Key Takeaways
- Pennsylvania requires a 10-day free look period for individual life insurance policies (30 days for seniors 65+)
- Life insurance policies must include a 2-year incontestability clause under Pennsylvania law
- Pennsylvania prohibits unfair discrimination in life insurance underwriting and rating
- Suicide exclusion in Pennsylvania is limited to 2 years from policy issue date
- Pennsylvania requires a 31-day grace period for premium payment
Pennsylvania Life Insurance Policy Requirements
Pennsylvania law imposes specific requirements on life insurance policies sold in the Commonwealth. These requirements protect consumers and ensure policy standardization.
Free Look Period
Pennsylvania provides free look periods for life insurance:
| Policy Type | Free Look Period |
|---|---|
| Standard Life Policy | 10 days |
| Senior Citizens (65+) | 30 days |
| Annuities | 10 days (30 days for seniors) |
| Replacement Policy | 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: Pennsylvania's standard free look is 10 days, but seniors age 65 and older get 30 days. This senior protection is frequently tested.
Incontestability Clause
Pennsylvania 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 in the application
- Exceptions: Fraud, non-payment of premiums, or violation of policy conditions
- The clause protects beneficiaries from having claims denied due to application errors
Pennsylvania Specific Rules
- Incontestability period begins from the issue date
- If policy lapses and is reinstated, a new 2-year period begins
- Does not protect against fraudulent claims in all circumstances
Suicide Clause
Pennsylvania 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
- Return of premiums only if death occurs within exclusion period
Grace Period Requirements
Pennsylvania requires a 31-day grace period for life insurance premium payments:
| Premium Mode | Grace Period |
|---|---|
| Annual | 31 days |
| Semi-annual | 31 days |
| Quarterly | 31 days |
| Monthly | 31 days |
During the grace period:
- Coverage remains in effect
- Premium can be paid without penalty
- If death occurs, benefit is reduced by unpaid premium
Unfair Discrimination Prohibitions
Pennsylvania prohibits unfair discrimination in life insurance:
Prohibited Discrimination
| Prohibited Basis | Rule |
|---|---|
| Race | Cannot use for underwriting or rating |
| Religion | Cannot use for underwriting or rating |
| National Origin | Cannot use for underwriting or rating |
| Blindness/Disability | Special protections apply |
What IS Permitted
Insurers can consider:
- Age
- Sex (actuarially justified)
- Health conditions
- Smoking status
- Occupation
- Lifestyle factors related to risk
Standard Policy Provisions
Pennsylvania requires these provisions in life insurance policies:
| Provision | Requirement |
|---|---|
| Entire Contract | Policy and application constitute entire contract |
| Grace Period | 31 days minimum |
| Incontestability | 2 years maximum |
| Misstatement of Age | Adjust benefits, not void policy |
| Reinstatement | Must allow within 3 years if conditions met |
| Nonforfeiture | Cash value options required |
How long is the free look period for a standard life insurance policy in Pennsylvania for a 50-year-old buyer?
What is the required grace period for life insurance premium payments in Pennsylvania?