FAQs About Life Insurance
The Department of Insurance has developed a list of frequently asked questions.
What does “free look” mean?
“Free look” is the period of time following policy delivery in which the applicant can return the policy for a full refund of premium.
Can an insurance company void my policy if I made a mistake in completing the application?
Life insurance contracts may be voided within the first two years (the “incontestability period”) if the applicant provides incorrect answers to the application questions and the company’s decision to issue the policy was based on the misrepresentations. Always verify that answers and information submitted on any application for insurance is complete and accurate.
Does a life insurance policy contain a premium grace period?
Yes. Life insurance policies provide a minimum 31-day grace period for premium payments.
Is an insurance company required to pay the death benefits if the insured person commits suicide?
Generally, a life insurance policy limits death benefits to the amount of premiums paid if the insured person commits suicide during the first two years. After the initial two years, the benefits should not be affected.
I purchased a life insurance policy in another state. Do North Carolina insurance laws apply?
No. The laws and regulations of the state of issue apply. North Carolina law applies only to policies applied for and issued in North Carolina.
Is a company required to pay interest on death benefits?
North Carolina law requires insurance companies to pay interest if the death proceeds are not paid in accordance with the terms of the policy within 30 days after the receipt of satisfactory proof of loss.
What rights does the designated policy owner have?
The policy owner has full legal right to all policy values and to make policy changes during the lifetime of the insured.
What rights does the designated beneficiary have?
The named beneficiary is entitled to receive death proceeds upon the death of the insured person.
Will outstanding loans reduce death benefits payable to the beneficiary?
Yes.
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