Chapter Ins 2

Ins 2.19(7)(i) (i) Make any representation, or use any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity, including, but not limited to, use of any of the following titles: “Battalion Insurance Counselor,” “Unit Insurance Advisor,” “Servicemen’s Group Life Insurance Conversion Consultant” or “Veteran’s Benefits Counselor.” Nothing is this subdivision shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning, including, but are not limited to, Chartered Life Underwriter, Chartered Financial Consultant, Certified Financial Planner, Master of Science in Financial Services, and Masters of Science of Financial Planning.

Ins 2.19(7)(j) (j) Solicit the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government or the United States Armed Forces.

Ins 2.19(7)(k) (k) Use or describe the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid.

Ins 2.19(7)(L) (L) Excluding individually issued annuities, misrepresent the mortality costs of a life insurance product, including stating or implying that the product costs nothing or is free.

Ins 2.19(7)(m) (m) Make any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents of a service member by Servicemembers’ Group Life Insurance or Veterans’ Group Life Insurance, which is false, misleading or deceptive.

Ins 2.19(7)(n) (n) Make any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of Servicemembers’ Group Life Insurance or Veterans’ Group Life Insurance to private insurers which is false, misleading or deceptive.

Ins 2.19(7)(o) (o) Suggest, recommend or encourage a service member to cancel or terminate his or her Servicemembers’ Group Life Insurance or issue a life insurance policy which replaces an existing Servicemembers’ Group Life Insurance policy unless the replacement will take effect upon or after the service member’s separation from the United States Armed Forces.

Ins 2.19(7)(p) (p) Deploy, use or contract for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance.

Ins 2.19(7)(q) (q) Fail to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

Ins 2.19(7)(r) (r) Excluding individually issued annuities, fail to clearly and conspicuously disclose the fact that the product being sold is life insurance.

Ins 2.19(7)(s) (s) Fail to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by 10 U.S.C. 992 note section 10.

Ins 2.19(7)(t) (t) Excluding individually issued annuities, when the sale is conducted in-person face-to-face with an individual known to be a service member, fail to provide the applicant at the time the application is taken all of the following:

Ins 2.19(7)(t)1. 1. An explanation of any free look period with instructions on how to cancel if a policy is issued.

Ins 2.19(7)(t)2. 2. Either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of s. Ins 2.17 shall be deemed sufficient to meet this requirement for a written disclosure.

Ins 2.19(7)(u) (u) Excluding individually issued annuities, recommend the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer and insurance producer have reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable. The offer for sale, or sale, of a life insurance product which includes a side fund to a service member in pay grades E-4 or below who is currently enrolled in Servicemembers’ Group Life Insurance is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant’s Servicemembers’ Group Life Insurance death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant’s insurable needs for life insurance. For the purpose of this paragraph:

Ins 2.19(7)(u)1. 1. “Insurable needs” are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant’s estate, survivors or dependents.

Ins 2.19(7)(u)2. 2. “Other military survivor benefits” include: the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare Benefits, Survivor Housing Benefits and Allowances, Federal Income Tax Forgiveness, and Social Security Survivor Benefits.

Ins 2.19(7)(v) (v) Excluding individually issued annuities, offer for sale or sell any life insurance contract which includes a side fund to an individual known to be a service member:

Ins 2.19(7)(v)1. 1. Unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

Ins 2.19(7)(v)2. 2. Unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return shall consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule shall be provided for at least each policy year from one to ten and for every fifth policy year thereafter ending at the earliest of age 100, policy maturity or final expiration; and

Ins 2.19(7)(v)3. 3. Which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.

Ins 2.19(7)(w) (w) Excluding individually issued annuities, offer for sale or sell any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with standard nonforfeiture law for life insurance.

Ins 2.19(7)(x) (x) Sell any life insurance product to an individual known to be a service member that excludes coverage if the insured’s death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, including a double indemnity, which may be excluded.

Ins 2.19 History History: CR 07-108: cr. Register March 2009 No. 639, eff. 4-1-09.

Ins 2.20 Ins 2.20 Unisex nonforfeiture values in certain life insurance policies.

Ins 2.20(1) (1) Purpose. The purpose of this section is to allow insurers who have elected an operative date under s. 632.43 (6m) (h), Stats., to provide for cash surrender and paid-up nonforfeiture benefits which do not vary with the sex of the life insured. Some life insurance policies are subject to the decision of the United States supreme court in Arizona Governing Committee v. Norris,103 Supreme Court Reporter 3492, which makes it illegal for an employer to make contributions after August 1, 1983, to a defined contribution pension plan if the benefits derived from those contributions differ by sex. Separate provisions are set forth in this section for unisex policies that may be subject to that decision and for unisex policies in general.

Ins 2.20(2) (2) Scope. Except as provided for in sub. (4) (b), this section applies only to those policies issued in this state for which the insurer or employer has determined that the implications of Norris would prohibit the use of cash surrender and paid-up nonforfeiture benefits which vary with the sex of the insured.

Ins 2.20(3) (3) Definitions.

Ins 2.20(3)(a) (a) “lx” means the number of lives surviving to age x.

Ins 2.20(3)(b) (b) “1000 qx” means the yearly death rate per thousand at age x.

Ins 2.20(3)(c) (c)

Ins 2.20(3)(c)1. 1. “Table A” means the 1980 CSO Mortality Table and the 1980 CET Mortality Table for male lives, with or without 10-Year Select Mortality Factors. The yearly death rate per thousand, 1000 qx, for these tables is published in Appendix A and Appendix B, pages 618 and 619, Volume 33, Transactions of the Society of Actuaries.

Ins 2.20(3)(c)2. 2. “Tables NA and SA” means the corresponding 1980 nonsmoker and smoker mortality tables for male lives.

Ins 2.20(3)(d) (d)

Ins 2.20(3)(d)1. 1. “Table G” means the 1980 CSO Mortality Table and the 1980 CET Mortality Table for female lives, with or without 10-Year Select Mortality Factors. The yearly death rate per thousand, 1000 qx, from these tables is published in Appendix A and Appendix B, pages 618 and 619, Volume 33, Transactions of the Society of Actuaries.

Ins 2.20(3)(d)2. 2. “Tables NG and SG” means the corresponding 1980 nonsmoker and smoker mortality tables for female lives.

Ins 2.20(3)(e) (e)

Ins 2.20(3)(e)1. 1. “Tables B through F” means the blended 1980 CSO and 1980 CET Mortality Tables for policies issued on an age nearest birthday basis with varying proportions of male lives to total lives. The ratio of male lives to total lives is 80% for Table B, 60% for Table C, 50% for Table D, 40% for Table E and 20% for Table F. These tables are published in the proceedings of the National Association of Insurance Commissioners for the 1983 December meeting, pages 396 last birthday basis, the tables shall be modified by interpolation between values of lx.

Ins 2.20(3)(e)2. 2. “Tables NB through NF and SB through SF” means the corresponding 1980 blended nonsmoker and smoker mortality tables.

Ins 2.20(3)(f) (f) “1980 CSO and CET Nonsmoker and Smoker Mortality Tables”means the mortality tables with separate rates of mortality for nonsmokers and smokers derived from the 1980 CSO and 1980 CET Mortality Tables and adopted by the NAIC in December 1983. Mortality rates for these tables are published on pp. 406-409, Proceedings of the National Association of Insurance Commissioners, 1984, Vol. 1, and pp. 521-530 Proceedings of the National Association of Insurance Commissioners, 1987, Vol. 1.

Ins 2.20(4) (4) Cash value and paid-up nonforfeiture benefits.

Ins 2.20(4)(a) (a)

Ins 2.20(4)(a)1. 1. For any policy of life insurance which falls within sub. (2) of this section and is delivered or issued for delivery in this state after the operative date of s. 632.43 (6m) (h), Stats., applicable to the policy, the cash surrender and paid-up nonforfeiture benefits provided under the policy may be calculated using one of the sets of tables designated as Table A through Table G. Tables A and G may not be used for policies issued on or after January 1, 1985 except where the proportion of persons insured is anticipated to be 90% or more of one sex or the other or except for certain policies converted from group insurance. Such group conversions issued on or after January 1, 1986, shall use mortality tables based on the blend of lives by sex expected for such policies if such group conversions are considered extensions of the Norris decision.

Ins 2.20(4)(a)2. 2. In place of Tables A through G under sub. (1), corresponding Tables NA through NG and SA through SG may be used in situations where separate rates for nonsmokers and smokers are used.

Ins 2.20(4)(b) (b)

Ins 2.20(4)(b)1. 1. An insurer may elect one of the Tables B through F in lieu of the 1980 CSO and CET tables for all life insurance policies under which all contractual requirements and guarantees are independent of the sex of the life insured, without regard to any opinion as to the applicability of Norris; provided that the Table so elected may not be changed unless the insurer can demonstrate to the satisfaction of the commissioner that a different Blend is more appropriate.

Ins 2.20(4)(b)2. 2. In lieu of the above, corresponding Tables NB through NF and SB through SF may be used in situations where separate rates for nonsmokers and smokers are used.

Ins 2.20(5) (5) Reserves. The minimum reserve standards for life insurance policies are set forth in s. 623.06, Stats., and are not affected by this section.

Ins 2.20 History History: Emerg. cr. eff. 5-19-84; cr. Register, August, 1984, No. 344, eff. 9-1-84; r. (6) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348; renum. (3)(c), (d), (e), (4)(a) and (b) to be (3)(c)1., (d)1., (e)1., (4)(a)1. and (b)1. and am. (4)(a)1. and (b)1., cr. (3)(c)2., (d)2., (e)2., (f), (4)(a)2. and (b)2., Register, November, 1988, No. 395, eff. 12-1-88.

Ins 2.30 Ins 2.30 Annuity mortality tables.

Ins 2.30(1) (1) Purpose. The purpose of this section is to adopt, pursuant to s. 623.06 (2a) (b) and (d), Stats., mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts.

Ins 2.30(2) (2) Definitions.

Ins 2.30(2)(a) (a) “1983 GAM table” means those male and female group annuity mortality tables adopted for the valuation of group annuity and pure endowment contracts in December of 1983 by the NAIC and published on pages 414-415, NAIC proceedings, vol. I, 1984.

Ins 2.30(2)(b) (b) “1983 table ‘a’” means that mortality table adopted for the valuation of individual annuity and pure endowment contracts in June of 1982 by the NAIC and published on page 454, NAIC proceedings, vol. II 1982.

Ins 2.30(2)(c) (c) “1994 GAR table” means the group annuity reserving table adopted for the valuation of group annuity and pure endowment contracts in December of 1996 by the NAIC as published on pages 866 and 867, vol. XLVII, transactions, society of actuaries, 1995.

Ins 2.30(2)(d) (d) “2012 Individual Annuity Mortality Period Life Table” or “2012 IAM Period Table” means the Period Table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the society of actuaries committee on life insurance research, and published in the 2012 proceedings of the NAIC, Fall Volume I, pages 149-150.

Ins 2.30(2)(e) (e) “2012 IAR Table” means that generational mortality table developed by the society of actuaries committee on life insurance research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in Section 3m.

Ins 2.30(2)(f) (f) “Annuity 2000 mortality table” means those male and female mortality tables adopted for the valuation of individual annuity and pure endowment contracts in December of 1996 by the NAIC as published on page 240, vol. XLVII, transactions, society of actuaries, 1995.

Ins 2.30(2)(g) (g) “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.

Ins 2.30(2)(h) (h) “NAIC” means the national association of insurance commissioners.

Ins 2.30(2)(i) (i) “Period table” means a table of mortality rates applicable to a given calendar year.

Ins 2.30(2)(j) (j) “Projection Scale G2” or “Scale G2” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the society of actuaries committee on life insurance research, and published in the 2012 proceedings of the NAIC, Fall Volume I, pages 151-152.

Ins 2.30(3) (3) Individual annuity or pure endowment contracts.

Ins 2.30(3)(a) (a) The 1983 table ‘a’ may be used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after November 8, 1977 but before January 1, 1986.

Ins 2.30(3)(b) (b) Either the 1983 table ‘a’ or the annuity 2000 mortality table shall be used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1986 but before January 1, 1999.

Ins 2.30(3)(c) (c) Except as provided in par. (d) the annuity 2000 mortality table shall be used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1999, but before January 1, 2015.

Ins 2.30(3)(cm) (cm) Except as provided in par. (d) the 2012 IAR Table may be used to determine the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015. For any individual annuity or pure endowment contract issued on or after January 1, 2016, the 2012 IAR Table shall be used.

Ins 2.30(3)(d) (d) The 1983 table a without projection shall be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 1999 when the contract is based on life contingencies and is issued to fund periodic benefits arising from any of one of the following:

Ins 2.30(3)(d)1. 1. Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions.

Ins 2.30(3)(d)2. 2. Settlements involving similar actions such as worker’s compensation claims.

Ins 2.30(3)(d)3. 3. Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

Ins 2.30(3m) (3m) Application of the 2012 IAR Table.

Ins 2.30(3m)(a) (a) In using the 2012 IAR Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

Ins 2.30(3m)(b) (b) The resulting qx 2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. The rounding shall occur according to the formula in par. (a), starting at the 2012 period table rate.

Ins 2.30 Note Note: For example, for a male age 30, qx 2012 = 0.741.
qx 2013 = 0.741 * (1 – 0.010) ^ 1 = 0.73359, which is rounded to 0.734.
qx 2014 = 0.741 * (1 – 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.

Ins 2.30 Note Note: A method leading to incorrect rounding would be to calculate qx 2014 as qx 2013 * (1 – 0.010), or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx 2013 to calculate qx 2014.

Ins 2.30(4) (4) Group annuity or pure endowment contracts.

Ins 2.30(4)(a) (a) Either the 1983 GAM table, the 1983 table ‘a’, or the 1994 GAR table may be used to value any annuity or pure endowment purchased on or after November 8, 1977 but before January 1, 1986 under a group annuity or pure endowment contract.

Ins 2.30(4)(b) (b) Either the 1983 GAM table or the 1994 GAR table shall be used to determine the minimum standard of valuation for any annuity or pure endowment contract purchased on or after January 1, 1986 but before January 1, 1999 under a group annuity or pure endowment contract.

Ins 2.30(4)(c) (c) The 1994 GAR table shall be used for determining the minimum standard of valuation for any annuity or pure endowment contract purchased on or after January 1, 1999 under a group annuity or pure endowment contract.

Ins 2.30(5) (5) Application of 1994 GAR table.

Ins 2.30(5)(a) (a) In using the 1994 GAR table the mortality rate for a person age x in year (1994 + n) is calculated as follows:

qx 1994+n = qx 1994 (1-AAx) n

where the qx 1994s and AAxs are as specified in the 1994 GAR Table.

Ins 2.30 History History: Cr. Register, November, 1985, No. 359, eff. 12-1-85; am. Register, October, 1998, No. 514, eff. 1-1-99; CR 14-076: r. and recr. (2), am. (3) (c), cr. (3) (cm), (3m) Register August 2015 No. 716, eff. 9-1-15.

Ins 2.35 Ins 2.35 Smoker and nonsmoker mortality tables for minimum reserve liabilities and minimum nonforfeiture benefits.

Ins 2.35(1) (1) Purpose. This section implements ss. 623.06 (2) (am) 3. and 632.43 (6m) (e) 3. f., Stats., by permitting the use of mortality tables that reflect differences in mortality between smokers and nonsmokers. These mortality tables are used in determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits for plans of insurance with separate premium rates for smokers and nonsmokers.

Ins 2.35(2) (2) Definitions. In this section: