2.1 Washington Life Insurance Policy Requirements

Standard Provisions Required by Statute

Washington adopts the standard policy provisions found in RCW chapter 48.23. The Office of the Insurance Commissioner (OIC) reviews and approves every individual life form before it can be sold, so the exam tests the statutory minimums an insurer can never weaken (it may always be more generous to the insured).

Free Look (Right to Examine)

Under RCW 48.23.380, every individual life policy issued after September 1, 1977 must have printed on its face or attached to it a notice that the owner may return the policy within ten (10) days of delivery and receive a full refund of all premium paid "for any reason." Memorize the trap: Washington's life statute does not add a separate 20-day senior free look — that extension exists in some other states, not in RCW 48.23.380. Variable contracts may carry a longer SEC-driven look, but the state floor is 10 days.

Worked example: A policy is mailed and the owner signs the carrier's delivery receipt on June 1. The 10-day window closes at end of day June 11. A return postmarked June 11 is timely; a return mailed June 13 is too late and the insurer keeps the policy in force.

Incontestability

RCW 48.23.060 requires that the policy become incontestable after two years from issue (excluding any period the insured is disabled, by some forms). Once the two-year clock runs while the insured is alive, the insurer cannot rescind for a material misstatement or even most fraud in the application. The narrow survivors are non-payment of premium and provisions on military/aviation hazards and age misstatement. A claim filed in month 25 on a policy issued with an undisclosed condition must be paid.

Suicide Clause

RCW 48.23.090 limits any suicide exclusion to two years from issue. If the insured dies by suicide in that window, the insurer refunds premiums paid (not the face amount); after two years the full death benefit is payable. Note this runs from issue, parallel to but legally separate from incontestability.

Grace Period, Reinstatement, and Loan Rules

RCW 48.23.030 grants a grace period of one month, but not less than 30 days, for any premium after the first. The policy stays in force during grace; if the insured dies, the insurer pays the death benefit minus the overdue premium. The insurer may charge interest on the late premium not exceeding 6% per year.

Reinstatement (RCW 48.23.080): a lapsed policy may be reinstated within three years on evidence of insurability and payment of overdue premiums with interest. Critically, reinstatement starts a new two-year contestable and suicide period measured from the reinstatement date — a heavily tested point.

Unfair Discrimination — RCW 48.30.300

RCW 48.30.300 makes it an unfair practice to refuse coverage or vary rates, terms, or benefits based on factors not supported by sound actuarial principles or actual experience. Washington courts and the OIC read this to bar pricing or denial based on sexual orientation, gender identity, marital or domestic-partner status, and the presence of HIV when not tied to genuine mortality data. Same-sex spouses and registered domestic partners must be underwritten on the same basis as opposite-sex spouses.

What insurers MAY still use (legitimate risk factors):

• Age and sex (where actuarially justified)
• Tobacco/nicotine use
• Documented medical history and current health
• Hazardous occupation or avocation (aviation, diving)
• Foreign travel to high-risk regions

Common trap: Charging a higher rate for a verifiable heart condition is lawful risk classification; charging more solely because an applicant is gay, or because the applicant is HIV-positive without individualized mortality evidence, is unfair discrimination. Distinguish lawful risk classification from unlawful unfair discrimination — the test is whether a real, measurable mortality difference supports the distinction.

Other Mandatory Policy Provisions

Beyond the headline clauses, RCW chapter 48.23 forces several standard provisions into every individual life contract. The exam frequently pairs the name of the provision with what it protects:

Worked example (misstatement of age): An insured understated his age by three years to lower the premium. On a death claim the insurer does not rescind; under the standard provision it pays the reduced face amount the actual premium would have bought at the correct age. Compare this to a material health misstatement, which the incontestability clause may bar after two years.

Other delivery duties: the OIC requires accurate illustrations under RCW 48.23A (no misleading projections of non-guaranteed values), and producers must physically deliver the contract and any required buyer's guide so the free-look clock actually begins. Failure to deliver, or backdating the delivery receipt, is a market-conduct violation that can extend the owner's right to return the policy.