(A) Buyer's Guide. A
Buyer's Guide is a document which contains, and is limited to, the language
contained in the Appendix to this Rule or language approved by the
Superintendent of Insurance.
(B)
Equivalent Level Death Benefit. The Equivalent Level Death Benefit of a policy
or term life insurance rider is an amount calculated as follows:
1. Accumulate the guaranteed amount payable
upon death, regardless of the cause of death, at the beginning of each policy
year for ten and twenty years at five percent interest compounded annually to
the end of the tenth and twentieth policy years respectively.
2. Divide each accumulation of Step 1 by an
interest factor that converts it into one equivalent level annual amount that,
if paid at the beginning of each year, would accrue to the value in Step 1 over
the respective periods stipulated in Step 1. If the period is ten years, the
factor is 13.207 and if the period is twenty years, the factor is
34.719.
(C) Generic Name.
Generic Name means a short title which is descriptive of the premium and
benefit patterns of a policy or a rider.
(D) Life Insurance Cost Indexes.
1. Life Insurance Surrender Cost Index. The
Life Insurance Surrender Cost Index is calculated by applying the following
steps:
a. Determine the guaranteed cash
surrender value, if any, available at the end of the tenth and twentieth policy
years.
b. Divide the result of Step
(a) by an interest factor that converts it into an equivalent level annual
amount that, if paid at the beginning of each year, would accrue to the value
in Step (a) over the respective periods stipulated in Step (a). If the period
is ten years, the factor is 13.207 and if the period is twenty years, the
factor is 34.719.
c. Determine the
equivalent level premium by accumulating each annual premium payable for the
basic policy or rider at five percent interest compounded annually to the end
of the periods stipulated in Step (a) and dividing the result by the respective
factors stated in Step (b) (this amount is the annual premium payable for a
level premium plan).
d. Subtract
the result of Step (b) from Step (c).
e. Divide the result of Step (d) by the
number of thousands of the Equivalent Level Death Benefit to arrive at the Life
Insurance Surrender Cost Index.
2. Life Insurance Net Payment Cost Index. The
Life Insurance Net Payment Cost Index is calculated in the same manner as the
comparable Life Insurance Cost Index except that the cash surrender value is
set at zero.
(E) Policy
Summary. For the purpose of this Rule, Policy Summary means a written statement
describing the guaranteed elements of the policy including but not limited to:
1. A prominently placed title as follows:
STATEMENT OF POLICY COST AND BENEFIT INFORMATION.
2. The name and address of the insurance
producer, or, if no producer is involved, a statement of the procedure to be
followed in order to receive responses to inquiries regarding the Policy
Summary.
3. The full name and home
office or administrative office address of the company in which the life
insurance policy is to be or has been written.
4. The Generic Name of the basic policy and
each rider.
5. The following
amounts, where applicable, for the first five policy years and representative
policy years thereafter sufficient to clearly illustrate the premium and
benefit patterns, including, but not necessarily limited to, the years for
which Life Insurance Cost Indexes are displayed and at least one age from sixty
through sixty-five or maturity whichever is earlier:
a. The annual premium for the basic
policy.
b. The annual premium for
each optional rider.
c. Guaranteed
amount payable upon death, at the beginning of the policy year regardless of
the cause of death other than suicide, or other specifically enumerated
exclusions, which is provided by the basic policy and each optional rider, with
benefits provided under the basic policy and each rider shown
separately.
d. Total guaranteed cash
surrender values at the end of the year with values shown separately for the
basic policy and each rider.
e.
Guaranteed endowment amounts payable under the policy which are not included
under guaranteed cash surrender values above.
6. The effective policy loan annual
percentage interest rate, if the policy contains this provision, specifying
whether this rate is applied in advance or in arrears. If the policy loan
interest rate is variable, the Policy Summary includes the maximum annual
percentage rate.
7. Life Insurance
Cost Indexes for ten and twenty years but in no case beyond the premium paying
period. Separate indexes are displayed for the basic policy and for each
optional term life insurance rider. Such indexes need not be included for
optional riders which are limited to benefits such as accidental death
benefits, disability waiver of premium, preliminary term life insurance
coverage of less than 12 months and guaranteed insurability benefits nor for
the basic policies or optional riders covering more than one life.
8. A Statement in close proximity to the Life
Insurance Cost Indexes as follows: An explanation of the intended use of these
indexes is provided in the Life Insurance Buyer's Guide.
9. The date on which the Policy Summary is
prepared.
The Policy Summary must consist of a separate document. All
information required to be disclosed must be set out in such a manner as to not
minimize or render any portion thereof obscure. Any amounts which remain level
for two or more years of the policy may be represented by a single number if it
is clearly indicated what amounts are applicable for each policy year. Amounts
in item 5 of this section shall be listed in total, not on a per thousand nor
per unit basis. If more than one insured is covered under one policy or rider,
guaranteed death benefits shall be displayed separately for each insured or for
each class of insureds if death benefits do not differ within the class. Zero
amounts shall be displayed as zero and shall not be displayed as a blank
space.
(F)
Preliminary Statement of Policy Cost. For purposes of this Rule, Preliminary
Statement of Policy Cost means a written statement describing certain elements
of the policy and shall only contain such information and shall only be in such
format prescribed in Appendix B to this Rule. In the event that the prescribed
format is clearly inadequate for an accurate description of a particular policy
or type of policy to be made, the Superintendent shall have discretionary
authority to approve the use of such alternate format as may be
necessary.
