North Carolina Life Study Guide

North Carolina life law sits almost entirely in one statute — G.S. 58-58-22, the provisions every life policy issued here must contain — plus a handful of Title 11 administrative rules covering the free look, replacement and annuity sales. Learn § 58-58-22 as a numbered list and you have most of this section. Then learn the one number North Carolina sets differently from almost everywhere else, because that is where the exam lives.

The § 58-58-22 required provisions

Grace period: 31 days for any premium after the first, with the policy — and the death benefit — in force throughout. Note it is 31, not 30.

Incontestability: 2 years. The statute puts it as: “the validity of the policy shall not be contested, except for nonpayment of premium, once it has been in force for two years after its date of issue.”

Suicide: 2 years. The exclusion may not run longer than two years from issue, and if it applies the insurer must return at least the premiums paid.

Reinstatement: 5 years from the date of premium default — on application, proof of insurability, payment of the overdue premiums with interest, and any policy indebtedness. This is the one that costs candidates points, and it gets its own section below.

Misstatement of age or gender: an equitable adjustment of premiums or benefits. The insurer recalculates; it does not rescind, and it does not matter whether the contestable period has run.

Five years, not three

Here is the deviation. Essentially every national course teaches a three-year reinstatement window, because that is what the NAIC model provision and most states use. North Carolina gives five.

Worse, from a test-taking perspective, three years will be sitting right there as an answer choice and it will look completely reasonable. This is not a rule you can reason your way to from principles — it is a number you either know or you do not.

One related detail: North Carolina fixes no statutory cap on the interest chargeable on the overdue premiums. Overdue premiums are paid with interest at the rate specified in the policy. States that cap it commonly use 6% or 8%; if a question offers you a North Carolina percentage cap, the premise is wrong.

The free look: 10 days, with a sticker

North Carolina’s free look does not live in Chapter 58 at all — it is 11 NCAC 12 .0447, and it gives 10 days to return an individual life or annuity policy for a prompt refund of premium paid.

The rule has an unusual procedural wrinkle worth knowing: the insurer must display a “Ten Day Free Look” provision on the policy — by sticker, or printed on the policy face — before issuance or delivery. It is not enough to bury the right in the contract terms. The same rule reaches group life and annuity policies or certificates that contain a free-look provision.

There is a second, longer free look hiding in the annuity rules. Under G.S. 58-60-135(c), where the buyer’s guide and disclosure document are not delivered at or before application, the applicant gets no less than 15 days. Think of it as the penalty version: deliver the disclosure late, and the customer’s window gets longer. The statute adds that this period runs concurrently with any other free look — so it stretches the 10 days to 15, it does not add 15 to 10.

Variable products need a separate line

North Carolina does not fold variable authority into the life line. Selling variable life or variable annuities requires the Life line, plus a separate Variable Life & Variable Annuity line of authority, plus FINRA registration. G.S. 58-33-26 requires the producer to satisfy the Commissioner that they have met the FINRA requirements of the Secretary of State — it does not name particular series numbers, so treat any specific pairing you see quoted as industry practice rather than statute. Fixed annuities, by contrast, sell under the Life line with nothing extra.

Life settlements

North Carolina regulates viatical and life settlements under Article 58, and providers and brokers must be licensed. The number to know is the rescission window, and note carefully what it runs from: the viator has an unconditional right to rescind for at least 10 business days after receiving the settlement proceeds — not from the date the contract was signed. If the insured dies during the rescission period the contract is deemed rescinded, subject to repaying the proceeds and any premiums, loans and loan interest.

Two details there are easy to lose: it is business days, not calendar days, and the clock starts at receipt of proceeds, not execution.