Ins 2.13(8)(c)3.3. In establishing the minimum value of a paid-up annuity, cash surrender or death benefit available under a modified guaranteed annuity contract, the insurer shall base the value on nonforfeiture amounts meeting the requirements of this subdivision and subd. 4. The unadjusted minimum nonforfeiture amount on any date before the annuity commencement date shall equal the percentages of net considerations, as specified in subd. 4., increased by the interest credits allocated to the percentage of net considerations. The insurer shall reduce this amount to reflect the effect of all of the following: Ins 2.13(8)(c)3.b.b. The amount of any indebtedness on the contract, including interest due and accrued. Ins 2.13(8)(c)3.c.c. An annual contract charge which shall equal the lesser of $30 or 2% of the end-of-year contract value less the amount of any annual contract charge deducted from any gross considerations credited to the contract during the contract years. The contract charge may not be less than $0.00. Ins 2.13(8)(c)3.d.d. A transaction charge of $10 for each transfer to another investment division with the same contract. Ins 2.13(8)(c)4.a.a. Guaranteed interest credits in each year for any period of time for which interest credits are guaranteed shall be reasonably related to the average guaranteed interest credits over that period of time. Ins 2.13(8)(c)4.b.b. The minimum nonforfeiture amount shall be the unadjusted minimum nonforfeiture amount adjusted by the market-value adjustment formula contained in the contract. Ins 2.13(8)(c)4.c.c. The annual contract charge of $30 and the transaction charge of $10 shall be adjusted to reflect changes in the consumer price index as provided in subd. 5. c. Ins 2.13(8)(c)5.5. The percentages of net considerations used to define the minimum nonforfeiture amount under subd. 3. shall meet all of the following requirements: Ins 2.13(8)(c)5.a.a. If the contract provides for periodic considerations, the net considerations for a given contract year used to define the minimum nonforfeiture amount shall not be less than $0.00 and shall equal the corresponding gross considerations credited to the contract during that contract year less an annual contract charge of $30 and less a collection charge of $1.25 per consideration credited to the contract during that contract year and less any charge for premium taxes. The percentages of net considerations shall be 65% for the first contract year and 871⁄2% for the 2nd and subsequent contract years except that the percentage shall be 65% of the portion of the total net consideration for any renewal contract year which exceeds, by not more than 2 times, the sum of those portions of the net considerations in all prior contract years for which the percentage was 65%. Ins 2.13(8)(c)5.b.b. With respect to contracts providing for a single consideration, the net consideration used to define the minimum nonforfeiture amount shall be the gross consideration less a contract charge of $75 and less any charge for premium taxes. The percentage of the net consideration shall be 90%. Ins 2.13(8)(c)5.c.c. The annual contract charge of $30 and the collection charge of $1.25 under subd. 5. a. and the single consideration contract charge of $75 under subd. 5. b., shall be adjusted annually to reflect changes in the consumer price index by multiplying each charge by the ratio of the consumer price index for June of the year preceding the date of filing to the consumer price index for June, 1979. “Consumer price index” means the index for all urban consumers for all items as published by the bureau of labor statistics of the United States department of labor or any successor agency. If publication of the consumer price index ceases, or if the index otherwise becomes unavailable or is altered so as to be unusable for purposes of this paragraph, the commissioner may substitute another suitable index. Ins 2.13(8)(c)6.6. An insurer shall use any paid-up annuity benefit available under a modified guaranteed annuity contract that has a present value on the annuity commencement date that is at least equal to the minimum nonforfeiture amount on the date. The insurer shall compute the present value using the mortality table, if any, and the guaranteed or assumed interest rates used in calculating the annuity payments. Ins 2.13(8)(c)7.7. For modified guaranteed annuity contracts which provide cash surrender benefits, the cash surrender benefit at any time before the annuity commencement date shall be equal to or greater than the minimum nonforfeiture amount next computed after the insurer receives a request for surrender. The death benefit under the contract shall be at least equal to the cash surrender benefit. Ins 2.13(8)(c)8.8. Any modified guaranteed annuity contract which does not provide either a cash surrender benefit or a death benefit at least equal to the minimum nonforfeiture amount before the annuity commencement date shall include, in a prominent place in the contract, a statement that these benefits are not provided. Ins 2.13(8)(c)9.9. Notwithstanding any other requirement of this paragraph, a modified guaranteed annuity contract may provide that the insurer, at its option, may cancel the annuity and pay the contract holder the larger of the unadjusted minimum nonforfeiture amount or the minimum nonforfeiture amount, and that the payment shall release the insurer from any further obligation under the contract. This option shall apply only under one of the following conditions: Ins 2.13(8)(c)9.a.a. At the time the annuity becomes payable, the larger of the unadjusted minimum nonforfeiture amount or the minimum nonforfeiture amount is less than $2,000, or would provide an income the initial amount of which is less than $20 per month. Ins 2.13(8)(c)9.b.b. Before the annuity becomes payable under a periodic payment contract, the insurer has not received any considerations under the contract for a period of 2 years and the total consideration paid before the 2-year period, reduced to reflect any partial withdrawals from or partial surrenders of the contract, plus the larger of the unadjusted minimum nonforfeiture amount or the minimum nonforfeiture amount is less than $2,000. Ins 2.13(8)(c)10.10. For any modified guaranteed annuity contract which provides in the same contract, by rider or supplemental contract provision, both annuity benefits and life insurance benefits that exceed the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall equal the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the insurance portion computed as if each portion were a separate contract. Notwithstanding subd. 2., in determining the minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits required by this paragraph, the insurer shall disregard additional benefits payable in the event of the total and permanent disability of the contract holder, as reversionary annuity or deferred reversionary annuity benefits or as other policy benefits additional to life insurance, endowment and annuity benefits and considerations for all such additional benefits. The inclusion of such additional benefits is not required in any paid-up benefits unless the additional benefits would, if provided separately, require minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits. Ins 2.13(8)(d)(d) The application for a modified guaranteed annuity shall contain, immediately before the signature line, a prominent statement that amounts payable under the contract are subject to a market-value adjustment before a date or dates specified in the contract. Ins 2.13(9)(9) Provisions applicable to modified guaranteed life insurance and annuities. Ins 2.13(9)(a)(a) Before any insurer issues any modified guaranteed life insurance policy or modified guaranteed annuity contract in this state, the commissioner may require the insurer to file a copy of any prospectus or other sales material to be used in connection with the marketing of the modified guaranteed life insurance policy or modified guaranteed annuity contract. The sales material shall clearly illustrate that there can be both upward and downward adjustments due to the application of the market-value adjustment formula in determining nonforfeiture benefits. Ins 2.13(9)(b)(b) An insurer issuing a modified guaranteed life insurance policy or a modified guaranteed annuity in this state shall submit to the commissioner all of the following: Ins 2.13(9)(b)1.1. A separate account annual statement which shall include the business of these policies or contracts. Ins 2.13(9)(c)(c) The commissioner may disapprove any material required to be filed if the commissioner finds that the material does not comply with this section. Ins 2.13(9)(d)(d) The statutes and administrative rules governing individual life insurance and individual annuity form filings also apply to modified guaranteed life insurance policies and modified guaranteed annuity contracts. Each filing shall demonstrate in a form satisfactory to the commissioner that the nonforfeiture provisions of the policy or contract comply with this section. Ins 2.13(9)(e)1.1. An insurer shall establish reserve liabilities in accordance with actuarial procedures that recognize all of the following: Ins 2.13(9)(e)2.2. The separate account liability shall equal the surrender value based on the market-value adjustment formula contained in the modified guaranteed life insurance policy or modified guaranteed annuity contract. If that liability is greater than the market value of the assets, the insurer shall transfer assets into the separate account so that the market value of the assets at least equals that of the liabilities. The insurer shall establish any additional reserve that is needed to cover future guaranteed benefits. Ins 2.13(9)(e)3.3. An insurer shall consider the market-value adjustment formula, the interest guarantees and the degree to which projected cash flow of assets and liabilities are matched. The statement of actuarial opinion accompanying each annual statement shall include an opinion on whether the assets in the separate account are adequate to provide all future guaranteed benefits. Ins 2.13(9)(e)4.4. An insurer shall maintain in the general account reserve liabilities for all fixed incidental insurance benefits and any guarantees associated with variable incidental insurance benefits. Ins 2.13(10)(a)(a) Each insurer issuing individual variable contracts shall mail to each contractholder, at least once in each contract year after the first, at his or her last address known to the insurer, a statement reporting the investments held in the separate account and, in the case of contracts under which payments have not yet commenced, a statement reporting either of the following as of a date not more than 4 months before the date of mailing: Ins 2.13(10)(a)1.1. The number of accumulation units credited to the contract and the dollar value of a unit. Ins 2.13(10)(b)(b) The insurer shall submit annually to the commissioner a statement of the business of each of its separate accounts in the form as required by the annual statement form designated as Life and Accident and Health Association Edition-Variable Life Insurance Separate Account. Ins 2.13(11)(11) Foreign companies. If the law or regulation in the place of domicile of a foreign insurer provides protection to the policyholders and the public which is substantially equal to that provided by this section, the commissioner, to the extent he or she considers appropriate, may consider compliance with that law or regulation as compliance with this section. Ins 2.13(12)(12) Agent qualifications. Prior to April 1, 2010, any person selling or offering for sale a variable contract shall have a valid license under s. Ins 6.59 (4) (an) authorizing the solicitation of variable life insurance and variable annuity products as defined in s. Ins 6.50 (2) (a) 6. or a valid license under s. Ins 6.59, authorizing the solicitation of life insurance as listed in s. Ins 6.50 (2) (a), and shall provide verification of required registration by the Financial Industry Regulatory Authority (FINRA) registered for Series 6 or Series 7. Ins 2.13(12)(a)(a) General Securities Registered Representation Examination. Ins 2.13(12)(b)(b) Investment Company Products/Variable Contracts Limited Representative Qualification Examination. Ins 2.13(12)(e)(e) Investment Company Products/Variable Contracts Limited Principal Qualification Examination. Ins 2.13(12m)(12m) Agent qualifications. On or after April 1, 2010, any person selling or offering for sale a variable contract shall have a valid license under s. Ins 6.59 (4) (an), authorizing the solicitation of variable life insurance and variable annuity products as defined in s. Ins 6.50 (2) (a) 6. Ins 2.13(13)(13) Nonapplicability. To the extent that any provision of sub. (7) or (8) is inconsistent with a provision of sub. (6) or (10), sub. (6) or (10) does not apply to a policy or contract described in sub. (7) or (8). Ins 2.13 HistoryHistory: Cr. Register, October, 1968, No. 154, eff. 11-1-68; emerg. am. (1), (2) (a), (4) (a) and (g), eff. 6-22-76; am. (1), (2) (a), (4) (a) and (g), Register, September, 1976, No. 249, eff. 10-1-76; am. (6) (e), Register, March, 1979, No. 279, eff. 4-1-79; r. (2) (d) 5., (9) (g), to (m) and (p), am. (2) (b) to (d) (intro.), (6) (a), (9) (a) to (f), cr. (9) (g) to (i), renum. (9) (n) and (o) to be (9) (j) and (k), Register, May, 1979, No. 281, eff. 6-1-79; r. and recr. (2) and (9), Register, October, 1981, No. 310, eff. 11-1-81; am. (1), (3) (a) (intro.) and 2., (b), (c) (intro.), 2. and 3., (4) (a) to (g), (5) (a), (b) 2., (d), (e) and (6), renum. (2) (a) and (b), (7) to (9) to be (2) (b) and (a), (10) to (12) and am. (2) (a) and (b), (10) (a) (intro.) and 1., (b), (11) and (12), cr. (2) (intro.), (c) to (g), (7) to (9) and (13), Register, April, 1990, No. 412. eff. 5-1-90; CR 09-022: am. (12) (intro.), cr. (12m) Register August 2009 No. 644, eff. 9-1-09; CR 14-076: am. (6) (d) 2. Register August 2015 No. 716, eff. 9-1-15. Ins 2.14Ins 2.14 Life insurance solicitation. Ins 2.14(1)(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. Ins 2.14(2)(a)(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. Ins 2.14(2)(b)(b) Unless otherwise specifically included, this section does not apply to: Ins 2.14(2)(b)4.4. 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. Ins 2.14(2)(b)5.5. Variable life insurance under which the death benefits and cash values vary in accordance with unit values of investments held in a separate account. Ins 2.14(3)(3) Definitions. For the purposes of this section, the following definitions shall apply: Ins 2.14(3)(a)(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. Ins 2.14(3)(b)(b) “Equivalent level death benefit” of a policy or term life insurance rider is an amount calculated as follows: Ins 2.14(3)(b)1.1. 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. Ins 2.14(3)(b)2.2. 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. Ins 2.14(3)(c)(c) “Generic name” means a short title which is descriptive of the premium and benefit patterns of a policy or a rider. Ins 2.14(3)(d)(d) “Life insurance buyer’s guide” means the document published by the national association of insurance commissioners entitled life insurance buyer’s guide. Ins 2.14(3)(e)(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. Ins 2.14(3)(f)(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: Ins 2.14(3)(f)1.1. A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION. Ins 2.14(3)(f)2.2. 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. Ins 2.14(3)(f)3.3. 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. Ins 2.14(3)(f)5.5. 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: Ins 2.14(3)(f)5.c.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. Ins 2.14(3)(f)5.d.d. Total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider. Ins 2.14(3)(f)5.e.e. Guaranteed endowment amounts payable under the policy which are not included under guaranteed cash surrender values in subd. 5. d. Ins 2.14(3)(f)6.6. 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. Ins 2.14(3)(g)(g) “Surrender cost index” means a cost comparison index calculated by applying the following steps: Ins 2.14(3)(g)1.1. Determine the guaranteed cash surrender value, if any, available at the end of the tenth and twentieth policy years. Ins 2.14(3)(g)2.2. 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. Ins 2.14(3)(g)3.3. 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. Ins 2.14(3)(g)5.5. Divide the result of subd. 4. by the number of thousands of the equivalent level death benefit to arrive at the surrender cost index.
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