South Carolina's individual life policy provisions are in S.C. Code 38-63-220 to 38-63-250, its group life provisions in 38-65, and its replacement and disclosure rules in Regulations 69-12.1 and 69-30. The state questions ask for South Carolina's numbers:

• A 10-day free look, 20 days when a replacement is involved, and 31 days for direct response.
• A 31-day grace period.
• A 3-year reinstatement period at no more than 8%.
• A 2-year suicide limit.
• Mutual rescission during the contestable period.

What each provision means in general is in the national Life Policy Provisions, Options and Riders guide.

Free look (38-63-220(b))

• The insurer must refund the entire premium immediately.
• Replacements: Regulation 69-12.1 separately requires the replacing insurer to give notice of a 30-day right to return for an unconditional full refund (Sec. 5A(4)). Know both numbers and which source each comes from.

Required provisions (38-63-210 to 38-63-250)

Policy form and contract

• Entire contract: the policy and the attached application. If a copy of the application isn't attached, the insurer can't defend a claim based on it (38-63-210).
• Form number: shown in the lower left corner of the first page (38-63-220(a)).
• The policy must state: who may waive or change its terms, and how beneficiaries are designated and changed (38-63-220(c), (g)).

Incontestability and rescission

• Incontestability: 2 years (38-63-220(d)). A rider added later becomes incontestable 2 years from the rider's issue date.
• Rescission during the contestable period (38-63-230): only by mutual rescission agreement, or by proving fraud or material misrepresentation in court by clear and convincing evidence.
• Mutual rescission: the insurer sends a certified letter with a premium refund check. Cashing or depositing the check counts as acceptance. Guaranteed issue policies aren't subject to mutual rescission.

Misstatement of age (38-63-220(e))

• Benefits are adjusted to what the premium would buy.

Grace period (38-63-220(i))

• 31 days after the first premium.
• If the insured dies during grace, the claim is paid less the premium due.

Premium after death (38-63-220(h))

• Premium paid for any period beyond the date of death is refunded with the claim.

Reinstatement (38-63-220(j))

• Within 3 years of default, if the policy wasn't surrendered.
• Interest on overdue premiums and loans can't exceed 8% a year, compounded annually.
• If an agent accepts a premium more than 30 days late without requiring a reinstatement application, the policy continues without a lapse.

Dividends (38-63-220(k))

• If the owner chooses a dividend option within a stated period, the period must be at least 30 days after the dividend is payable.

Policy loans (38-63-220(l), 38-63-240, 38-63-250)

• The insurer may defer a loan (other than for premiums) for up to 6 months.
• Termination for excess loans: only after mailing 30 days' notice.
• Fixed rate: for policies issued after May 1, 1985, no more than 8%.
• Adjustable rate: the maximum may be redetermined once every 12 months.

Death claims (38-63-80)

• A lump-sum claim not paid within 30 days of proof and claim papers earns interest at the legal rate from the date of death.

Exclusions (38-63-225)

Suicide

• An exclusion may run no more than 2 years from issue and must return at least the premiums paid.

Other allowed exclusions

• War, declared or undeclared.
• Certain aviation risks, but not death as a fare-paying passenger on a commercial airline.
• Hazardous occupations or sports named in the policy.
• Residence in specified foreign countries.

Required notice

• A policy with a war, aviation or hazardous activity exclusion must carry a stamped notice on its face, and the insurer gets a signed acknowledgment.

Beneficiaries and creditors

• Creditor protection: proceeds payable for the benefit of the insured's spouse, children or dependents are generally exempt from the insured's creditors (38-63-40). Group life proceeds are also exempt.
• Spendthrift clauses protect proceeds from beneficiaries' creditors (38-63-50).
• Charities: a qualifying charity named irrevocably has an insurable interest if the insured signs the application (38-63-100).
• Living organ donors: a life insurer may not decline coverage solely because the applicant is a living organ donor (38-63-110).
• Rates for women: life insurers may quote lower rates to women because of their longer life expectancy (38-63-30).

Replacement (Regulation 69-12.1)

What counts as a replacement

• Using an existing policy's cash value to pay premiums on a new policy.
• Using existing values within 4 months before to 13 months after the new policy takes effect is presumed to be a financed purchase.
• Non-convertible term that expires within 5 years is exempt.

The producer's duties

• Every application includes a statement on existing coverage, signed by the applicant and the producer.
• Present and read the replacement notice no later than when the application is taken. The applicant may decline to have it read aloud.
• Leave copies of all sales material with the applicant.
• Telling an applicant to answer "no" to the replacement question is a violation.

The insurers' duties

• The replacing insurer notifies existing insurers within 5 business days.
• The existing insurer sends the owner a letter within 5 business days offering information on the existing policy.
• Insurers keep replacement records for 5 years after the policy ends.

Buyer's Guide (Regulation 69-30)

• If a policy has an unconditional refund provision of at least 10 days, the Buyer's Guide may be delivered with or before the policy.
• A Buyer's Guide requested by a prospect must be provided within 30 days.

Group life basics (38-65-210)

• Grace period: 31 days.
• Conversion within 31 days after employment ends, to any form except term.
• Conversion when the group policy ends: only for people insured 5 years.
• More group rules are in the South Carolina Group Health Insurance guide.

Common exam traps

• Free look: 10 / 20 / 31 days by statute. The replacement regulation adds a 30-day right to return.
• Grace: 31 days. Reinstatement: 3 years, 8% compounded.
• Suicide: no more than 2 years, and at least premiums are returned.
• Contestable-period rescission requires mutual agreement or clear and convincing proof in court.
• Unattached application: the insurer can't use it as a defense.