Current through Register Vol. 46, No. 39, September 25, 2024
(a) Each
insurer shall:
(1) inform and train its
insurance agents and the insurance brokers that place business with the insurer
with respect to the requirements of this Part;
(2) require with or as part of each
application, a completed "Definition of Replacement" signed by the applicant
and insurance agent or broker;
(3)
maintain signed and completed copies of the "Definition of Replacement" in
accordance with Part 243 of this Title (Regulation 152); and
(4) require with or as part of each
application a statement signed by the insurance agent or broker as to whether,
to the best of the agent's or broker's knowledge, replacement of a life
insurance policy or annuity contract is involved in the transaction.
(b) Where a replacement has
occurred or is likely to occur, the insurer replacing the life insurance policy
or annuity contract shall:
(1) require with
or as part of each application a list prepared by the insurance agent or broker
representing, to the best of the agent's or broker's knowledge, all of the
existing life insurance policies and annuity contracts proposed to be
replaced;
(2) require with or as
part of each application a copy of the sales material including any proposal,
used in the sale of the life insurance policy or annuity contract, and proof of
receipt by the applicant of the "IMPORTANT Notice Regarding Replacement or
Change of Life Insurance Policies or Annuity Contracts";
(3) prior to the delivery of the life
insurance policy or annuity contract, require an accurate and complete
"Disclosure Statement" signed by the insurance agent or broker in the form
prescribed in Appendices 10A or 10B to this Part, including the primary reason
or reasons for recommending the new life insurance policy or annuity contract
and why the existing life insurance policy or annuity contract cannot meet the
applicant's objectives;
(4) examine
the sales material, including any proposal, used in the sale of the life
insurance policy or annuity contract, and the "Disclosure Statement", and
ascertain that they are accurate and meet the requirements of the Insurance Law
and regulations promulgated thereunder;
(5) deliver the completed "Disclosure
Statement" to the policy or contract holder no later than the time of delivery
of the policy or contract. The insurer may, at its discretion, require the
"Disclosure Statement" to be signed by the applicant, a copy of which shall be
provided to the applicant at the time the applicant signs the "Disclosure
Statement";
(6) within ten days of
the delivery of the life insurance policy or annuity contract, furnish to the
insurer that issued the coverage that is being replaced the completed
"Disclosure Statement" and a list of the sales material, including any
proposal, used in the sale of the life insurance policy or annuity contract
with an offer to provide a copy of such material within ten days of a request
for the material;
(7) submit
annual electronic reports by February 1 of each year to the superintendent,
indicating which insurers, if any, have failed to provide the information as
required in paragraph (c)(2) of this section;
(8) maintain copies of: the sales material,
including any proposal, used in the sale of the life insurance policy or
annuity contract; proof of receipt by the applicant of the "IMPORTANT Notice
Regarding Replacement or Change of Life Insurance Policies or Annuity
Contracts"; the signed and completed "Disclosure Statement"; and the
notification of replacement to the insurer that issued the life insurance
policy or annuity contract that is to be replaced, indexed by insurance agent
and broker, in accordance with Part 243 of this Title (Regulation
152);
(9) treat the proposed life
insurance policy or annuity contract in all respects as if it were a new
issuance of the life insurance policy or annuity contract subject to no
differences in underwriting or in other considerations including: premium
discount, interest rate credit, insurance agent or broker compensation or
expenses, or incentives such as bonuses or other inducements to agents or
brokers. This provision, however, shall not prevent an insurer from paying
lower compensation or expenses to agents or brokers on the proposed life
insurance policy or annuity contract; and
(10) if an initial "Disclosure Statement" was
provided to the applicant prior to the delivery of the life insurance policy or
annuity contract and the life insurance policy or annuity contract is issued
other than as applied for, then the insurer shall provide the owner a revised
"Disclosure Statement" that conforms to the life insurance policy or annuity
contract as issued no later than the time of delivery of the policy or
contract, except that a revised "Disclosure Statement" does not need to be
provided where there are changes in the amount of expected initial or
additional premiums and any changes in amounts of exchanges pursuant to section
1035 of the Internal Revenue Code,
rollovers or transfers if the changes do not impact the key benefits and
features of the life insurance policy or annuity contract as applied
for.
(c) Where a
replacement has occurred or is likely to occur, the insurer that issued the
life insurance policy or annuity contract that is to be replaced shall:
(1) upon notice that its existing coverage
may be replaced, maintain copies of such notification, indexed by insurer
notifying it of such replacement, in accordance with Part 243 of this Title
(Regulation 152); and
(2) within
20 days of receipt of a request from a licensee of the department, for
information necessary for completion of the "Disclosure Statement" with respect
to the life insurance policy or annuity contract proposed to be replaced,
together with proper authorization from the applicant, furnish the required
information simultaneously to the insurance agent or broker of record of the
existing life insurance policy or annuity contract being replaced and the agent
or broker and insurer replacing the life insurance policy or annuity contract.
This information shall include the insurer's customer service telephone number,
the current status of the existing life insurance policy or annuity contract,
and the currently illustrated dividends/interest and other non-guaranteed costs
and benefits.
(d) Any
insurer that issues a replacement life insurance policy or annuity contract
shall provide to the policy or contract owner the right to return the policy or
contract within 60 days from the date of delivery of such policy or contract
and receive an unconditional full refund of all premiums or considerations paid
on it, or in the case of a variable or market value adjustment policy or
contract, a payment of the cash surrender benefits provided under the policy or
contract, plus the amount of all fees and other charges deducted from gross
considerations or imposed under the policy or contract. Payment of such refund
shall be made within ten days following receipt of the policy or contract for
cancellation in accordance with the right to cancellation provision of the
policy or contract. During this period, an insurer that issued the policy or
contract that has been replaced shall reinstate or restore, without
underwriting or a new contestable or suicide period, such policy or contract as
of the date of replacement, upon receipt by the insurer that issued the policy
or contract that has been replaced of:
(1)
written proof that the replacement policy or contract has been canceled,
including the date of cancellation;
(2) any funds, previously released under such
replaced policy or contract; and
(3) any premium or consideration due on the
original policy or contract which shall be calculated from the paid-to-date.
The insurer that issued the policy or contract that has been replaced shall
reinstate or restore the original policy or contract to its former status to
the extent possible and in accordance with its published reinstatement rules to
the extent that such rules are not inconsistent with the provisions of this
Part.
(e) Both the
insurer that issued the life insurance policy or annuity contract that is being
replaced and the insurer replacing the life insurance policy or annuity
contract shall establish and implement procedures to ensure compliance with the
requirements of this Part. These procedures shall include a requirement that
all material be dated upon receipt. Such insurers shall also designate a
principal officer specifically responsible for the monitoring and enforcement
of these procedures. All insurers covered under this Part shall furnish the
superintendent with these procedures and the name and title of the designated
principal officer by the effective date of this Part. Any changes in these
procedures or the designated principal officer shall be furnished to the
superintendent within 30 days of such change.
