2.1 Connecticut Life Insurance Policy Requirements
Key Takeaways
- Connecticut requires a 10-day free look on standard individual life policies under Conn. Gen. Stat. 38a-436 (long-term care is 30 days).
- The incontestability clause limits insurer challenges to the first 2 policy years, except for fraud, nonpayment, and age/sex misstatement.
- The suicide exclusion may not exceed 2 years; thereafter suicide is paid at full face, and within the period only premiums are refunded.
- Life policies must carry a 31-day grace period, entire-contract, reinstatement (3 years), nonforfeiture, and misstatement-of-age provisions.
- The Connecticut Insurance Department (CID) enforces these standard provisions and reviews policy forms before they may be sold.
How Connecticut Regulates the Life Contract
The Connecticut Insurance Department (CID), led by the Insurance Commissioner, regulates every individual life policy delivered or issued for delivery in the state. Connecticut is a prior-approval state for many life and annuity forms: the policy language must be filed with and accepted by the CID before a producer may sell it. The governing law is Title 38a of the Connecticut General Statutes, especially Chapter 700b (Life Insurance, Annuities, Burial Contracts and Life Settlements).
For the exam, memorize the standard provisions every individual life policy must contain. These are not optional; an insurer may give the policyholder more favorable terms but never less favorable than the statute requires.
Free Look Period
Under Conn. Gen. Stat. 38a-436, the buyer may examine an individual life policy and return it for a full refund of all premiums paid. The clock starts on delivery of the policy, not the application date.
| Product Type | Connecticut Free Look |
|---|---|
| Standard individual life | 10 days |
| Policy issued as a replacement | 10 days right to return (38a-435 regulation) |
| Individual long-term care | 30 days |
| Individual annuity contract | 10 days |
During the free look the consumer may return the policy for any reason and owes nothing. For a variable or market-value-adjusted product, the refund may equal the account value plus any deducted charges rather than gross premium, because the value floats with the market.
Exam trap: Some study aids quote a "20-day" Connecticut free look. The statute (38a-436) and CID consumer guidance use 10 days for standard life and annuities. Only long-term care carries the longer 30-day window.
Incontestability Clause
Connecticut requires a two-year incontestability provision. After the policy has been in force during the insured's lifetime for 2 years from the issue date, the insurer can no longer void it or deny a claim because of a material misrepresentation on the application.
- Exceptions that survive forever: outright fraud in the application, nonpayment of premium, and adjustments for misstatement of age or sex (the benefit is recalculated, never voided).
- The 2-year clock runs while the insured is alive; a death inside the contestable window keeps the contest right open even if investigation extends past 2 years.
- A reinstated policy starts a new contestable period (typically 2 years) on the reinstated coverage only.
Worked example: Maria omits a 2018 cardiac diagnosis on her 2024 application. If she dies in 2025 (year 1), the insurer may rescind for the misrepresentation and refund premiums. If she dies in 2027 (past year 2) of the same condition, the policy is incontestable and the full face amount is paid.
Suicide Clause
Connecticut caps the suicide exclusion at 2 years from issue:
| Time of Suicide | Insurer Pays |
|---|---|
| Within first 2 years | Refund of premiums paid (limited liability), not the face amount |
| After 2 years | Full death benefit |
Reinstatement may restart the 2-year suicide window on the new coverage. Note the suicide and incontestability periods are separate clauses that happen to share the same 2-year length.
Other Mandatory Provisions
| Provision | Connecticut Standard |
|---|---|
| Grace period | 31 days for premium (coverage continues; overdue premium is deducted from any death claim) |
| Entire contract | Policy + attached application = the whole agreement; no incorporation by reference |
| Reinstatement | Right to reinstate a lapsed policy within 3 years with evidence of insurability and back premiums plus interest |
| Misstatement of age/sex | Benefit adjusted to what the premium would have purchased at the correct age/sex |
| Nonforfeiture options | Required on cash-value policies: cash surrender, reduced paid-up, extended term |
| Policy loan | Available against cash value at the contract loan rate |
The three nonforfeiture options test heavily. Cash surrender ends the contract for its cash value (minus loans). Reduced paid-up keeps permanent coverage at a lower face amount with no further premiums. Extended term keeps the same face amount as term insurance for a limited period determined by the cash value. The automatic default if the owner selects nothing is usually extended term.
Settlement Options and Beneficiary Protections
Connecticut life policies must offer settlement options that let a beneficiary choose how proceeds are paid rather than taking a lump sum:
| Settlement Option | How Proceeds Are Paid |
|---|---|
| Lump sum | Entire death benefit paid at once (default) |
| Interest only | Insurer holds principal and pays interest periodically |
| Fixed period | Equal payments over a chosen number of years |
| Fixed amount | Set dollar amount paid until the fund is exhausted |
| Life income | Payments for the payee's lifetime (may add period certain) |
Connecticut requires insurers to pay valid death claims promptly. If the insurer unreasonably delays payment of a clean claim, interest accrues on the proceeds, and the insurer must use good-faith efforts to locate missing beneficiaries (consistent with unclaimed-property and the state's use of the Death Master File to identify deceased insureds).
Why These Numbers Matter on the Exam
Connecticut largely mirrors the standard provisions taught for the national portion, so test items hinge on the exact numbers: free look 10 days (life and annuity) versus 30 days (long-term care); grace 31 days; incontestability and suicide each 2 years; reinstatement window 3 years. A common distractor swaps the 31-day grace period for a 30-day or 60-day figure, or swaps the 10-day life free look for the 30-day long-term-care figure. Anchor each clause to its number and you will clear most of this section's questions.
Remember too that misstatement of age or sex adjusts the benefit and is never grounds to void the contract, even past the contestable period.
An individual standard life insurance policy is delivered to a Connecticut applicant. How long is the free look period, and when does it begin?
A Connecticut insured who concealed a prior illness dies in the third year the policy is in force. What may the insurer do regarding the misrepresentation?
A Connecticut policyowner stops paying premiums on a whole life policy and selects no nonforfeiture option. Which result keeps the original face amount in force for a limited time?