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. Ins 2.14(4)(a)(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. Ins 2.14(4)(b)(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. Ins 2.14(4)(c)(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. Ins 2.14 NoteNote: 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.
Ins 2.14(4)(d)(d) Cost comparison indexes, if illustrated, shall be representative of guaranteed values only. Ins 2.14(4)(e)(e) The surrender cost index and the net payment cost index are the only cost comparison indexes which may be illustrated. Ins 2.14(4)(f)(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. Ins 2.14(4)(g)(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. Ins 2.14(5)(a)(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). Ins 2.14(5)(b)(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. Ins 2.14(5)(c)(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. Ins 2.14(5)(d)(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. Ins 2.14(5)(f)(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); Ins 2.14(5)(g)(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. Ins 2.14(5)(h)(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). Ins 2.14(5)(i)(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. Ins 2.14(6)(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. Ins 2.14 HistoryHistory: Cr. Register, March, 1972, No. 195, eff. 4-1-72; emerg. am. (1) and (2), eff. 6-22-76; am. (1) and (2), Register, 1976, No. 249, eff. 10-1-76; r. and recr. Register, November, 1978, No. 275, eff. 1-1-79; am. (3) (a) and (6), r. and recr. appendices, Register, January, 1980, No. 289, eff. 2-1-80; r. (3) (a) and (f), (4) (a) and (c), Appendices 1, 2 & 3, renum. (3) (b) to (e) and (g) to be (3) (a) to (e), (4) (b), (d) and (e) to be (4) (a) to (c), Register, May, 1984, No. 341, eff. 6-1-84; r. (10) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348; am. (1) and (3) (e) 1. i., cr. (4) (am) and appendix 1, Register, October, 1986, No. 370, eff. 11-1-86; am. (1), (2) (a) and (b) (intro.) and 4., (3) (intro.), (e) 1., (4) (b) and (c), (5) (a), (h) and (k), r. (3) (d) 4., (6), (8) and (9), r. and recr. (5) (e) and (f), renum. (7) to be (6) and am. Register, July, 1989, No. 403, eff. 8-1-89; correction in (3) (e) made under s. 13.93 (2m) (b) 1., Stats., Register, April, 1992, No. 436; correction in (3) (f) and (5) (b) made under s. 13.93 (2m) (b) 5. and 7., Stats., Register, June, 1997, No. 498; r. and recr. Register, March, 1998, No. 507, eff. 4-1-98; CR 14-075: cons. (4) (g) (intro.), 2., renum. to (4) (g) and am., r. (4) (g) 1. Register August 2015 No. 716, eff. 9-1-15. Ins 2.15Ins 2.15 Annuity benefit solicitations. Ins 2.15(1)(1) Findings. Information on file in the office of the commissioner of insurance and submitted as Exhibit 4 at the hearing February 28, 1980 shows that some of the brochures, presentations, illustrations and other sales material which have been used by insurers and their representatives to sell annuity contracts to Wisconsin residents are confusing, misleading and incomplete, and that annuity purchasers are not receiving the information needed to make sound purchase decisions. The commissioner of insurance finds that such presentations and sales material are misleading, deceptive and restrain competition unreasonably as considered by s. 628.34 (12), Stats., and that their continued use would constitute an unfair trade practice under s. 628.34 (12), Stats., and would result in misrepresentation as defined and prohibited in s. 628.34 (1), Stats. Ins 2.15(2)(a)(a) The purpose of this section is to require insurers to deliver to prospects for deferred annuity contracts or deposit funds, riders or provisions accepted in conjunction with insurance policies or annuity contracts, information which helps the prospect select an annuity benefit appropriate to the prospect’s needs, improves the prospect’s understanding of the basic features of the plan under consideration and improves the prospect’s ability to evaluate the relative benefits of similar plans. This section does not prohibit the use of additional material which is not in violation of any other Wisconsin rule or statute. This section is in addition to and not a substitute for the requirements set forth in s. Ins 2.16. Ins 2.15(3)(a)(a) Except as specified in par. (b), this section shall apply to any solicitation, negotiation or procurement of annuity or deposit fund arrangements occurring within this state. This section shall apply to any issuer of life insurance policies or annuity contracts, including fraternal benefit societies. Ins 2.15(3)(b)1.1. Non-registered variable annuities issued exclusively to an accredited investor or qualified purchaser as those terms are defined by the Securities Act of 1933 (15 U.S.C. Section 77a et seq.), the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.), or the regulations promulgated under either of those acts, and offered for sale and sold in a transaction that is exempt from registration under the Securities Act of 1933 (15 U.S.C. Section 77a et seq.); Ins 2.15(3)(b)2.2. Transactions involving variable annuities and other registered products in compliance with Securities and Exchange Commission (SEC) rules and Financial Industry Regulatory Authority (FINRA) rules relating to disclosures and illustrations; Ins 2.15(3)(b)2.a.a. Notwithstanding subdivision 2. above, the delivery of the applicable Buyer’s Guide is required in sales of variable annuities and, when appropriate, in sales of other registered products. Ins 2.15(3)(b)2.b.b. Nothing in this subdivision will limit the Commissioner’s ability to enforce the provisions of this regulation or to require additional disclosures. Ins 2.15(3)(b)3.3. Group annuity and pure endowment contracts purchased under a retirement plan or plans of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or both; Ins 2.15(3)(b)4.4. Immediate annuity contracts (arrangements under which payments begin within 13 months of the issue date); Ins 2.15(3)(b)5.5. Policies or contracts issued in connection with employee benefit plans as defined by 29 USC 1002 (3) of the federal employee retirement income security act of 1974 (ERISA), except policies or contracts issued in connection with plans providing for the purchase of annuity contracts solely by reason of salary reduction agreements under 26 USC 403 (b) of the internal revenue code; Ins 2.15(3)(b)6.6. Individual retirement accounts and individual retirement annuities as described in 26 USC 408 of the internal revenue code; Ins 2.15(3)(b)7.7. A single advance payment of specified premiums equal to the discounted value of such premiums; Ins 2.15(3)(b)8.8. A policyholder’s deposit account established solely to facilitate payment of regular premiums; Ins 2.15(3)(b)9.9. Settlement options under life insurance or annuity contracts. Ins 2.15(4)(a)(a) “Contract Summary”means a written statement to be provided to the buyer at the time of contract delivery describing the elements of the annuity contract or deposit fund in the manner set out in sub. (6). Ins 2.15(4)(b)(b) “Preliminary Contract Summary” means a written statement to be provided to the buyer prior to sale which describes the elements of the annuity contract or deposit fund in the manner set out in sub. (5). Ins 2.15(4)(c)(c) “Buyer’s Guide” means one of the following buyer’s guides adopted by the National Association of Insurance Commissioners (NAIC): Ins 2.15(4)(c)1.1. With respect to sales of fixed or fixed indexed annuities, either: Ins 2.15(4)(d)(d) “Yields” means those effective annual interest rates at which the accumulation of 100% of all gross considerations would be equal to the guaranteed and illustrated cash surrender values at the points specified. For contracts without surrender values the yields shall be figured on the basis of the contract values used to determine annuity payments at the points specified. Ins 2.15(5)(5) Preliminary contract summary. The Preliminary Contract Summary shall include: Ins 2.15(5)(a)(a) A prominently placed title, PRELIMINARY CONTRACT SUMMARY, followed by an identification of the arrangement to which the statement applies; Ins 2.15(5)(b)(b) The name and address of the insurance intermediary or, if no intermediary is involved, a statement of the procedure to be followed in order to receive responses to inquiries; Ins 2.15(5)(c)(c) The full name and home office or administrative office address of the insurer; Ins 2.15(5)(d)(d) A statement as to whether the arrangement provides any guaranteed death benefits during the deferral period; Ins 2.15(5)(e)(e) A prominent statement that the contract does not provide cash surrender values, if such is the case; Ins 2.15(5)(f)(f) For arrangements under which guaranteed cash surrender values at any duration are less than the total scheduled considerations paid, a prominent statement that such contract or fund may result in loss if kept for only a few years; Ins 2.15(5)(h)(h) A prominent description of all fees, charges, and loading amounts that are or may be deducted from initial or subsequent considerations paid or that are or may be deducted from the contract or fund values prior to or at contract maturity, including but not limited to, any surrender penalties, discontinuance fees, partial surrender or withdrawal penalties or fees, transaction fees, and account maintenance fees; Ins 2.15(5)(i)(i) In the event any sales promotion literature or oral representation illustrates values or annuity payments which are based on dividends, excess interest credits, or current annuity rates, then the Preliminary Contract Summary shall contain a statement that such dividends, excess interest credits, and current annuity purchase rates are not guaranteed and that any corresponding values and annuity amounts are illustrations only and are not guaranteed; Ins 2.15(5)(j)(j) A statement that the insurer shall provide the prospective customer a Contract Summary upon request. Ins 2.15(6)(6) Contract summary. The Contract Summary shall include: Ins 2.15(6)(a)(a) A prominently placed title, CONTRACT SUMMARY, followed by an identification of the arrangement to which the statement applies; Ins 2.15(6)(b)(b) The name and address of the insurance intermediary or, if no intermediary is involved, a statement of the procedure to be followed in order to receive responses to inquiries; Ins 2.15(6)(c)(c) The full name and home office or administrative office address of the insurer; Ins 2.15(6)(d)(d) Any guaranteed death benefits during the deferral period, and the form of annuity payment selected for pars. (f), (g) and (i); Ins 2.15(6)(e)(e) A prominent statement that the contract does not provide cash surrender values if such is the case; Ins 2.15(6)(f)(f) The amount of the guaranteed annuity payments at the scheduled commencement thereof, based on the assumption that all scheduled considerations are paid and there are no prior withdrawals from or partial surrenders of the arrangement and no indebtedness to the insurer on the contract; Ins 2.15(6)(g)(g) Illustrative annuity payments on a current basis, if shown, must be on the same basis as for par. (f) except for guarantees, and may not be greater in amount than those based on: Ins 2.15(6)(g)1.1. The current dividend scale and the interest rate currently used to accumulate dividends under such arrangements, or the current excess interest rate credited by the insurer, and Ins 2.15(6)(h)(h) For arrangements under which guaranteed cash surrender values at any duration are less than the total considerations paid, a prominent statement that such contract or fund may result in loss if kept for only a few years and showing the number of years such a relationship exists, together with a reference to the schedule of guaranteed cash surrender values required by par. (i) 3.; Ins 2.15(6)(i)(i) The following amounts, where applicable, for the first 5 years and representative years thereafter sufficient to illustrate clearly the patterns of considerations and benefits, including but not limited to the tenth and twentieth contract years and at least one age from 60 through 65 or the scheduled commencement of annuity payments: Ins 2.15(6)(i)3.3. The total guaranteed cash surrender value at the end of the year or, if no guaranteed cash surrender values are provided, the total guaranteed paid-up annuity at the end of the year; Ins 2.15(6)(i)4.4. If other than guaranteed cash values are shown, the total illustrative cash value or paid-up annuity at the end of the year may not be greater in amount than that based on: Ins 2.15(6)(i)4.a.a. The current dividend scale and the interest rate currently used to accumulate dividends under such arrangements or the current excess interest rate credited by the insurer, and Ins 2.15(6)(im)(im) If the annuity payments have not yet commenced, the yield on gross considerations at the end of 10 years and at the scheduled commencement of annuity payments. For contracts without surrender values, only the yield at the scheduled commencement of annuity payments need be shown. The yield shall be figured on the basis of the contract value used to determine the annuity payments. These yield figures shall be shown on a guaranteed basis and, if current annuity payments or cash surrender values are shown, on an illustrative basis also. Ins 2.15(6)(in)(in) A statement of the interest rates used in calculating the guaranteed and illustrative contract or fund values.
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