Rhode Island Life Insurance Practice Exam

According to the Nonforfeiture Law, what is the maximum number of months a cash surrender value payment can be deferred?

1. 3 months

2. 6 months

3. 12 months

4. 18 months

The correct answer is: 6 months

The maximum number of months that a cash surrender value payment can be deferred under the Nonforfeiture Law is six months. This provision is designed to provide policyholders with some flexibility while ensuring they receive their benefits in a timely manner. The intent behind allowing a maximum deferral period of six months is to balance the insurer's need to manage their cash flow with the policyholder's right to access funds that are due to them. During this period, the insurer may take the necessary time to process the surrender request without unduly delaying the policyholder's access to their funds. The six-month limit is a regulatory standard that protects consumers, ensuring that they are not left waiting indefinitely for their cash value after surrendering their policy. Understanding this aspect of the Nonforfeiture Law is crucial for both insurance professionals and policyholders in navigating insurance contracts and their benefits effectively.