Vermont Life Insurance Policy Requirements

Vermont law imposes specific requirements on life insurance policies sold in the state under Title 8 of the Vermont Statutes Annotated. The Vermont Department of Financial Regulation (DFR) oversees insurance regulation.

Free Look Period

Vermont provides a free look period for life insurance:

During the free look period, the policyholder can:

• Review the policy thoroughly
• Return it for a full refund of premiums paid
• No questions asked, no penalty

Incontestability Clause

Vermont requires a 2-year incontestability clause in all life insurance policies:

• After 2 years from issue, the insurer cannot contest the policy based on misstatements
• Exceptions: Fraud, non-payment of premiums
• If policy is reinstated, a new contestability period may apply
• Protects beneficiaries from denied claims due to application errors

Suicide Clause

Vermont limits the suicide exclusion:

• Suicide exclusion cannot exceed 2 years from policy issue
• After 2 years, death by suicide is covered
• If policy is reinstated, new period may apply

Grace Period Requirements

Vermont mandates grace periods for premium payments:

During the grace period:

• Policy remains in full force
• Death benefits are payable (minus unpaid premium)
• Policy lapses at end of grace period if premium not paid

Beneficiary Protections

Vermont has specific beneficiary protection laws:

Creditor Protection

Under Vermont law:

• Life insurance proceeds payable to a named beneficiary may be protected from the insured's creditors
• Cash surrender values have limited protection
• Proceeds payable to the estate are subject to creditor claims

Beneficiary Designation

• Policyowner has the right to change beneficiary unless irrevocably designated
• Changes must be made in writing
• Change is effective when received by the insurer

Required Policy Provisions

Under Vermont law, life insurance policies must include: