State RegulationsNC specificDifficulty 3/5
A producer sells a client a new standard individual hospitalization policy and tells her she may return it within 30 days of receipt for a full premium refund. The transaction is not a replacement of existing coverage. Under North Carolina law, the producer's statement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-51-10, individual and family hospitalization policies must carry a notice that the insured may return the policy within 10 days of the date received for a prompt refund of premium, with coverage void if it is returned within that window. The 30-day unconditional full-refund return right exists only in replacement transactions under 11 NCAC 12 .0612(a)(4). Because this sale is not a replacement, the producer's 30-day statement is wrong, and no insurer approval is needed to exercise the statutory 10-day right.
Why the other options are wrong
- B: Only replacement transactions carry a 30-day return right under 11 NCAC 12 .0612(a)(4); a standard individual hospitalization policy carries the 10-day right of G.S. 58-51-10.
- C: Hospitalization policies expressly carry a return right — 10 days from receipt with a prompt premium refund (G.S. 58-51-10).
- D: The 10-day return right is statutory and does not depend on the insurer's written approval (G.S. 58-51-10).
Memory hook
Standard free look 10; replacement 30. Not replacing? 10.