2.1 North Dakota Life Insurance Policy Requirements

Regulatory Authority and Title 26.1

All insurance in North Dakota is governed by Title 26.1 of the North Dakota Century Code (NDCC), with required life-policy provisions concentrated in Chapter 26.1-33. The North Dakota Insurance Department (NDID) enforces these statutes. Unlike most states, North Dakota's Insurance Commissioner is elected to a four-year term, not appointed. The Commissioner approves policy forms before sale, issues and renews producer licenses, investigates consumer complaints, and may impose fines, license suspension, or revocation for violations.

Key exam point: the licensing exam itself is administered by PSI (not Pearson VUE). The Life producer exam carries 110 scored questions, a 150-minute limit, a 70% passing score, and a $64 sitting fee. Scores are valid for one year. Memorize the day/year thresholds below; the state-law portion leans heavily on them.

Free Look (Right to Examine) — 20 Days

This is the single most-missed North Dakota number. Under NDCC 26.1-33-02.1, every individual life policy must give the owner a 20-day right to examine and return the policy for a full refund of premium, with the notice printed on the first page of the contract. Many national prep banks list the generic 10 days — that is wrong for North Dakota life insurance.

Worked example: A policy is delivered March 1. The owner has until and including March 21 (20 days) to mail it back and recover every dollar of premium paid — no surrender charge, no pro-ration. If the owner returns it on day 22, the contract is in force and only its surrender value (if any) is available.

Incontestability Clause — 2 Years

NDCC 26.1-33-05 requires that a policy be incontestable after it has been in force during the lifetime of the insured for two years from its date of issue. After two years the insurer cannot void the policy or deny a death claim for material misstatements or concealment on the application.

• Surviving exceptions: nonpayment of premium, and (per the statute) violations relating to naval or military service in time of war.
• The two years must run during the insured's lifetime. If the insured dies in month 18, the policy is still contestable for fraud even though more than two years may have passed by the time the claim is investigated — a classic trap.
• A reinstated policy starts a fresh contestable period running from the reinstatement date for statements made on the reinstatement application.

Suicide Clause — 1-Year Limit

North Dakota law makes suicide no defense once a life policy or certificate has been in force one year (NDCC 26.1-33-37); NDCC 26.1-33-05 likewise lets a suicide restriction be effective only during the first year after issue. If the insured dies by suicide within that first year, the policy's suicide clause typically limits the insurer to a refund of premiums paid (less any indebtedness). After one year, suicide is covered in full like any other death. The suicide limit and the incontestability clause are legally distinct: incontestability bars contesting for misrepresentation for two years, while the suicide limit ends after one year.

Trap: National study material often says "two years" for the suicide clause. In North Dakota the suicide limit is one year, while incontestability is still two years.

Grace Period and Reinstatement

• Grace period — 31 days. After the first premium, every renewal premium carries a 31-day grace period during which coverage stays fully in force. If the insured dies during grace, the death benefit is paid minus the overdue premium.
• Reinstatement — 3 years. A lapsed policy may be reinstated within three years of default if the owner: (1) provides evidence of insurability satisfactory to the insurer, (2) pays all back premiums with interest, and (3) repays or reinstates any policy loan with interest.

Beneficiary and Unclaimed-Benefit Protections

North Dakota has adopted unclaimed-life-insurance-benefits requirements modeled on the NAIC framework. Insurers must:

• Compare in-force policies against the Social Security Death Master File (DMF) on a regular basis;
• Make good-faith efforts to locate beneficiaries when a match is confirmed;
• Not charge the beneficiary any fee for the search or claim;
• Pay the proceeds, or, if the beneficiary cannot be found, escheat the benefit to the State Treasurer's unclaimed-property division — the benefit is never forfeited and the beneficiary may still claim it from the state.

Required Standard Provisions Checklist

Every North Dakota individual life policy must contain at minimum:

1. Entire contract clause (policy plus attached application).
2. Grace period (31 days).
3. Incontestability (2 years).
4. Reinstatement rights (3 years).
5. Misstatement of age/sex — benefit adjusted to what the premium would have purchased at the true age, rather than voiding the policy.
6. Suicide limit (no defense after one year in force).
7. Free look notice (20 days) on page one.

Scenario: An applicant understated her age by three years. She dies in year five (policy incontestable). The insurer cannot rescind, but under the misstatement-of-age provision it reduces the death benefit to the amount the paid premium would have bought at her actual age. This adjustment is permitted even on an incontestable policy.