Life insurance comes in many different forms and many different sized policies. While the exact details of rights may vary based on specific policies and companies, there are some inalienable rights that policyholders have in the Mountain State. These rights exist to protect consumers’ interests and are in place under authority from the State and lawmakers in Charleston.
West Virginia Rules and Regulations
West Virginia’s life insurance is regulated under Chapter 33 of the State Statutes. These statutes spell out the exact minimum rights of policyholders on some very key points regarding life insurance. These key points are detailed below.
The free look period begins when a policy delivery receipt is signed by an owner. In West Virginia, lawmakers have decided to give all consumers a 10 day period in which they can review their contract, without permanent financial obligation. Often times when an owner purchases life insurance, he submits a payment “with application”. If an insured dies, even if the policy has not been issued, the coverage is in place in many instances. This means that if the insurance company would have accepted the insured through underwriting if no death occurred, the company must make the payment of a claim to beneficiaries.
Since this payment may take place before the policy has even been printed and delivered, West Virginia lawmakers have decided that owners deserve a 10 day period in which to review the policy before accepting it as final. If the owner decides to “free look” the policy during this time period for any reason, the insurance company must pay a full refund of all premiums submitted to date.
West Virginia is unique in that it defines the grace period as four weeks long. The grace period is the period of time after a missed premium payment becomes due, but the policy is not allowed to lapse. If death occurs, and a valid death claim is filed, the insurance company must still make a full payout of the claim to the beneficiaries. The grace periods helps prevent policies from going into “lapsed” status, which may require a larger payment and even underwriting to reinstate the policy. If payment is made to the insurance company during the grace period, the insurance company must keep the policy in good standing for the owner. Beware that a grace period may require a larger payment to bring the policy in good standing than the original premium due, so always try to make timely payments. There are no limits to the number of times a policy can enter the grace period.
Guarantee of Death Claims During Bankruptcy
An insurance company declaring bankruptcy is very rare today, but it can and will happen. As an additive measure of protection for consumers, the West Virginia Life and Health Insurance Guaranty Association has been set up to provide up to $300,000 of lost death claims in the event of a bankruptcy and up to $100,000 of lost cash surrender value.
While the guarantee is helpful, it is a maximum per person. Many insurance policies are larger than this, especially if they are whole life policies that have been growing over time. We always recommend that consumers only purchase life insurance from financially stable companies with high financial ratings.
West Virginia Life & Health Insurance Guaranty Association
PO Box 816
Huntington, WV 25712
Timely Payment of Claims
The state of West Virginia requires that all claims be settled in a timely manner. While not providing specific guidance, most claims are settled within two months, and if an insurance company is taking an unreasonably long time to make a claim payment they may be subject to fines, penalties, and sanctions by state regulators.
West Virginia Office of the Insurance Commissioner