(1)
At or before the execution of any application for a variable life insurance
policy, the insurer shall give the applicant the following information:
(a) a summary explanation, in non-technical
terms, of the principal features of the policy, including a description of the
manner in which the variable benefits will reflect the investment experience of
the separate account and the factors which affect such variation. Such
explanation must include a notice of the provisions required by
211 CMR
95.08(1)(g) and
95.08(9).
This summary shall also include:
1. a
prominent statement 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;
2. for scheduled premium policies, a
prominent statement that a premium at a guaranteed rate is necessary to sustain
the policy in force to policy maturity;
3. a prominent statement that cash values may
increase or decrease in accordance with the experience of the separate account
(subject to any specified minimum guarantees);
4. a prominent statement that in the case of
a variable endowment policy the amount of the endowment payable at maturity is
not guaranteed but is dependent upon then cash value at maturity (subject to
any specified minimum guarantees); and
5. for flexible premium policies which do not
have a guaranteed death benefit until the maturity date of the policy, a
prominent statement 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;
(b) a
statement of the investment policy of the separate account including:
1. a description of the investment objectives
intended for the separate account and the principal types of investments
intended to be made; and
2. a
notice that a statement describing any restrictions or limitations on such
investments or on the manner in which the operations of the separate account
are intended to be conducted is available upon request.
(c) a statement of the net investment return
of the separate account for each of the last ten years or such lesser period as
the separate account has been in existence.
(d) a statement of the annual charges, each
of the items expressed as a dollar amount or as an annual percentage, levied
against the separate account during the previous year, or to the extent to
which they are ascertainable or may be reasonably estimated, of all charges
which may be levied against the separate account in the coming year in
comparable detail to that provided in accordance with the requirements of
211 CMR
95.05.
(e) a statement of all front end loads, back
end loads, surrender charges and other charges which may be made under the
policy in comparable detail to that provided in accordance with the
requirements of
211 CMR
95.08.
(f) a summary of the method to be used in
valuing assets held by the separate account.
(g) a summary of the federal income tax
aspects of the policy applicable to the insured, the policy owner, and the
beneficiary. This summary shall also include a statement to the effect that
federal and state tax laws can change from time to time without notice and, as
a result, the taxable consequences to the insured, policy owner or beneficiary
may be altered.
(h) a statement
describing how the actuarially determined costs of insurance (tabular costs)
are charged.
(i) Illustrations of
benefits payable under the variable life insurance contract. All such
illustrations shall be prepared by the insurer and shall not include
projections of past investment experience into the future or attempt
predictions of future investment experience; provided, however, that an insurer
may use hypothetical assumed rates of return to illustrate possible levels of
benefits if it is made clear that such assumed rates are hypothetical only, and
are not predictions of actual future performance, and as long as one of the
hypothetical assumed rates is 0% and assumes maximum guaranteed mortality and
expense charges. At least one set of illustrations provided to the applicant
shall disclose all charges that would be levied against the contract, with a
clear explanation of the nature and amount or those charges. The Commissioner
may disapprove any illustration he or she deems to be misleading, inadequate,
or incorrect.
(j) any statement
that a policy will be paid up or will require no cash outlay after a given time
period must be in writing, and must clearly specify in detail all assumptions
on which the statement is based.
(k) Such additional information concerning
the variable life insurance operations or the variable life insurance separate
accounts as the Commissioner may deem necessary.
(2) The insurer shall obtain from each
applicant a signed and dated acknowledgment of receipt for the information
described in 211 CMR 95.11(1).
(3)
The requirements of 211 CMR 95.11(1) shall be deemed to have been satisfied to
the extent that information required by 211 CMR 95.11(1) is delivered in either
of the following forms:
(a) a prospectus
included in a registration statement that satisfies the requirements of the
Federal Securities Act of 1933 and has been declared effective by the
Securities and Exchange Commission; or
(b) if the policies are exempted from the
registration requirements of the Securities Act of 1933 pursuant to section
3(a)(2) thereof, all information and reports required by the Employee
Retirement Income Security Act of 1974 (ERISA). Any disclosures not found in
such prospectus or report documents shall be provided to the applicant on a
sticker attached to such prospectus or report or on a supplemental disclosure
page, in such form as approved by the Commissioner. To the extent that an
insurer relies upon the prospectus or ERISA reports to provide information
required by 211 CMR 95.11(1), the insurer shall file with the Commissioner a
certification by a company official as to which provisions of 211 CMR 95.11 are
complied with thereby. Such filing shall accompany the filing of the policy
form and supplemental disclosure page or sticker.
(4) No insurer or insurance producer
authorized to transact variable life insurance business in the Commonwealth may
use any policy material, sales material, advertising material, or descriptive
literature or other materials of any kind in connection with its variable life
insurance business in the Commonwealth which is false, misleading, deceptive,
or inaccurate.
(5) Any material
submitted to the Commissioner under 211 CMR 95.11 or
95.12 will be
disapproved if it is found to be false, misleading, deceptive, or inaccurate in
any material respect and, if previously distributed, the Commissioner may
require the distribution of amended material. Any material required to be filed
with and approved by the Commissioner shall be subject to disapproval if at any
time it is found by him or her not to comply with the standards established in
211 CMR 95.11. 211 CMR 95.11 in no way limits the Commissioner's authority to
impose other sanctions as permitted by law.
