Rhode Island Life Insurance Practice Exam

What interest rate must an insurer pay on death proceeds from the date of death until the payment is made?

1. 5%

2. 7%

3. 9%

4. 10%

The correct answer is: 9%

In Rhode Island, when an insurer is responsible for paying death proceeds from a life insurance policy, they are obligated to pay interest on those proceeds from the date of death until the payment is actually made. The correct answer indicates that the legal minimum interest rate that must be paid on such death proceeds is set at 9%. This requirement serves as a consumer protection measure, ensuring beneficiaries do not face delays in receiving funds without compensation for the time that has elapsed since the policyholder’s death. By mandating this specific interest rate, the legislation recognizes the potential financial impact on beneficiaries and provides a reasonable return on the funds that are owed to them. Understanding the importance of this legal stipulation can help individuals recognize their rights as beneficiaries and the responsibilities of insurers in honoring life insurance policies promptly and fairly.