Rhode Island Life Study Guide

Rhode Island’s individual life rules are short, and the exam points sit in what the chapter leaves out. Grace, incontestability and a suicide clause the insurer is free not to use are all that section 27-4-6.2 carries; the free look sits one decimal away, and reinstatement and misstatement-of-age adjustment sit nowhere in chapter 27-4 at all. Work out which instrument a rule lives in before you answer what it says.

The free look, and where a returned policy may go

The free look is not in the standard-provisions section. It is at 27-4-6.1, and it gives an owner a minimum of 20 days to return an individual life policy or an individual annuity contract delivered after 1 January 2008 — one sentence covering both products. The older 10-day limb still governs pre-2008 contracts.

The tested detail is the return address. The contract may go back to the insurer’s home or branch office “or to the insurance producer through whom it was applied for.” A policy handed back across your own desk is legally returned, and the contract is then void “as from the beginning.”

Grace and incontestability — the mandatory pair

Section 27-4-6.2(a) opens “shall contain in substance the following provisions.” The grace period at 27-4-6.2(a)(1) is 31 days, or one month, following any premium due date after the first, policy in full force throughout. If the insured dies inside it, the insurer may deduct the unpaid premium through the end of the policy month of death; if death falls in a paid-up period, it must add back premium paid beyond that month, unless the premium was waived under a waiver-of-premium benefit. The subsection does not reach single premium or paid-up policies.

Incontestability at 27-4-6.2(a)(2) runs 2 years from date of issue, during the insured’s lifetime, with nonpayment of premium always excepted. An increase in benefits applied for with evidence of insurability starts its own fresh 2-year clock from the effective date of that increase. Both reach policies delivered or issued for delivery on or after 1 January 2008.

The suicide provision is permissive

Subsection (a) says a policy shall contain its provisions. Subsection (b) — the suicide subsection — says a policy “may contain in substance the following provision.” One word apart, one subsection apart, and the answer flips: Rhode Island does not require a suicide exclusion. What 27-4-6.2(b) does is cap one at “not exceed two (2) years” if the insurer elects to write it, and fix the minimum settlement where it applies — a refund of premiums paid, less dividends, indebtedness and partial withdrawals, so the beneficiary never walks away with nothing.

Two absences — and what sits next to each

Reinstatement. Chapter 27-4 contains no life reinstatement provision at all, so the policy terms control the window, and no statutory maximum reinstatement interest rate applies — the rate is whatever the policy specifies. The contrast is the tell: section 27-18-3(a)(4) does mandate a Reinstatement provision, on the individual accident and sickness side.

Misstatement of age. There is no benefit-adjustment provision here either. Section 27-4-10 sits nearby and does something else entirely — a materiality test under which no misstatement renders a life policy void “unless this matter represented shall have actually contributed to the contingency or event on which the policy is to become due and payable” — and whether it did is a jury question. An answer that recalculates the death benefit at the true age is importing a rule this chapter does not contain.

Interest on death proceeds

Section 27-4-26 adds 9 percent per annum to life insurance death proceeds, “added to and be a part of the total sum paid.” The clock is the point: interest runs from the date of death — not from proof of death, not from the filing of a claim. The section is a single sentence with no proof-of-death proviso; do not supply one from memory of another rule.

Policy loans: an election, not a cap

“Rhode Island caps policy loan interest at 8 percent” is half a rule. Under 27-4-13.1, on policies issued on or after 25 May 1982, the insurer elects between a fixed maximum of not more than 8 percent per annum and an adjustable maximum. The adjustable ceiling is the higher of the published monthly average from two months prior, or the policy’s cash-value rate plus 1 percent, and it moves at least once every 12 months but not more than once in any 3-month period, and only where the change is half a percentage point or more.