Ins 2.08(4)(d) (d) Profit-sharing policy forms are contrary to statute and the public interest by representing as an inducement to insurance that the person who purchases such a policy is procuring a preferential interest in the future profits and earnings of the insurance corporation. Any distribution to a policyholder of the company of earnings, profits, or surplus is a refund of the excess premiums paid by that policyholder. Such distribution must be fair and equitable to all policyholders, it must not discriminate unfairly between individuals of the same class and equal expectation of life, and it must be in the best interest of the company and its policyholders. Therefore, no profit-sharing policy shall be approved for use and no profit-sharing policy heretofore approved shall be issued or delivered in this state on or after June 15, 1962. Further, on or after June 15, 1962, no participating policy shall be approved and no participating policy heretofore approved shall be issued or delivered in this state unless the policy provides without deception or misrepresentation that the source of any dividends or abatement of premium is limited to the divisible surplus derived from participating business.

Ins 2.08 Note Note: See historical note relating to s. Ins 2.08 as printed with this rule as released in December, 1984.

Ins 2.08 History History: Cr. Register, May, 1962, No. 77, eff. 6-15-62; am. (4) (b), Register, August 1964, No. 104, eff. 12-1-64; am. (4) (b) (intro. par.), Register, March, 1965, No. 111, eff. 4-1-65. emerg. am. (1) and (2), eff. 6-22-76; am. (1) and (2), Register, September, 1976, No. 249, eff. 10-1-76; am. (2), Register, March, 1979, No. 279, eff. 4-1-79; am. (4) (b) (intro.), Register, January, 1984, No. 337, eff. 2-1-84; r. (5) under s. 13.93 (2m) (b) 16., Stats., Register, December, 1984, No. 348; correction in (4) (c) made under s. 13.93 (2m) (b) 7., Stats., Register, April, 1992, No. 436; correction in (2) (c) made under s. 13.93 (2m) (b) 5., Stats., Register, June, 1997, No. 498.

Ins 2.09 Ins 2.09 Separate and distinct representations of life insurance.

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)(c) (c) Be accurate and complete;

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 History History: 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 2.12 Ins 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.