State RegulationsNC specificDifficulty 3/5
In Greensboro, one applicant replaces an existing life policy through a new insurer, while another applicant buys a brand-new individual life policy with no existing coverage involved. Which pairing of return rights is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under 11 NCAC 12 .0612(a)(4), a replacing insurer must give notice of the right to return the new policy within 30 days of delivery for an unconditional full refund of all premiums and considerations, including policy fees. Under 11 NCAC 12 .0447, every individual life or annuity policy must display the Ten Day Free Look provision on its face, giving the policyholder the right to return it after receipt for a prompt refund of premium. The 30-day right exists only because replacement transactions carry extra risk of lapse-induced loss.
Why the other options are wrong
- A) The figures are reversed: 30 days belongs to the replacement under 11 NCAC 12 .0612(a)(4), and 10 days is the standard free look under 11 NCAC 12 .0447.
- B) The 31-day figure is the life insurance grace period, a premium-payment concept that creates no policy-return right.
- D) Both transactions carry statutory return rights; denying them ignores both the Ten Day Free Look rule and the replacement regulation.
Memory hook
New policy 10, replace with 30: switching policies buys triple the look time.