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The standard policy provisions laws of the various states require that life insurance policies include certain provisions but allow the insurance companies to select the actual wording. However, the wording must be submitted to and approved by the state insurance department. The standard provisions laws do not apply to group life insurance. For some insurance contracts, such as term, single premium, and nonparticipating policies, some of the standard provisions may not be applicable. To that extent, those contracts are excused from compliance with the law.
Prior to 1900, life insurance contracts were not regulated as they are today. After the Armstrong Investigation of 1905 in New York, the number of restrictions on the language and form of life insurance contracts was drastically increased. In fact, the state of New York enacted statutes that prescribed exactly how term life, ordinary life, and endowment contracts could be written. This inflexible statutory solution proved to be impractical almost immediately, and it was soon repealed. In its place, New York enacted legislation that merely required that certain kinds of provisions be included in the contract. Insurers were permitted to draft their own contractual language for these provisions. The language the insurers selected was subject to state approval, which would be granted so long as (1) the minimum intent of the required statutory provision was obtained or (2) the insurer�s language was more favorable to the policyowner than the statutory intent.
The state insurance codes generally impose a requirement that unless specifically exempted from the law, all life insurance policies delivered or issued for delivery in the state must contain language substantially the same as certain specified provisions. Insurers are also generally given the option to insert different provisions than those specified in the statute if the language in the insurer�s provisions is more favorable to policyowners. The insurance department determines whether an alternative provision is more favorable to consumers.
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