Are you in the market for a new life insurance policy to make sure loved ones are cared for after a passing, or maybe you would like to diversify your investments as well with some investment-grade permanent life insurance. If you live in the Green Mountain State, here are the most important rights as consumers of life insurance in Vermont. Even if you own life insurance currently, many of these rights still pertain to you during policy ownership.
Vermont Life Insurance Rules and Regulations
Vermont’s life insurance codes are written in the law books under Title 8 of the state Statutes. These rules are written by legislatures to protect the rights of policyholders, and to ensure that the life insurance business in the state is conducted in an ethical and standardized way across companies.
The Grace Period in Vermont is 30 days, a length of time that is pretty standard across the country. The day a life insurance premium is due, but not paid, marks the beginning of the grace period. During the grace period, an insurance company can not deny coverage to beneficiaries if an insured were to pass. If a valid claim is filed, the beneficiaries must be paid in full. If a payment is received by the insurance company during the grace period time, the policy must be restored in full to good standing. There are no limits to the amount of grace periods that a policy may enter. After the 30 day grace period if no payment is made the policy will lapse, and reinstatement is subject to insurance company rules regarding underwriting requirements and cost of reinstatement.
If you recently purchased life insurance, you may be required to remit a premium payment before you have your insurance policy delivered. Because it is unfair to ask someone to pay for something that they have not had time to review carefully, Vermont provides a 10 day “free look” period, starting at delivery of the policy. During this period, as an owner is looking over his contract, if he/she decides that the insurance does not fit her/his needs, the policy can be returned for a full refund of premiums. Not every state has this mandated free look period, but many do, and the length of time may vary. It is illegal for an insurance company to charge any fees or penalties for having an owner take advantage of the free look period.
Guaranteed Benefits In Case Of Insolvency
If an insurance company goes bankrupt and can not pay claims, beneficiaries will lose vast sums of money that they are rightfully owed. Owners of permanent forms of insurance will also lose cash value, and everyone will forfeit a lot of money for an insurers irresponsible behavior. Vermont believes that it’s consumers deserve protection from this unlikely event, and provide a back up guarantee as a safety net. If an insurance company can not pay claims or make good on cash surrender value, the Vermont Life and Health Insurance Guaranty Association will make up to $300,000 of death claim payments and $100,000 of lost cash surrender value returns. These limits apply per person and are not influenced by size of policies or number of policies outstanding, so when you are comparing quotes with Life Ant please give preference to those companies with the highest financial ratings.
Vermont Life & Health Insurance Guaranty Association
One National Life Drive, Suite M585
Montpelier, VT 05604
Timely Payment On Claims
Vermont wants all claims to be settled promptly, and they have set a definite limit on what they consider prompt. An insurance company has up to 45 days to pay all claims. Failing to do this, the insurance company must now pay the claim amount plus accrued interest to beneficiaries. As a result most claims in Vermont do end up being paid in full within the 45 day window, as the financial incentive for insurance companies to avoid paying accrued interest is effective.
Vermont Department of Financial Regulation