State RegulationsAZ specificDifficulty 3/5
A policyholder returns a variable life policy within the right-of-return period after receipt. Under A.R.S. 20-2604, what refund is due?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A.R.S. 20-2604 sets the right-of-return refund for variable life as premiums paid minus amounts allocated to the separate account, plus the separate-account value when the returned policy is received. The formula returns the policyholder's investment position rather than the face amount.
Why the other options are wrong
- A) The separate-account adjustment and account value are part of the statutory refund formula.
- C) The face amount is never the free-look refund; the formula governs.
- D) Projected interest is not part of the refund; the separate-account value takes its place.
Memory hook
Refund = premiums in, minus allocations, plus account value.