Key Takeaways
- New Mexico requires a 10-day free look period for standard life insurance policies
- Life insurance policies must include a 2-year incontestability clause under New Mexico law
- Suicide exclusion in New Mexico is limited to 2 years from policy issue date
- The New Mexico Office of Superintendent of Insurance (OSI) regulates all insurance activities
- New Mexico requires insurers to cross-check policies against death records to locate beneficiaries
New Mexico Life Insurance Policy Requirements
New Mexico law imposes specific requirements on life insurance policies sold in the state under Chapter 59A of the New Mexico Statutes Annotated (NMSA). These requirements protect consumers and ensure policy standardization.
Regulatory Authority
The New Mexico Office of Superintendent of Insurance (OSI) regulates all insurance activities in the state:
- Headed by the Superintendent of Insurance
- Reviews and approves policy forms
- Licenses insurance producers
- Investigates consumer complaints
- Enforces insurance laws and regulations
Free Look Period
New Mexico provides a free look period for life insurance:
| Policy Type | Free Look Period |
|---|---|
| Standard Life Policy | 10 days |
| Annuity Contracts | 10 days |
| Replacement Policies | 10 days |
During the free look period, the policyholder can:
- Review the policy
- Return it for a full refund of premiums paid
- No questions asked, no penalty
Exam Tip: New Mexico follows the standard 10-day free look period for life insurance policies.
Incontestability Clause
New Mexico requires a 2-year incontestability clause in all life insurance policies:
- After 2 years from issue, the insurer cannot contest the policy based on misstatements
- Exceptions: Fraud, non-payment of premiums
- Protects beneficiaries from claim denials based on application errors
New Mexico-Specific Rules
- Incontestability period begins from the issue date
- If policy lapses and is reinstated, a new 2-year period begins
- Material fraud may still be contested in certain circumstances
Suicide Clause
New Mexico limits the suicide exclusion:
- Suicide exclusion cannot exceed 2 years from policy issue
- After 2 years, death by suicide is covered
- If policy is reinstated, new 2-year period may apply
- Benefits limited to return of premiums if death is within exclusion period
Beneficiary Protections
New Mexico has specific beneficiary protection laws:
Unclaimed Life Insurance Benefits
New Mexico requires insurers to:
- Cross-check policies against the Social Security Death Master File
- Make reasonable efforts to locate beneficiaries
- Initiate claims process when death is confirmed
- Cannot charge fees for locating beneficiaries
Unclaimed Property
If beneficiaries cannot be found:
- Death benefits are not forfeited
- Must be reported as unclaimed property to the state
- Beneficiaries can still claim from the state
Policy Delivery Requirements
New Mexico requires:
- Policy delivered within reasonable time of issue
- Delivery must include policy summary
- Receipt should be documented
- Electronic delivery permitted with consent
Grace Period
New Mexico life insurance policies must include:
| Feature | Requirement |
|---|---|
| Minimum Grace Period | 31 days for annual/semi-annual premiums |
| Monthly Premiums | Minimum grace period applies |
| Coverage During Grace | Policy remains in full force |
Reinstatement Rights
New Mexico policyholders have reinstatement rights under NMSA 59A-18-17:
| Requirement | Detail |
|---|---|
| Time Limit | Within 3 years of lapse |
| Evidence of Insurability | Required |
| Back Premiums | Must pay with interest |
| Contestability | New 2-year period begins |
| Effective Date | Date of reinstatement application approval |
Standard Policy Provisions
New Mexico requires these standard provisions in life insurance policies under NMSA 59A-18:
| Provision | Requirement | Statute |
|---|---|---|
| Entire Contract | Policy and application are complete contract | NMSA 59A-18-11 |
| Misstatement of Age | Adjustment to premium/benefits | NMSA 59A-18-14 |
| Grace Period | 31 days minimum | NMSA 59A-18-15 |
| Incontestability | 2 years from issue | NMSA 59A-18-13 |
| Suicide Exclusion | 2-year maximum | NMSA 59A-18-16 |
| Reinstatement | 3 years to reinstate | NMSA 59A-18-17 |
| Nonforfeiture | Required options | NMSA 59A-18-19 |
Nonforfeiture Options
New Mexico requires life insurance policies to include nonforfeiture options:
| Option | Description |
|---|---|
| Cash Surrender Value | Receive cash value upon surrender |
| Reduced Paid-Up | Lower death benefit, no more premiums |
| Extended Term | Same death benefit for limited period |
| Automatic Premium Loan | Policy loan pays premium |
Exam Tip: Nonforfeiture options protect policyholders who stop paying premiums. They cannot be denied these options after building cash value.
Insurable Interest Requirements
New Mexico requires insurable interest under NMSA 59A-18-5:
| Requirement | Detail |
|---|---|
| Definition | Substantial economic interest in continued life of insured |
| When Required | At time of policy inception |
| Self-Insurance | Always has insurable interest in own life |
| Family | Spouses, parents, children presumed |
| Business | Key employees, partners, creditors |
STOLI Prohibition
New Mexico prohibits Stranger-Originated Life Insurance (STOLI):
- Policies obtained with intent to transfer to third party with no insurable interest
- Violates public policy against wagering on human life
- Policies may be voided if STOLI is discovered
How long is the free look period for a standard life insurance policy in New Mexico?
After how many years does a life insurance policy become incontestable in New Mexico?
Which agency regulates life insurance in New Mexico?
What is the maximum suicide exclusion period allowed in New Mexico life insurance policies?
How long do New Mexico policyholders have to reinstate a lapsed life insurance policy?