Ins 2.09(1)(1) Purpose. The interests of policyholders and purchasers of life insurance which is sold in connection with any security must be safeguarded by providing them with clear and unambiguous written proposals and statements in which all material relating to life insurance is set forth separately from any other material. This rule implements and interprets s. 628.34, Stats., by establishing minimum standards for the form of proposals and statements used to solicit, service, or collect premiums for life insurance which is sold in connection with a mutual fund or other security. Ins 2.09(2)(2) Scope. This rule shall apply to the solicitation of, negotiation for, procurement of, or joint billing of any insurance specified in s. Ins 6.75 (1) (a), within this state or involving a resident of this state where it is known to the insurer or the insurance agent that the sale of any mutual fund or other security has been, may become, or is a part of any such transaction. Ins 2.09(3)(3) Definitions. For the purposes of this rule: Ins 2.09(3)(a)(a) “Proposal” includes any estimate, illustration, or statement which involves a representation of any premium charge, dividends, terms, or benefits of any policy of life insurance within sub. (2). Ins 2.09(3)(b)(b) “Life insurance” includes life insurance, annuities, and endowments. Ins 2.09(4)(4) Responsibility of insurer and agent. No insurer and no insurance agent shall make, in connection with any transaction within sub. (2), a proposal or billing other than in accordance with this rule. Every insurer must inform its agents involved with the solicitation of life insurance on residents of this state of the requirements of this rule. Ins 2.09(5)(5) Written proposal. In any solicitation or sale within sub. (2), the prospect or policyholder must be furnished with a copy of a clear and unambiguous written proposal not later than at the time the solicitation or proposal is made. Ins 2.09(6)(6) Contents of proposal. Any proposal referred to in this rule must: Ins 2.09(6)(a)(a) Be dated and signed by the insurance agent or by the insurer if no agent is involved; Ins 2.09(6)(b)(b) State the name of the company in which the life insurance is to be written; Ins 2.09(6)(d)(d) Contain no misrepresentations or false, deceptive or misleading statements; Ins 2.09(6)(e)(e) Show the premium charge for life insurance separately from any other charge; Ins 2.09(6)(f)(f) If values which may accrue prior to the death of the insured are involved in the presentation, show the value of the life insurance separately from any other values; Ins 2.09(6)(g)(g) Show, if it is involved in the presentation, the amount of the death benefit for the life insurance separately from any other benefit which may accrue upon the death of the insured; Ins 2.09(6)(h)(h) Set forth all matters pertaining to life insurance separately from any matter not pertaining to life insurance; Ins 2.09(6)(i)(i) Contain only such representations as will accurately reflect the actual conditions applicable to the proposed insured. Ins 2.09(7)(7) Statements to be separate. Any bill, statement, or representation sent or delivered to any prospect or policyholder must show the premium charge for the life insurance and any other information mentioned concerning life insurance separately from any other charges or values shown in the same billing. Ins 2.09(8)(8) Violation. Any violation of this rule shall be deemed to be a misrepresentation of the nature of the life insurance involved. Ins 2.09 HistoryHistory: Cr. Register, October, 1963, No. 94, eff. 11-1-63; emerg. am. (1) and (2), eff. 6-22-76; am. (1) and (2), Register, September, 1976, No. 249, eff. 10-1-76; am. (1) and (2), Register, March, 1979, No. 279, eff. 4-1-79; r. (9) under s. 13.93 (2m) (b) 16, Stats., Register, December, 1984, No. 348. Ins 2.12Ins 2.12 Exceptions to unfair discrimination. The following practices, without being all-inclusive, shall not be considered unfairly discriminatory as considered by s. 628.34, Stats.: Ins 2.12(1)(1) Issuing life insurance policies or life annuity contracts on a salary savings, salary allotment, bank draft, pre-authorized check, or payroll deduction plan or other similar plan at a reduced rate or with special underwriting considerations reasonably related to the savings made by use of such plan. Ins 2.12(2)(2) Issuing life insurance policies or annuity contracts at premiums determined by rating plans which provide for modification of premiums based on the amount of insurance; but any such rating plans shall not result in reduction in premiums in excess of the savings reasonably related to the savings made by use of the plan. All cost factors must be given proper recognition in order to preserve equity between various classes of policyholders. Ins 2.12(3)(3) Issuing so-called “family plan’ life insurance policies which include insured, spouse, and their children with the premium calculated on the basis of the family unit. The rating plan must give recognition to all cost factors in order to preserve equity between various classes of policyholders. Ins 2.12(4)(4) Issuing policies under the authority of s. Ins 6.75 (1) (a), with the premium calculated on the basis of the average age of those insured or calculated in some other manner which is appropriate for the coverage offered, provided that the rate must be reasonably related to the coverage provided and to the savings made by use of the rating procedure. Ins 2.12(5)(5) Issuing life insurance policies or life annuity contracts at special rates or with special underwriting considerations, reasonably related to the savings made, in connection with: Ins 2.12(5)(b)(b) Plans used to fund retirement benefits under the Federal Self-Employed Individuals Tax Retirement Act of 1962. Ins 2.12(5)(c)(c) Plans used to fund retirement benefits for employees of certain organizations exempt from Federal income tax and public schools (so-called tax sheltered annuity plans). Ins 2.12 HistoryHistory: Cr. Register, May, 1964, No. 101, eff. 6-1-64; emerg. am. (intro.), (4) and (5) (d), eff. 6-22-76; am. (intro.), (4) and (5) (d), Register, September, 1976, No. 249, eff. 10-1-76; am. (4) and (5) (a), Register, March, 1979, No. 279, eff. 4-1-79; r. (5) (d), Register, June, 1982, No. 318, eff. 7-1-82; reprinted to correct error in (5), Register, August, 1982, No. 320; correction in (5) (a) made under s. 13.93 (2m) (b) 7., Stats., Register, April, 1992, No. 436. Ins 2.13Ins 2.13 Separate accounts and variable contracts. Ins 2.13(1)(1) Purpose. This section creates standards for establishing separate accounts and for issuing contracts on a variable basis, both as provided by ss. 611.25 and 632.45 (1), Stats. Ins 2.13(2)(a)(a) “Agent” means a person who sells or offers to sell any contract on a variable basis. Ins 2.13(2)(b)(b) “Contract on a variable basis” or “variable contract”means a policy or contract which provides for insurance or annuity benefits which may vary according to the investment experience of any separate account maintained by the insurer as to the policy or contract, as provided for in s. 632.45 (1), Stats., including contracts defined in pars. (e) and (f). Ins 2.13(2)(c)(c) “Interest credits” means all interest that is credited to a policy or contract. Ins 2.13(2)(e)(e) “Modified guaranteed annuity” means a deferred annuity contract, the underlying assets of which are held in a separate account and the values of which are guaranteed if held for specified periods, containing nonforfeiture values based on a market-value adjustment formula if held for shorter periods, which formula may or may not reflect the value of assets held in the separate account. Ins 2.13(2)(f)(f) “Modified guaranteed life insurance policy” means an individual policy of life insurance, the underlying assets of which are held in a separate account and the values of which are guaranteed if held for specified periods, containing nonforfeiture values based on a market-value adjustment formula if held for shorter periods, which formula may or may not reflect the value of assets held in the separate account. Ins 2.13(2)(g)(g) “Policy processing day” means the day on which charges authorized in the policy are deducted from the policy’s cash value. Ins 2.13(3)(3) Qualification of insurer to issue variable contracts. Ins 2.13(3)(a)(a) No insurer may issue variable contracts in this state unless: Ins 2.13(3)(a)1.1. It is licensed or organized to do a life insurance or annuity business in this state; and Ins 2.13(3)(a)2.2. The commissioner is satisfied that its condition or method of operation in connection with the issuance of variable contracts will not render its operation hazardous to the public or its policyholders in this state. In determining the qualification of an insurer requesting authority to issue variable contracts in this state, the commissioner shall consider among other things: Ins 2.13(3)(a)2.b.b. The character, responsibility and fitness of the officers and directors of the insurer; and Ins 2.13(3)(a)2.c.c. The law and regulation under which the insurer is authorized in the state of domicile to issue variable contracts. Ins 2.13(3)(b)(b) If the insurer is a subsidiary of an admitted life insurance company, or affiliated with an admitted life insurance company by common management or ownership, the commissioner may deem it to have satisfied par. (a) 2. if either it or the admitted life insurance company satisfies the provisions of par. (a) 2. The commissioner may deem any licensed insurer which has a satisfactory record of doing business in this state for a period of at least 3 years to have satisfied the provisions of par. (a) 2. Ins 2.13(3)(c)(c) Before any insurer issues variable contracts in this state, it shall submit to the commissioner: Ins 2.13(3)(c)1.1. A general description of the kinds of variable contracts it intends to issue; Ins 2.13(3)(c)2.2. If requested by the commissioner, a copy of the statutes and regulations of its state of domicile under which it is authorized to issue variable contracts; and Ins 2.13(3)(c)3.3. If requested by the commissioner, biographical data with respect to its officers and directors. Ins 2.13(4)(a)(a) A domestic insurer issuing variable contracts shall establish one or more separate accounts pursuant to s. 611.25, Stats., subject to the following provisions: Ins 2.13(4)(a)1.1. Except as provided in this subsection, an insurer may invest and reinvest amounts allocated to and accumulating in any separate account without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies. This subdivision applies only if the insurer maintains in any separate account its reserve liability with regard to benefits guaranteed as to amount and duration and funds guaranteed as to principal or rate of interest, and a portion of the assets of the separate account at least equal to the reserve liability, or another amount approved by the commissioner, is invested in accordance with the laws of this state governing the investments of life insurance companies. No investments in a separate account may be taken into account in applying the investment limitations applicable to the investments of the insurer. Ins 2.13(4)(a)2.2. With respect to 75% of the market value of the total assets in a separate account, no insurer may purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal or interest by the United States if, immediately after the purchase or acquisition, the market value of the investment, together with prior investments of the separate account in the security taken at market, would exceed 10% of the market value of the assets of the separate account. The commissioner may waive this limitation if he or she believes that the waiver will not render the operation of the separate account hazardous to the public or the insurer’s policyholders in this state. Ins 2.13(4)(a)3.3. No insurer may, either for its separate accounts or otherwise, invest in the voting securities of a single issuer in an amount exceeding 10% of the total issued and outstanding voting securities of the issuer. This limitation does not apply with respect to securities held in separate accounts, the voting rights in which are exercisable only in accordance with instructions from persons having interests in the accounts. Ins 2.13(4)(a)4.4. The limitations provided in subds. 2. and 3. do not apply to the investment with respect to a separate amount in the securities of an investment company registered under the investment company act of 1940, 29 USC 80a-1 to 80a-64, as amended, if the investments of the investment company comply in substance with subds. 2. and 3. Ins 2.13(4)(b)(b) Unless otherwise approved by the commissioner, an insurer shall value assets allocated to a separate account at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to the separate account, except that the insurer shall value the portion of the assets of the separate account equal to the insurer’s reserve liability with regard to the benefits and funds described in par. (a) 1., if any, in accordance with the rules otherwise applicable to the insurer’s assets. Ins 2.13(4)(c)(c) To the extent provided under any applicable contract, no portion of the assets of any separate account established under this subsection equal to the reserves and other applicable contract liabilities of the account are chargeable with liabilities arising out of any other business the insurer may conduct. Ins 2.13(4)(d)(d) Notwithstanding any other provision of law, an insurer may: Ins 2.13(4)(d)1.1. With respect to any separate account registered with the securities and exchange commission as a unit investment trust, exercise voting rights in connection with any securities of a regulated investment company registered under the investment company act of 1940, 15 USC 80a-1 to 80a-64, as amended, which are held in separate accounts in accordance with instructions from persons having interests in the accounts ratably as determined by the insurer; or Ins 2.13(4)(d)2.a.a. With respect to any separate account registered with the securities and exchange commission as a management investment company, establish for the account a committee, board or other body, the members of which may or may not be otherwise affiliated with the insurer and may be elected to membership by the vote of persons having interests in the account ratably as determined by the insurer. Ins 2.13(4)(d)2.b.b. A committee, board or other body established under subd. 2. a. may, alone or in conjunction with others, manage the separate account and the investment of its assets. Ins 2.13(4)(d)2.c.c. An insurer or a committee, board or other body established under subd. 2. a. may make other provisions for any separate account established under this subsection in order to facilitate compliance with federal or state law, if the commissioner approves the provisions as not hazardous to the public or the insurer’s policyholders in this state. Ins 2.13(4)(e)1.1. An insurer may not transfer assets between any of its separate accounts or between any other investment account and a separate account except that an insurer may transfer assets into a separate account solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made. Ins 2.13(4)(e)2.b.b. By a transfer of securities having a readily determined market value, if the transfer is approved by the commissioner. Ins 2.13(4)(e)3.3. Notwithstanding subd. 2., the commissioner may authorize other transfers among accounts if he or she believes that the transfers would not be inequitable. Ins 2.13(4)(f)(f) The insurer shall maintain in each separate account established under this subsection assets with a value at least equal to the reserves and other contract liabilities with respect to the account, except as otherwise approved by the commissioner. Ins 2.13(4)(g)(g) Section 611.60, Stats., applies to the members of any separate account’s committee, board or other body established under par. (d) 2. a. No officer or director of the insurer nor any member of a committee, board or body of a separate account may receive directly or indirectly any commission or any other compensation with respect to the purchase or sale of assets of the separate account. Ins 2.13(5)(a)(a) No variable contract may be issued in this state until the commissioner has approved the form or until the form and rates have been filed with the commissioner for 30 days. Ins 2.13(5)(b)(b) The filing letter shall be in duplicate and shall contain the following information: Ins 2.13(5)(b)1.1. An identifying form number and title for each form submitted. Ins 2.13(5)(b)3.3. A listing of the types of policies to which rider or endorsement forms will be attached. Ins 2.13(5)(b)4.4. The form number and date of approval by the commissioner of any form to be superseded. Ins 2.13(5)(c)(c) One copy of all forms or rates submitted or approval shall be submitted with a copy of the application attached if the application is to be a part of the contract. If the application was previously approved, the form number and date of approval will suffice. Ins 2.13(5)(d)(d) Each form shall include hypothetical data showing its use, a correct table of values and an explanation of all variable information. Ins 2.13(5)(e)(e) Each filing shall include an actuarial statement of methods used to calculate values in the contract. Ins 2.13(6)(a)(a) Any variable contract issued in this state shall contain a statement of the essential features of the procedures to be followed by the insurer in determining the amount of the variable benefits. Each variable contract, including a group contract and any certificate issued under a group contract, shall state that the amount of benefits will vary to reflect investment experience and shall contain on its first page, in a prominent position, a clear statement that the benefits under the contract are on a variable basis and the location in the contract of the details of the variable provisions. Ins 2.13(6)(b)(b) No illustration of benefits payable under any variable contract may include a projection of past investment experience into the future or a prediction of future investment experience. This paragraph does not prohibit the use of hypothetical assumed rates of return to illustrate possible levels of benefits. Ins 2.13(6)(c)(c) No insurer may issue an individual variable annuity contract calling for periodic stipulated payments in this state unless the contract contains in substance all of the following provisions or provisions which in the opinion of the commissioner are more favorable to the holder of the contract: Ins 2.13(6)(c)1.1. A grace period of 30 days or one month within which the holder may make any stipulated payment, other than the first payment, due the insurer. During the grace period the contract shall continue in force. The contract may include a statement of the basis on which the insurer determines the date that it will apply any stipulated payment received during the grace period to produce the values under the contract arising from the application of the payment.
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