Life Insurance Protections Most People Don’t Know About

Feb 4, 2020

[Life Insurance 101 Series: This series features IMPACT posts that detail the breadth of the industry’s reach and benefits provided to consumers.]

When consumers purchase a life insurance policy, their main concern is how it will protect their family’s financial future. People buy life insurance for the peace of mind that comes with knowing their families will be taken care of should the unthinkable happen.  

Few consumers, however, likely give much thought to—or know about—laws and regulations, that safeguard them during and after the sales process.

Life insurance is among the most regulated financial products in the marketplace. Every policy, every conversation with an agent and every disclosure presented to a consumer is governed by rules and laws that are strictly enforced. These comprehensive standards assure life insurers and agents act in the best interest of consumers.

Every state has an insurance commissioner who implements and enforces these rules. And working through the National Association of Insurance Commissioners (NAIC), the commissioners promote uniform standards to help ensure all consumers are protected no matter where they live. The NAIC also provides regulators with a forum to evaluate and, when needed, improve regulatory standards as products evolve to meet consumer demand.

Consumers also have extensive protections after they purchase a policy.  For example, all states require life insurance policies to have a “free look” period that offers consumers more time to review their coverage. If a consumer is unsatisfied with their purchase, he or she can cancel the policy and receive a refund. Free look periods typically last 10 days but can be as long as 30 days in some states.

State insurance commissioners also address consumer grievances as they arise. To be sure, complaints about life insurance products and services are low, accounting for less than one percent of the 138 million policies Americans own. When consumers have an issue, however, state regulators will work with them and companies to resolve a dispute.

Life insurance companies and agents are committed to working in the best interest of the 90 million families they serve. And they support the letter and spirit of laws and regulations that are consistent with this commitment.

Bruce Ferguson

Bruce Ferguson was Senior Vice President, Economic Empowerment & Racial Equity at the American Council of Life Insurers (ACLI). He oversaw all of ACLI’s integrated efforts to implement its multifaceted Economic Empowerment & Racial Equity Initiative. Previously, Bruce served as ACLI’s Senior Vice President, State Relations.