Rhode Island Life Insurance Practice Exam

Which legislation outlines the minimum standards for life insurance products?

1. Insurance Coverage Act

2. Life Insurance Guaranty Act

3. Nonforfeiture Law

4. Prudential Insurance Law

The correct answer is: Nonforfeiture Law

The Nonforfeiture Law outlines the minimum standards for life insurance products by ensuring that policyholders receive certain benefits even if they stop paying premiums. This law primarily addresses the rights of policyholders to receive a portion of their paid premiums or a guaranteed cash value, thereby protecting consumers from losing their accumulated benefits due to lapsing policies. Nonforfeiture provisions typically include options like cash surrender values and extended term insurance, which provide financial security and flexibility for policyholders. By establishing these minimum standards, the Nonforfeiture Law helps ensure that life insurance policies provide meaningful value to consumers and encourages companies to design products that are fair and equitable. The other options refer to different aspects of insurance regulation or guarantee funds but do not specifically outline the minimum standards for life insurance products. Therefore, the Nonforfeiture Law is the key legislation that sets these essential standards in the life insurance industry.