23-230): every prospective buyer gets one before the insurer accepts the application or premium.
• Policy summary: if neither the policy nor the summary has a 10-day unconditional refund right, the summary must be delivered before the policy.
• These disclosure rules don't apply to annuities, credit life, variable life, or group life paid for by the employer or association.
• Illustrations (chapter 48.23A RCW):
  • A signed illustration goes in with the application.
  • If the policy is issued differently, a revised illustration is signed no later than delivery.
  • Insurers send an annual report on illustrated policies.
  • The rules don't apply to variable life, annuities, credit life or policies with no illustrated death benefit over $10,000.

Replacement (WAC 284-23-400 to -480)

• Replacement includes using an existing policy to finance the new one, or borrowing more than 25% of its loan value. Converting the old policy to reduced paid-up or extended term also counts.
• Excluded: credit life, most group coverage, and conversions with the existing insurer.
• The producer presents the signed replacement notice no later than when the application is taken and leaves the original with the applicant.
• The replacing insurer contacts the existing insurer within three working days. An existing insurer that tries to conserve the policy has 20 days to give the owner a policy summary.
• The replacing insurer gives a 20-day unconditional refund right from delivery.
• A pattern of replacements without the required notices is prima facie evidence that the producer meant to violate the rule.

Sales conduct (WAC 284-23-240)

• The producer discloses that they are acting as a producer with a life line of authority.
• Titles such as "financial planner" may be used only by producers who really run an advisory business and earn a substantial part of their pay from it.

Insurable interest and consent

• Anyone may insure their own life for any beneficiary. When insuring someone else, the payee must be the insured, the insured's representative or a person with an insurable interest at the time the contract is made (RCW 48.18.030).
• Each party to a business buy-sell agreement has an insurable interest in the other parties.
• The insured must apply for or consent in writing to an individual life or disability policy (RCW 48.18.060). Exceptions:
  • a spouse insuring the other spouse
  • insuring a minor by someone with an insurable interest
  • group and blanket coverage

Guaranty protection

The Washington Life and Disability Insurance Guaranty Association covers $500,000 in death benefits and $500,000 in cash value, with a $500,000 aggregate per life (RCW 48.32A.025).

Common exam traps

• Washington's life free look is 10 days, with a 10% penalty on refunds paid more than 30 days late. A replacement gets 20 days.
• The grace period is one month (at least 30 days), and the insurer may charge up to 6% interest.
• The suicide limit is two years, and the insurer pays at least the reserve, not just a premium refund.
• Death claim interest is at least 8% from the date of death, plus 3% after 90 days.
• The loan rate is capped at 8% fixed.
• An application copy must be attached to be used in evidence.
• Borrowing more than 25% of the loan value to fund a new policy is a replacement.