Wisconsin Administrative Code
Office of the Commissioner of Insurance
Chapter Ins 2 - Life Insurance
Section Ins 2.14 - Life insurance solicitation
Universal Citation: WI Admin Code § Ins 2.14
Current through November 25, 2024
(1) PURPOSE. The purpose of this section is to require insurers to deliver to purchasers of life insurance information which will improve the buyer's ability to select the most appropriate plan of life insurance for the buyer's needs, improve the buyer's understanding of the basic features of the policy, and improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance. This section does not prohibit the use of additional material which is not in violation of this section or any other Wisconsin statute or rule. This section interprets ss. 628.34 and 628.38, Stats. This section is in addition to and not a substitute for the requirements set forth in ss. Ins 2.16 and 2.17.
(2) SCOPE.
(a) Except as stated in par. (b), this
section applies to any solicitation, negotiation, or procurement of life
insurance occurring within this state. This section applies to any issuer of
life insurance contracts including fraternal benefit societies and the state
life Insurance fund.
(b) Unless
otherwise specifically included, this section does not apply to:
1. Annuities.
2. Credit life insurance.
3. Group life insurance.
4. Life insurance policies issued in
connection with pension and welfare plans as defined by and which are subject
to the federal employee retirement income security act of 1974 (ERISA),
29 U.S.C. sections
1001 to
1461.
5. Variable life insurance under which the
death benefits and cash values vary in accordance with unit values of
investments held in a separate account.
(3) Definitions. For the purposes of this section, the following definitions shall apply:
(a) "Cost comparison index" means a number
corresponding to the cost of a policy, which can be used to compare similar
policies within a company or between companies.
(b) "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 10 and 20 years at 5% interest compounded annually to the end of the
tenth and twentieth policy years, respectively.
2. Divide each accumulation of subd. 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 subd. 1.
over the respective periods stipulated in subd. 1. If the period is 10 years,
the factor is 13.207 and if the period is 20 years, the factor is 34.719.
(c) "Generic name"
means a short title which is descriptive of the premium and benefit patterns of
a policy or a rider.
(d) "Life
insurance buyer's guide" means the document published by the national
association of insurance commissioners entitled life insurance buyer's
guide.
(e) "Net payment cost index"
means a cost comparison index calculated in the same manner as the comparable
surrender cost index except that the cash surrender value is set at
zero.
(f) "Policy summary" means a
written statement in substantially the same format for all companies and
describing only 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
intermediary, or, if no insurance intermediary 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 20 policy years and at least one age
from 60 through 65 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 in subd. 5. d.
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 is variable, the policy summary shall include the maximum annual
percentage rate.
7. The date on
which the policy summary is prepared.
(g) "Surrender cost index" means a cost
comparison index calculated by applying the following steps:
1. Determine the guaranteed cash surrender
value, if any, available at the end of the tenth and twentieth policy
years.
2. Divide the result of
subd. 1. 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 subd. 1. over the respective periods stipulated in subd. 1. If the period is
10 years, the factor is 13.207 and if the period is 20 years, the factor is
34.719.
3. Determine the
equivalent level premium by accumulating each annual premium payable for the
basic policy or rider (if the annual premium includes supplemental benefits
without a separate identifiable charge, a reasonable adjustment may be made) at
5% interest compounded annually to the end of the period stipulated in subd. 1.
and dividing the result by the respective factors stated in subd. 2. This
amount is the annual premium payable for a level premium plan.
4. Subtract the result of subd. 2. from subd.
3.
5. Divide the result of subd. 4.
by the number of thousands of the equivalent level death benefit to arrive at
the surrender cost index.
(4) DISCLOSURE REQUIREMENTS.
(a) The insurer shall provide a policy
summary upon delivery of the policy, if the policy form was identified by the
insurer under s.
Ins 2.17(4) as one to be marketed without
an illustration.
(b) The policy
summary shall consist of a separate document. All information required to be
disclosed shall be set out in a manner that does not minimize any information
or make any information obscure. Any amounts which remain level for 2 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. 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 insured 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.
(c) The insurer shall provide to all
prospective purchasers of any policy subject to this section a copy of the
latest published version of the life insurance buyer's guide, at the time the
application is taken, except that insurers which do not market policies through
an intermediary may provide the life insurance buyer's guide at the time the
policy is delivered provided they guarantee to the policyholder a 30 calendar
day right to return the policy for a full refund of premium.
Note: Copies of the life insurance buyer's guide can be obtained from the National Association of Insurance Commissioners, 120 West 12th Street, Suite 1100, Kansas City, MO 64105-1925.
(d) Cost comparison indexes, if illustrated,
shall be representative of guaranteed values only.
(e) The surrender cost index and the net
payment cost index are the only cost comparison indexes which may be
illustrated.
(f) Cost comparison
indexes, if illustrated, must be shown for year 10 and year 20. Additionally,
separate indexes must be 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.
(g) If cost comparison indexes are
illustrated, the insurer shall provide a statement regarding the use of the
cost comparison indexes, including an explanation to the effect that indexes
are useful only for the comparison of the relative costs of 2 or more similar
policies.
(5) GENERAL REQUIREMENTS.
(a) Each insurer shall maintain
at its home office or principal office, a complete file containing one copy of
each document authorized by the insurer for use pursuant to this section. The
file shall contain one copy of each authorized form for a period of 3 years
following the date of its last authorized use. The requirements of this
paragraph are in addition to the requirements set forth in ss.
Ins 2.16(30) and 2.17(8) (d).
(b) An intermediary shall inform the
prospective purchaser, prior to commencing a life insurance sales presentation,
that the intermediary is acting as a life insurance intermediary and inform the
prospective purchaser of the full name of the insurance company which the
intermediary is representing to the buyer. In sales situations in which an
intermediary is not involved, the insurer shall identify its full
name.
(c) Terms such as financial
planner, investment advisor, financial consultant, or financial counseling
shall not be used in such a way as to imply that the insurance intermediary is
generally engaged in an advisory business in which compensation is unrelated to
sales unless such is actually the case.
(d) Any reference to policy dividends shall
include a statement that dividends are not guaranteed. If dividends are
illustrated, such illustration must comply with the requirements of s.
Ins 2.17.
(e)
Any sales presentation subject to this section shall comply with the
requirements of s.
Ins 2.16(7) (b) and (c).
(f) Recommendations made by a person subject
to this section concerning the purchase or replacement of any life insurance
policy are subject to the requirements of s.
Ins 2.16(6);
(g) A system or presentation which does not
recognize the time value of money through the use of appropriate interest
adjustments shall not be used for comparing the cost of 2 or more life
insurance policies.
(h) Except for
an illustration as defined in s.
Ins 2.17(3)
(i) no presentation of benefits may display
guaranteed and nonguaranteed benefits as a single sum unless the guaranteed
benefits are shown separately in close proximity and with equal prominence. The
requirements of this paragraph are in addition to the requirements set forth in
s.
Ins 2.16(21).
(i) For the purposes of this section, the
annual premium for a basic policy or rider, for which the company reserves the
right to change the premium, shall be the maximum annual premium.
(6) UNUSUAL CIRCUMSTANCES. Insurers with unique difficulties in implementing provisions of this section may petition the commissioner for allowance to meet the requirements of the section through alternative approaches.
Disclaimer: These regulations may not be the most recent version. Wisconsin may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
