Connecticut Administrative Code
Title 38a - Insurance Department
433 - Variable Life Insurance
Section 38a-433-4 - Insurance policy requirements
Universal Citation: CT Reg of State Agencies 38a-433-4
Current through September 9, 2024
Policy Qualification: The Commissioner shall not approve any variable life insurance form filed pursuant to this regulation unless it conforms to the requirements of this Section.
(a) Filing of variable life insurance policies: All variable life insurance policies, and all riders, endorsements, applications and other documents which are to be attached to and made a part of the policy and which relate to the variable nature of the policy, shall be filed with the Commissioner and approved by him prior to delivery or issuance for delivery in this state.
(1) The procedures and requirements of such
filing and approval shall be, to the extent appropriate and not inconsistent
with this regulation, the same as those otherwise applicable to other life
insurance policies.
(2) The
Commissioner may approve variable life insurance policies and related forms
with provisions the Commissioner deems to be not less favorable to the
policyholder and the beneficiary than those required by this
regulation.
(b) Mandatory policy benefit and design requirements: Variable life insurance policies delivered or issued for delivery in this state shall comply with the following minimum requirements:
(1)
Mortality and expense risk shall be borne by the insurer. The mortality and
expense charges shall be subject to the maximums stated in the
contract.
(2) For scheduled premium
policies, a minimum death benefit shall be provided in an amount at least equal
to the initial face amount of the policy so long as premiums are duly
paid.
(3) The policy shall reflect
the investment experience of one or more separate accounts established and
maintained by the insurer. The insurer must demonstrate that the reflection of
investment experience in the variable life insurance policy is actuarially
sound.
(4) Each variable life
insurance policy shall be credited with the full amount of the net investment
return applied to the benefit base.
(5) Any changes in variable death benefits of
each variable life insurance policy shall be determined at least
annually.
(6) The cash value of
each variable insurance policy shall be determined at least monthly. The method
of computation of cash values and other non-forfeiture benefits, as described
either in the policy or in a statement filed with the Commissioner of the state
in which the policy is delivered, or issued for delivery, shall be in
accordance with actuarial procedures that recognize the variable nature of the
policy. The method of computation may disregard incidental minimum guarantees
as to the dollar amounts payable. Incidental minimum guarantees include, for
example, but are not to be limited to, a guarantee that the amount payable at
death or maturity shall be at least equal to the amount that otherwise would
have been payable if the net investment return credited to the policy at all
times from the date of issue had been equal to the assumed investment
rate.
(7) The computation of values
required for each variable life insurance policy may be based upon such
reasonable and necessary approximations as are acceptable to the
Commissioner.
(c) Mandatory policy provisions: Every variable life insurance policy filed for approval in this state shall contain at least the following:
(1) the cover page or pages corresponding to
the cover page of each such policy shall contain:
(A) a prominent statement in either
contrasting color or in boldface type that the amount or duration of death
benefit may be variable or fixed under specified conditions;
(B) a prominent statement in either
contrasting color or in boldface type that cash values may increase or decrease
in accordance with the experience of the separate account subject to any
specified minimum guarantees;
(C) a
statement describing any minimum death benefit required pursuant to section
38a-433-4(b)
(2);
(D) the method, or a reference
to the policy provision which describes the method, for determining the amount
of insurance payable at death;
(E)
to the extent permitted by state law, a captioned provision that the
policyholder may return the variable life insurance policy within 10 days of
receipt of the policy by the policyholder, and receive a refund equal to the
sum of (a) the difference between the premiums paid including any policy fees
or other charges and the amounts allocated to any separate accounts under the
policy and (b) the value of the amounts allocated to any separate accounts
under the policy, on the date the returned policy is received by the insurer or
its agent. Until such time as state law authorizes the return of payments as
calculated in the preceding sentence, the amount of the refund shall be the
total of all premium payments for such policy; and
(F) such other items as are currently
required for fixed benefit life insurance policies and which are not
inconsistent with this regulation.
(2) For scheduled premium policies, a
provision for a grace period of not less than thirty-one days from the premium
due date which shall provide that where the premium is paid within the grace
period, policy values will be the same, except for the deduction of any overdue
premium, as if the premium were paid on or before the due date.
(3) For flexible premium policies, a
provision for a grace period beginning on the policy processing day when the
total charges authorized by the policy that are necessary to keep the policy in
force until the next policy processing day exceed the amounts available under
the policy to pay such charges in accordance with the terms of the policy. Such
grace period shall end on a date not less than 61 days after the mailing date
of the report of policyholders required by section
38a-433-9(c).
The death benefit payable during the grace period will equal the death benefit in effect immediately prior to such period less any overdue charges. If the policy processing days occur monthly, the insurer may require the payment of not more than 3 times the charges which were due on the policy processing day on which the amounts available under the policy were insufficient to pay all charges authorized by the policy that are necessary to keep such policy in force until the next policy processing day.
(4) For scheduled premium
policies, a provision that the policy will be reinstated at any time within two
years from the date of default upon the written application of the insured and
evidence of insurability including good health, satisfactory to the insurer,
unless the cash surrender value has been paid or the period of extended
insurance has expired, upon the payment of any outstanding indebtedness arising
subsequent to the end of the grace period following the date of default
together with accrued interest thereon to the date of reinstatement and payment
of an amount not exceeding the greater of:
(A)
all overdue premiums and any other indebtedness in effect at the end of the
grace period following the date of default with interest at the rate permitted
by section
38a-444
of the General Statutes; or
(B)
110% of the increase in cash value resulting from reinstatement.
(5) a full description of the
benefit base and of the method of calculation and application of any factors
used to adjust variable benefits under the policy;
(6) a provision designating the separate
account to be used and stating that:
(A) the
assets of such separate account shall be available to cover the liabilities of
the general account of the insurer only to the extent that the assets of the
separate account exceed the liabilities of the separate account arising under
the variable life insurance policies supported by the separate account;
and
(B) the assets of such separate
account shall be valued at least as often as any policy benefits vary but at
least monthly.
(7) A
provision that at any time during the first eighteen months of the variable
life insurance policy, the owner may exchange the policy for a policy of
permanent fixed benefit insurance for the same initial amount of insurance as
the variable life insurance policy, provided that the new policy:
(A) shall bear the same date of issue and age
at issue as the original variable life insurance policy;
(B) is issued on any plan of permanent
insurance offered by the insurer or an affiliate on the date of issue of the
variable life insurance policy and premium rates in effect on that date for the
same class of insurance;
(C)
Includes such riders and incidental insurance benefits as were included in the
original policy if such riders and incidental insurance benefits are issued
with the fixed benefit policy. If the conversion results in an increase or
decrease in cash value, such increase or decrease will be payable to the
insurer or the insured as the case may be.
(D) Must apply as an advance premium on the
new policy any excess of the accrued premium on the original variable life
insurance policy from the date of issue to the date of request for exchange
over the corresponding accrued premium on the new fixed benefit policy, except
that any portion of such excess which is less than a regular mode premium on
the new policy may either be applied as an advance premium or refunded in cash
at the option of the insurer.
(E)
Shall not require evidence of insurability for this exchange.
(8) A provision specifying what
documents constitute the entire insurance contract;
(9) A designation of the officers of the
insurer who are empowered to make an agreement or representation on behalf of
the insurer and an indication that statements by the insured, or on his behalf,
shall be considered as representations and not warranties;
(10) an identification of the owner of the
insurance contract;
(11) a
provision setting forth conditions or requirements as to the designation, or
change of designation, of a beneficiary and a provision for disbursement of
benefits in the absence of a beneficiary designation;
(12) a statement of any conditions or
requirements concerning the assignment of the policy;
(13) A description of any adjustments in
policy values to be made in the event of misstatement of age or sex of the
insured;
(14) A provision that the
policy shall be incontestable by the insurer after it has been in force for two
years during the lifetime of the insured, provided, however, that any increase
in the amount of the policy's death benefits subsequent to the policy issue
date, which increase occurred upon a new application or request of the owner
and was subject to satisfactory proof of the insured's insurability, shall be
incontestable after any such increase has been in force, during the lifetime of
the insured, for two years from the date of issue of such increase;
(15) A provision stating that the investment
policy of the separate account shall not be changed without the approval of the
Insurance Commissioner of the state of domicile of the insurer, and that the
approval process is on file with the Commissioner of this state;
(16) A provision that payment of variable
death benefits in excess of any minimum death benefits, cash values, policy
loans, or partial withdrawals (except when used to pay premiums) or partial
surrenders may be deferred:
(A) for up to six
months from the date of request; or
(B) for any period during which the New York
Stock Exchange is closed for trading (except for normal holiday closing) or
when the Securities and Exchange Commission has determined that a state of
emergency exists which may make such payment impractical.
(17) If settlement options are provided, at
least one such option shall be provided on a fixed basis only;
(18) A description of the basis for computing
the cash value and the surrender value under the policy shall be
included.
(19) Premiums or charges
for incidental insurance benefits shall be stated separately;
(20) Any other policy provisions required by
this regulation;
(21) Such other
items as are currently required for fixed benefit life insurance policies and
are not inconsistent with this regulation.
(22) A provision for non-forfeiture insurance
benefits.
The insurer may establish a reasonable minimum cash value below which any non-forfeiture insurance options will not be available.
(d) Policy loan provisions: Every variable life insurance policy, other than term insurance policies and pure endowment policies, delivered or issued for delivery in this state shall contain provisions which are not less favorable to the policyholder than the following:
(1) A
provision for policy loans which provides the following:
(A) At least 75% of the policy's cash
surrender value may be borrowed;
(B) The amount borrowed shall bear interest
at a rate not to exceed that permitted by Section
38a-444
of the General Statutes.
(C) Any
indebtedness shall be deducted from the proceeds payable on death.
(D) Any indebtedness shall be deducted from
the cash surrender value upon surrender or in determining any non-forfeiture
benefit.
(E) For scheduled premium
policies, whenever the indebtedness exceeds the cash surrender value, the
insurer shall give notice of any intent to cancel the policy if the excess
indebtedness is not repaid within thirty-one days after the date of mailing of
such notice. For flexible premium policies, whenever the total charges
authorized by the policy that are necessary to keep the policy in force until
the next following policy processing day exceed the amounts available under the
policy to pay such charges, a report must be sent to the policyholder
containing the information specified by Section
38a-433-9(c).
(F) The policy may provide that if, at any
time, so long as premiums are duly paid, the variable death benefit is less
than it would have been if no loan or withdrawal had ever been made, the
policyholder may increase such variable death benefit up to what it would have
been if there had been no loan or withdrawal by paying an amount not exceeding
110% of the corresponding increase in cash value and by furnishing such
evidence of insurability as the insurer may request.
(G) The policy may specify a reasonable
minimum amount which may be borrowed at any time but such minimum shall not
apply to any automatic premium loan provision.
(H) No policy loan provision is required if
the policy is under the extended insurance non-forfeiture option.
(I) The policy loan provisions shall be
constructed so that variable life insurance policyholders who have not
exercised such provision are not disadvantaged by the exercise
thereof.
(J) Amounts paid to the
policyholders upon the exercise of any policy loan provision shall be withdrawn
from the separate account and shall be returned to the separate account upon
repayment except that a stock insurer may provide the amounts for policy loans
from the general account.
(e) Other policy provisions: The following provisions may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in this state:
(1) An exclusion for suicide within 2 years
of the issue date of the policy; provided, however, that to the extent of the
increased death benefits only, the policy may provide an exclusion for suicide
within two years of any increase in death benefits which results from an
application of the owner subsequent to the policy issue date;
(2) Incidental insurance benefits may be
offered on a fixed or variable basis;
(3) Policies issued on a participating basis
shall offer to pay dividend amounts in cash. In addition, such policies may
offer the following options:
(A) The amount of
the dividend may be credited against premium payments;
(B) The amount of the dividend may be applied
to provide paid-up amounts of additional fixed or variable benefit life
insurance;
(C) The amount of the
dividend may be deposited in the general account at a specified minimum rate of
interest;
(D) The amount of the
dividend may be applied to provide paid-up amounts of fixed benefit one-year
term insurance;
(E) The amount of
the dividend may be deposited as a variable deposit in a separate
account.
(4) A provision
allowing the policyholder to elect in writing in the application for the policy
or thereafter an automatic premium loan on a basis not less favorable than that
required of policy loans or partial withdrawals under this section, except that
a restriction that no more than two consecutive premiums can be paid under this
provision may be imposed.
(5) A
provision allowing the policyholder to make partial withdrawals;
(6) Any other policy provision approved by
the commissioner.
Disclaimer: These regulations may not be the most recent version. Connecticut may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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