Current through Register 1531, September 27, 2024
No variable life insurance policy shall be delivered or issued
for delivery in the Commonwealth unless it conforms in substance to the
following provisions, or provisions more favorable to the holder of such
policies:
(1) A cover page or pages
containing:
(a) a prominent statement, in
either contrasting color or in boldface type, that the premium is flexible or
fixed and that the amount or duration of the death benefit may be variable or
fixed under specified conditions and may increase or decrease;
(b) for scheduled premium policies, a
prominent statement, in either contrasting color or in boldface type, that a
premium at a guaranteed rate is necessary to sustain the policy in force to
policy maturity;
(c) 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;
(d) a statement describing any minimum death
benefit required pursuant to
211 CMR
95.07(3) or provided in the
policy;
(e) for flexible premium
policies which do not have a guaranteed death benefit until the maturity date
of the policy, a prominent statement, in either contrasting color or in
boldface type, explaining that the applicant could lose his or her entire
investment, depending on the performance of the fund, and that as a result
there could be no death benefit absent additional payments made to keep the
policy in force;
(f) the method for
determining the amount of insurance payable at death, or a reference to the
policy provision which describes the method;
(g) a captioned provision which provides that
the policyholder may return the variable life insurance policy to the insurer
or insurance producer thereof from whom it was purchased within ten days of
receipt of the policy and receive a refund of all premium payments for such
policy; and
(h) such other items as
are currently required for general account life insurance policies and which
are not inconsistent with
211 CMR
95.00.
(2) A complete description of all charges to
be made under the policy, including front end loads, back end loads and
surrender charges, containing the following information:
(a) all charges shall be identified by their
purpose, including, but not limited to identification by kind of administrative
charge, cost of insurance or other charge;
(b) all charges shall be clearly described
together in one section of the policy;
(c) the description shall specify guaranteed
maximum charges (in dollar amounts or proportions) for each type of charge and
the time period covered by such charge;
(d) the maximum cost of insurance charges
shall be stated separately in the policy from any other charges made under the
policy;
(e) premiums or charges for
incidental insurance benefits, shall be stated separately; and
(f) the sources of payment for each type of
charge shall be clearly explained.
(3) A disclosure of the policyholder's risk
classification.
(4) For scheduled
premium policies, a provision for a grace period of not less than 31 days from
the premium due date which shall provide:
(a)
that where the premium is paid within the grace period, policy values will be
the same as if the premium had been paid on or before the due date;
and
(b) that where the insured dies
during the grace period without having paid the premium, the policy benefits
will be the same as if the premium had been paid on or before the due date,
except for the deduction of the overdue premium.
(5) 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 to Policyholders required by
211 CMR
95.13(1)(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 three 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.
(6) For scheduled premium policies, a
provision that the policy will be reinstated at any time within three years
from the date of default upon evidence of insurability, unless the net 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 the accrued
interest thereon to the date of reinstatement and the payment of an amount not
exceeding the greater of (a) or (b), plus (c):
(a) all overdue premiums (other than for
incidental insurance benefits) and any other indebtedness in effect at the end
of the grace period following the date of default with interest at a rate
stated in the policy not exceeding that permitted by law; or
(b) 110% of the increase in cash value
resulting from reinstatement;
(c)
all overdue premiums for incidental insurance benefits with interest at a rate
stated in the policy not exceeding that permitted by law.
(7) 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.
(8) A provision designating any separate
account to be used and stating with respect to each such account 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;
(b) such separate account shall be used only
to fund variable policy benefits, and such other benefits, as applicable,
flowing from a variable life insurance policy, which may be permitted by
211 CMR
95.00, and
(c) the assets of such separate account shall
be valued at least as often as any policy benefits vary but at least
monthly.
(9) If the
policy is in force and does not provide for a fixed investment option, a
provision that at any time during the first 24 policy months, so long as the
policy is in force, the owner may exchange the policy without evidence of
insurability for a policy of permanent general account life insurance on the
life of the insured for the same amount of insurance as the initial face amount
of the variable life insurance policy, and on a plan of insurance specified in
the policy, subject to the following requirements:
(a) the new policy shall bear the same date
of issue and the issue age as the variable life insurance policy;
(b) the new policy shall be issued on a
substantially comparable plan of permanent insurance offered in the
Commonwealth by the insurer (or if not available from the insurer, by a
subsidiary of the insurer, its parent or an affiliate licensed to do a life
insurance business in the Commonwealth) with the same date of issue of the
variable life insurance policy and at the premium rates in effect on that date
for the same class of risk;
(c) the
new policy shall include such incidental insurance benefits as were included in
the variable life insurance policy if such incidental insurance benefits were
then available for issue with the new policy; and
(d) the exchange shall be subject to an
equitable premium or cash value adjustment that takes appropriate account of
the premiums and cash values under the original and new policies. A detailed
statement of the method of computing such adjustment shall be filed with the
Commissioner.
(10) A
provision that:
(a) if the policy is in force
other than under a fixed nonforfeiture benefit or if the policy is being
continued under a variable nonforfeiture benefit payment of variable death
benefits in excess of any minimum death benefits, net cash surrender values,
policy loans or partial withdrawals (except when used to pay premiums), or
partial surrenders may be deferred 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 had determined that a state of
emergency exists which may make such payment impractical; and
(b) if the policy is being continued under a
fixed nonforfeiture benefit, or to the extent benefits are being paid from the
general account, payment of any net cash surrender value or loan may be
deferred for up to six months from the date of request or as otherwise may be
permitted by law or regulation, however no deferral shall be made without
reasonable grounds therefor.
(11) For scheduled premium policies, a
provision for nonforfeiture insurance benefits so that at least one such
benefit is offered on a fixed basis from the due date of the premium in
default; however, a given nonforfeiture option need not be offered on both a
fixed and a variable basis. In addition, a summary of the method of computing
the cash value and net cash surrender value under the policy, including a
description of the basis and the interest assumption, shall be included. Any
surrender charges shall be shown in a table in the policy, as well as described
in the policy together with the other charges to be deducted as required by
211 CMR
95.05 and 95.08. The insurer may establish a
reasonable minimum net cash surrender value below which any nonforfeiture
insurance options will not be available, but the policyholder shall have the
right to receive a lump sum cash payment.
(12) A provision for policy loans after the
policy has been in force for three years which is not less favorable to the
policyholder than the following:
(a) the loan
value available shall be at least equal to 75% of the policy's cash surrender
value;
(b) the amount borrowed
shall bear interest at a rate stated in or determined by the terms of the
policy not to exceed the rate permitted by state insurance law;
(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 nonforfeiture benefit;
(e) for scheduled premium policies, whenever
the indebtedness exceeds the cash surrender value, the insurer shall give
notice of intent to cancel the policy if the excess indebtedness is not repaid
within 31 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, unless otherwise provided in the policy, the net cash
surrender value under the policy to pay such charges, a report must be sent to
the policyholder containing the information specified by
211 CMR
95.13(1)(c);
(f) no policy loan provision is required if
the policy is under the extended insurance nonforfeiture option;
(g) all policy loan, partial withdrawal, and
partial surrender provisions shall be so constructed that variable life
insurance policyholders who have not exercised such provision are not
disadvantaged by the exercise thereof; and
(h) amounts paid to the policyholders upon
the exercise of any policy loan, partial withdrawal, or partial surrender
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.
(13) In the event the proceeds of the policy
are payable in fixed installments or as a fixed annuity, a table showing the
amounts of the installments or annuity payments.
(14) A provision that in the event of a
material change in the investment policy of a separate account, any
policyholder objecting to such change shall have, without evidence of
insurability, the conversion options available under
211 CMR
95.04(4); that the insurer
will give appropriate notice to such objecting policyholder of the options
available; and that the option to convert is exercisable within 60 days after:
(a) the effective date of such change in the
investment policy; or
(b) the
receipt of the notice of the options available, whichever is later.
(15) 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 effective date of such increase.
(16) A description of how loans are charged
against separate accounts and the effect on such accounts when a loan is made
or repaid.
(17) A provision for
credit on loaned amounts at a rate at least equal to the loan interest rate
less 2% unless the Commissioner allows crediting of a lower rate of interest
upon an insurer demonstrating a justification for such lower rate.
(18) For scheduled premium policies which
permit the insurer to adjust premiums, a provision stating the frequency with
which premiums will be reviewed to determine whether an adjustment should be
made.
(19) If settlement options
are provided, at least one such option to be provided on a fixed basis
only.
(20) A description of the
basis for computing the cash value and the cash surrender value under the
policy.
(21) Specification of a
guaranteed minimum rate of interest for the portion of the fund accumulated in
a fixed investment option.
(22) Any
other policy provisions required for general account life insurance policies
and not inconsistent with
211 CMR
95.00.
