Current through Register Vol. 63, No. 9, September 1, 2024
As used in OAR
836-051-0005 to
836-051-0020:
(1) "Buyer's Guide" means a document that
contains, and is limited to, the wording contained in Exhibit 1 or other
wording approved by the Director.
(2) "Cash Dividend" means the currently
illustrated dividend that can be applied toward payment of the gross
premium.
(3) "Equivalent Level
Annual Dividend" means the amount calculated by the following steps:
(a) Accumulate the annual cash dividends at
five percent interest, compounded annually, to the ends of the 10th and 20th
policy years;
(b) Divide each
accumulation of step (a) by an interest factor that converts it into the
equivalent level annual amount that, if paid at the beginning of each year,
would accumulate to the value in step (a) over the respective period. If the
period is 10 years, the factor is 13.207 and if the period is 20 years, the
factor is 34.719;
(c) Divide the
results of step (b) by the number of thousands of the Equivalent Level Death
Benefit to arrive at the Equivalent Level Annual Dividend for each of the
respective periods.
(4)
"Equivalent Level Death Benefit" of a policy or term life insurance rider means
the amount calculated by the following steps:
(a) Accumulate the guaranteed amount, that
does not depend on the cause of death, payable upon death at the beginning of
each policy year for 10 and 20 years at five percent interest, com-pounded
annually, to the ends of the 10th and 20th policy years respectively;
(b) Divide each accumulation of step (a) by
an interest factor that converts it into the equivalent level annual amount
that, if paid at the beginning of each year, would accumulate to the value in
step (a) over the respective period. If the period is 10 years, the factor is
13.207 and if the period is 20 years, the factor is 34.719.
(5) "Generic Name" means a short
title that is descriptive of the premium and benefit patterns of a policy or a
rider.
(6) "Life Insurance Net
Payment Cost Index" means the amount calculated in the same manner as the Life
Insurance Surrender Cost Index except that the cash surrender value and any
terminal dividend are set at zero.
(7) "Life Insurance Surrender Cost Index"
means the amount calculated by the following steps:
(a) Determine the guaranteed cash surrender
value, if any, available at the ends of the 10th and 20th policy
years;
(b) For participating
policies, add to the respective amount determined in step (a) the accumulation
of the annual Cash Dividends at five percent interest, compounded annually, to
the end of the period selected, and the respective terminal dividend, if any,
payable upon surrender;
(c) Divide
the result of step (b), or step (a) for guaranteed cost policies, by an
interest factor that converts it into the equivalent level annual amount that,
if paid at the beginning of each year, would accumulate to the value in step
(b), or step (a) for guaranteed cost policies, over the period selected. If the
period is 10 years, the factor is 13.207 and if the period is 20 years, the
factor is 34.719;
(d) Determine the
equivalent level annual premium for each of the respective periods in step (a)
by accumulating each annual premium payable for the basic policy or rider at
five percent interest, compounded annually, to the end of the respective period
and dividing the result by the respective period factor stated in step (c).
(For a level premium plan, the result of this step equals the annual
premium.);
(e) Subtract the result
of step (c) from the result of step (d);
(f) Divide the result of step (e) by the
number of thousands of the Equivalent Level Death Benefit to arrive at the Life
Insurance Surrender Cost Index.
(8) "Policy Summary" means a written
statement describing the elements of the policy, including but not limited to
items in subsections (a) to (k) of this section. The Policy Summary is a
separate document. All information must be set out in such a manner as not to
minimize or obscure any portion. Any amounts that remain level for two or more
years of the policy may be represented by a single number if it is clearly
indicated which amounts are applicable for each policy year. If more than one
insured is covered under the policy or a 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 expressed
rather than being represented by a blank space:
(a) A prominently placed title as follows:
STATEMENT OF POLICY COST AND BENEFIT INFORMATION;
(b) The name and address of the insurance
producer or, if no insurance producer is involved, a statement of the procedure
to be followed in order to receive responses to inquiries regarding the Policy
Summary;
(c) The full name and home
office or administrative office address of the insurer in which the life
insurance policy is to be or has been written;
(d) The Generic Name of the basic policy and
each policy rider;
(e) The
following amounts, where applicable, on a total basis rather than on a per
thousand or a per unit basis, 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 Net Payment or Surrender Cost Indexes are
displayed and at least one age from 60 through 65 or policy maturity, whichever
is earlier:
(A) Annual premium for the basic
policy;
(B) Annual premium for each
optional rider;
(C) Guaranteed
amount payable upon death at the beginning of the policy year, without regard
to the cause of death other than suicide and other specific exclusions, that 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
optional rider;
(E) Cash Dividends
payable at the end of the year, with values shown separately for the basic
policy and each optional rider. (Dividends need not be displayed beyond the
20th policy year.);
(F) Guaranteed
endowment amounts payable under the policy that are not included under
guaranteed cash surrender values above.
(f) If the policy contains a loan provision,
the effective policy loan interest rate and the annual percentage interest rate
applied in advance or in arrears, whichever is specified. If the policy loan
interest rate is variable, the Policy Summary shall include the maximum
effective and annual percentage rates;
(g) Life Insurance Net Payment and Surrender
Cost Indexes for 10 and 20 years but in no case beyond the premium-paying
period. Separate Indexes shall be displayed for the basic policy and for each
optional term life insurance rider. The Indexes need not be included for
optional riders that are limited to such benefits as accidental death benefits,
disability waiver of premium, preliminary term life insurance coverage of less
than 12 months and guaranteed insurability benefits, nor for a basic policy or
optional rider covering more than one life;
(h) The Equivalent Level Annual Dividend, in
the case of participating policies and participating optional term life
insurance riders, under the same circumstances and for the same durations for
which Life Insurance Net Payment and Surrender Cost Indexes are
displayed;
(i) A statement, in the
case of a Policy Summary that shows dividends, that dividends are based on the
insurer's current dividend scale and are not guaranteed, and a statement in
close proximity to the Equivalent Level Annual Dividend as follows: "An
explanation of the intended use of the Equivalent Level Annual Dividend is
included in the Life Insurance Buyer's Guide";
(j) A statement in close proximity to the
Life Insurance Net Cost and Surrender Cost Indexes as follows: "An explanation
of the intended use of these Indexes is provided in the Life Insurance Buyer's
Guide";
(k) The date on which the
Policy Summary is prepared.
Stat. Auth.: ORS 731 & 743
Stats. Implemented: ORS
742.009(2)
