2.1 Alaska Life Insurance Policy Requirements

Where the Rules Live

Individual life insurance sold in Alaska is governed by Alaska Statutes (AS) Title 21, Chapter 45 (Life Insurance and Annuities), enforced by the Alaska Division of Insurance inside the Department of Commerce, Community, and Economic Development. The exam tests the specific Alaska numbers, so memorize them rather than reasoning from a generic model law.

Free Look (Right to Examine)

Every individual life policy must carry a free look of at least 10 days, running from the date the policy is delivered to the owner. Cancel inside the window and the insurer must refund all premium paid with no surrender charge and no questions.

Trap: The free look starts at delivery, not at application or at the issue date. A policy mailed June 1 and delivered June 5 starts its clock on June 5.

Grace Period — Watch the 30 vs 31

Under AS 21.45.030, an individual life policy must allow a grace period of one month, not less than 30 days, for every premium after the first. Coverage stays in full force during grace. If the insured dies in the grace period, the insurer pays the death benefit minus the one overdue premium.

• Individual life = 30 days (the statute's "one month of not less than 30 days").
• Group life = 31 days under the separate group statute.
• Industrial life billed more often than monthly = four weeks (28 days).

The stock prep answer "31 days" is the group number. On an individual-life item the correct Alaska floor is 30 days.

Incontestability and Suicide

A life policy becomes incontestable after it has been in force 2 years during the insured's lifetime. After that, the insurer cannot void it for a material misstatement on the application. Carve-outs that survive forever: nonpayment of premium and, in most policies, lack of insurable interest or impersonation/fraud in procurement.

The suicide exclusion may run no longer than 2 years from issue. If the insured dies by suicide inside that window, the insurer's only obligation is to return premiums paid, not the face amount. After 2 years, suicide is paid at full face value.

A lapse-and-reinstatement generally restarts a fresh contestable window for statements made on the reinstatement application only.

Worked Incontestability Example

Suppose a policy is issued January 1, 2024 and the insured dies February 1, 2026 — more than two years later. The insurer discovers the applicant had failed to disclose a heart condition. Because the policy has passed its two-year contestable period and was in force during the insured's lifetime for that whole time, the insurer cannot rescind for the misstatement and must pay the full death benefit. Had the death occurred December 1, 2025 (inside two years), the insurer could investigate and potentially deny for material misrepresentation. The exam loves this date arithmetic, so count carefully from the issue date.

Other Mandatory Policy Provisions

Alaska adopts the standard set of consumer-protective provisions. Know what each one does, because the exam phrases them as scenarios.

Misstatement-of-Age Worked Example

A $200,000 policy is issued on an applicant stated as age 45, premium $1,200/year. At death the insurer discovers the true age was 50, where $1,200 would have bought only $170,000. The claim pays $170,000, not zero — the benefit is adjusted, the contract is honored. This is the single most-tested age item: adjust, never void.

Beneficiary and Unclaimed-Benefit Protections

• Death benefits must be paid promptly on a valid claim; unreasonable delay accrues interest to the beneficiary.
• The insurer must make good-faith efforts to locate beneficiaries.
• A benefit owed but unclaimed is never forfeited. It is reported and turned over as unclaimed property, escheating to the State of Alaska, and the beneficiary can later claim it from the state.

Spendthrift / Settlement Options

Proceeds may be paid as a lump sum or under a settlement option (interest-only, fixed period, fixed amount, or life income). A spendthrift clause can shield proceeds left with the insurer from the beneficiary's creditors.

Delivery Mechanics

The policy must be delivered within a reasonable time, may be delivered electronically with the owner's prior consent, and — because the free-look clock starts at delivery — carriers usually obtain a delivery receipt to fix the date. Constructive delivery (mailing to the producer who then forwards it) can satisfy the requirement, but the free-look clock still begins when the owner actually receives it, which is why the dated receipt matters so much in disputes.

Tying the Provisions Together

Think of an individual life policy as a sequence of consumer rights that activate over time. At delivery the owner has a 10-day unconditional escape hatch. Once kept, the policy is protected by a 30-day grace cushion against an accidental lapse on every renewal premium. Through the first two years the insurer retains a limited right to investigate and contest for fraud or material misstatement, and to exclude suicide. After the 2-year mark, both of those insurer rights expire and the death benefit becomes essentially guaranteed except for unpaid premiums or loans.

The age-misstatement and reinstatement provisions then operate as ongoing fairness mechanisms — adjusting rather than voiding, and restoring lapsed coverage on reasonable terms — for the life of the contract.

Exam Tip: Three Alaska numbers cluster around the start of a policy — 10-day free look, 30-day individual grace, 2-year incontestability/suicide. Do not blend the 31-day group grace into the individual answer.