(2) Interest rates.
A policy providing for policy loans shall contain a provision for a maximum interest rate on the loans in accordance with one but not both of the following:
A provision permitting an adjustable maximum rate established from time to time by the insurer.
A provision permitting a specified rate not exceeding 12% per year.
(3) Adjustable maximum rate.
The rate of interest charged on a policy loan under sub. (2) (a)
shall not exceed the higher of the following:
The rate used to compute the cash surrender values under the policy during the applicable period plus 1% per year.
Moody's corporate bond yield monthly average, as published by Moody's Investors Service, Inc., or its successor, for the month ending 2 months before the rate is applied. If the monthly average is no longer published, a comparable average shall be substituted by the commissioner by rule.
(4) Frequency of changes.
If the maximum rate of interest is determined under sub. (2) (a)
the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
(5) Intervals and limits on changes.
The maximum rate of interest for a policy subject to sub. (2) (a)
shall be determined at regular intervals at least once every 12 months, but not more frequently than once in any 3-month period. At the intervals specified in the policy:
The rate being charged may be changed as permitted under sub. (3)
but no such change shall be less than 0.5% per year; and
The rate being charged must be reduced to or below the maximum rate as determined under sub. (3)
whenever the maximum is lower than the rate being charged by 0.5% or more per year.
Notify the policyholder of the initial rate of interest on the loan at the time a policy loan is made, if the loan is not a premium loan.
Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in par. (c)
Send to policyholders with loans 30 days' advance notice of any increase in the interest rate.
(7) Coverage continuation.
No policy may terminate in a policy year as the sole result of a change in the loan interest rate during that policy year. The insurer shall maintain coverage until it would have terminated if there had been no change.
(8) Policy provisions.
The pertinent provisions of subs. (2)
shall be set forth in substance in the policies to which they apply.
Designation of beneficiary. 632.48(1)
Powers of policyholders.
Subject to s. 632.47 (2)
, no life insurance policy or annuity contract may restrict the right of a policyholder or certificate holder:
Irrevocable designation of beneficiary.
To make at any time an irrevocable designation of beneficiary effective at once or at some subsequent time; or
Change of beneficiary.
If the designation of beneficiary is not explicitly irrevocable, to change the beneficiary without the consent of the previously designated beneficiary. Subject to s. 853.17
, as between the beneficiaries, any act that unequivocally indicates an intention to make the change is sufficient to effect it.
(2) Protection of insurer.
An insurer may prescribe formalities to be complied with for the change of beneficiaries, but formalities prescribed under this subsection shall be designed only for the protection of the insurer. The insurer discharges its obligation under the insurance policy or certificate of insurance if it pays a properly designated beneficiary unless it has actual notice of either an assignment or a change in beneficiary designation made under sub. (1) (b)
. It has actual notice if the prescribed formalities are complied with or if the change in beneficiary has been requested in the form prescribed by the insurer and delivered to an intermediary representing the insurer.
(3) Notice of changes.
An insurer that receives a request from the department of health services under s. 49.47 (4) (cr) 2.
for notification shall comply with the request and notify the department of any changes to or payments made under the annuity contract to which the request for notification relates.
Legislative Council Note, 1979: The amendment to sub. (2) adds a situation in which the insured has acted reasonably in dealing with a representative of the insurer. As between the insurer and the insured, the burden should fall upon the insurer if the agent makes an error of this kind. The insurer, of course, may have a cause of action against its agent. [Bill 20-S]
Under the facts of the case, the decedent's oral instruction to his attorney to change a beneficiary was a sufficient "act" under sub. (1) (b) even though the new beneficiary was not designated with sufficient specificity. Empire General Life Insurance v. Silverman, 135 Wis. 2d 143
, 399 N.W.2d 910
Estoppel from medical examination.
If under the rules of any insurer issuing life insurance, its medical examiner has authority to issue a certificate of health, or to declare the proposed insured acceptable for insurance, and so reports to the insurer or its agent, the insurer is estopped to set up in defense of an action on the policy issued thereon that the proposed insured was not in the condition of health required by the policy at the time of issue or delivery, or that there was a preexisting condition not noted in the certificate or report, unless the certificate or report was procured through the fraudulent misrepresentation or nondisclosure by the applicant or proposed insured.
History: 1975 c. 375
Estoppel under this section may apply against insurers who seek a medical examiner's opinion regarding fitness for insurance without establishing any formal rules regarding the examiner's authority. Grosse v. Protective Life Insurance Co. 182 Wis. 2d 97
, 513 N.W.2d 592
Required group life insurance provisions.
Every group life insurance policy shall contain the following:
(1) Evidence of insurability.
A provision setting forth any conditions under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of that coverage.
(2) Misstatement of age.
A provision specifying that an equitable adjustment of premiums or of benefits or of both will be made if the age of an insured person has been misstated and clearly stating the method of adjustment.
(3) Facility of payment.
A provision that any sum becoming due by reason of the death of an insured person is payable to the beneficiary designated by the insured person, subject to policy provisions if there is no designated beneficiary, and to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of the sum not exceeding $1,000 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the insured person. This subsection does not apply to a policy issued to a creditor to insure his or her debtors.
If it is not term insurance, equitable nonforfeiture provisions, but they need not be the same provisions as are in individual policies.
(5) Grace period.
A provision that the policyholder is entitled to a grace period of not less than 31 days for the payment of any premium due except the first. During the grace period the death benefit coverage shall continue in force, unless the policyholder gives the insurer advance written notice of discontinuance in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a proportional premium for the time the policy was in force during the grace period.
History: 1975 c. 375
; 1979 c. 110
s. 60 (11)
Conversion option in group and franchise life insurance. 632.57(1)(1)
Scope of application.
This section applies to all group life insurance policies other than credit life insurance policies and applies to franchise life insurance policies providing term insurance renewable only while the insured is a member of the franchise unit.
(2) Conversion right upon loss of eligibility.
If the insurance, or any portion of it, on a person insured under a policy covered by this section ceases because of termination of employment or of membership in the class or franchise unit eligible for coverage, the insurer shall, upon written application and payment of the first premium within 31 days after the termination, issue to the person, without evidence of insurability, an individual policy providing benefits reasonably similar in type and amount to those of the group or franchise insurance, but which need not include disability or other supplementary benefits.
Form of policy.
The individual policy shall, at the option of the applicant, be on any form then customarily issued by the insurer, except term insurance, at the age and for the amount applied for.
Amount of coverage.
The individual policy shall, at the option of the applicant, be in an amount as large as in the group or franchise life insurance which ceases, less any amount of insurance which has then matured as an endowment payable to the insured person, whether in one sum or in installments or in the form of an annuity.
The premium on the individual policy shall be at the customary rate then applied generally by the insurer to policies in the form and amount of the individual policy, to the class of risk to which the person then belongs without applying individual underwriting considerations, except as to occupation or avocation, and to the person's age on the effective date of the individual policy.
(4) Conversion upon termination of group or franchise insurance.
If the group or franchise policy terminates or is amended so as to terminate the insurance of any class of insured persons, the insurer shall, on written application and payment of the first premium within 31 days after the termination, issue to any person whose insurance is thus terminated or amended, after having been in effect for at least 5 years, an individual policy on the same conditions as in subs. (2)
, less the amount of any other group or franchise insurance made available to the person within 31 days thereafter as a consequence of the termination or amendment. The group policy may provide that the maximum amount of insurance available under this subsection is an amount not less than $2,000 without a conversion charge and an additional amount not less than $3,000 by paying the insurer's usual conversion charge on the additional amount.
(5) Extension of claims under group or franchise policy.
If a person insured under the group or franchise policy dies during the conversion period under sub. (2)
and before an individual policy is effective, the amount of life insurance which the person would have been entitled to have issued as an individual policy shall be payable as a claim under the group or franchise policy, whether or not the person has applied for the individual policy or paid the first premium.
History: 1975 c. 375
; 2001 a. 103
Limitation on credit life insurance.
Nothing in chs. 600
authorizes licensees under s. 138.09
to require or accept insurance not permitted under s. 138.09 (7) (h)
History: 1975 c. 375
; 1979 c. 89
Participating and nonparticipating policies. 632.62(1)(a)(a)
A stock insurer may issue both participating and nonparticipating life insurance policies and annuity contracts, subject to this section.
Fraternals and mutual insurers.
A fraternal or mutual insurer issuing life insurance policies may issue only participating policies, except for the following situations in which it may issue nonparticipating policies:
Paid-up, temporary, pure endowment insurance and annuity settlements provided in exchange for lapsed, surrendered or matured policies;
Annuities beginning within one year of the making of the contract; and
Such term insurance policies as the commissioner may exempt by rule.
Every participating policy shall by its terms give its holder full right to participate annually in the part of the surplus accumulations from the participating business of the insurer that are to be distributed.
Every insurer issuing both participating and nonparticipating policies shall separately account for the 2 classes of business and no part of the amounts accumulated or credited to the participating class may be voluntarily transferred to the nonparticipating class.
No life insurance policy or certificate may be issued in which the accounting, apportionment and distribution of surplus is deferred for a period longer than one year.
Every insurer doing a participating business shall annually ascertain the surplus over required reserves and other liabilities. After setting aside such contingency reserves as may be considered necessary and be lawful, such reasonable nondistributable surplus as is needed to permit orderly growth, making provision for the payment of reasonable dividends upon capital stock and such sums as are required by prior contracts to be held on account of deferred dividend policies, the remaining surplus shall be equitably apportioned and returned as a dividend to the participating policyholders or certificate holders entitled to share therein. A dividend may be conditioned on the payment of the succeeding year's premium only on the first and second anniversaries of the policy.
History: 1975 c. 373
; 1979 c. 102
Sub. (4) (b) mandates how a divisible surplus is to be determined. After the surplus is determined, then and only then must the insurer decide how to equitably apportion the surplus. An allocation to annuity policyholders before determining the surplus is contrary to the terms of the statute. Noonan v. Northwestern Mutual Life Insurance Co. 2004 WI App 154
, 276 Wis. 2d 33
, 687 N.W.2d 254
Certification of disability.
For the purpose of insurance policies that they issue, insurers doing a life insurance business in this state shall afford equal weight to a certification of disability signed by a physician with respect to matters within the scope of the physician's professional license, to a certification of disability signed by a chiropractor with respect to matters within the scope of the chiropractor's professional license, and to a certification of disability signed by a podiatrist with respect to matters within the scope of the podiatrist's professional license. This section does not require an insurer to treat a certificate of disability as conclusive evidence of disability.
History: 1981 c. 55
; 2009 a. 113
Annuity contracts without life contingencies.
The commissioner may by rule authorize insurers to issue annuity contracts which are without life contingencies. If the commissioner authorizes insurers to issue annuity contracts without life contingencies, the commissioner shall promulgate rules regulating those contracts.
History: 1987 a. 247
See also s. Ins 6.75
, Wis. adm. code.
Effect of power of attorney for health care.
Executing a power of attorney for health care under ch. 155
may not be used to impair in any manner the procurement of a life insurance policy or to modify the terms of an existing life insurance policy. A life insurance policy may not be impaired or invalidated in any manner by the exercise of a health care decision by a health care agent on behalf of a person whose life is insured under the policy and who has authorized the health care agent under ch. 155
History: 1989 a. 200
Life settlements. 632.69(1)(a)
"Advertisement" means any written, electronic, or printed communication or any communication made by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, motion pictures, and videos, published, disseminated, circulated, or placed, directly or indirectly, before the public in this state for the purpose of creating an interest in or inducing a person to purchase or sell, assign, devise, bequeath, or transfer the death benefit or ownership of a policy or an interest in a policy pursuant to a life settlement contract.
"Broker" means a person who, on behalf of an owner and for a fee, commission, or other valuable consideration, offers or attempts to negotiate life settlement contracts between an owner and one or more providers, or one or more brokers. "Broker" does not include an attorney or certified public accountant who is retained to represent the owner and whose compensation is not paid directly or indirectly by the provider or purchaser.
"Business of life settlements" means an activity involved in the offering soliciting, negotiating, procuring, effectuating, purchasing, investing in, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, hypothicating, or in any other manner, acquiring an interest in a policy by means of a life settlement contract.
"Chronically ill" means any of the following:
Being unable to perform at least 2 activities of daily living, including eating, toileting, transferring, bathing, dressing, or continence.
Requiring substantial supervision to monitor the health and safety of the individual due to his or her severe cognitive impairment.
Having a level of disability similar to that described in subd. 1.
, as defined by the U.S. department of health and human services.
"Financing entity" means a person whose principal activity related to a life settlement is providing funds to effect the life settlement contract or purchase of one or more policies and who has an agreement in writing with one or more providers to finance the acquisition of life settlement contracts, including an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy from a life settlement provider, credit enhancer, or any entity that has a direct ownership in a policy that is the subject of a life settlement contract. "Financing entity" does not include an investor that is not an accredited investor, as defined in 17 CFR 230.501
(a), or a purchaser.
"Financing transaction" means a transaction in which a licensed provider obtains financing from a financing entity including any secured or unsecured financing, any securitization transaction, or any securities offering which is either registered or exempt from registration under federal and state securities law.
"Fraudulent life settlement act" includes all of the following:
Acts or omissions that are committed by any person, or that a person permits its employees or its agents to engage in, for the purpose of pecuniary gain, including any of the following:
Presenting, causing to be presented, or preparing with the knowledge or belief that it will be presented to or by a provider, broker, purchaser, financing entity, insurer, insurance producer, or any other person, false material information, or concealing material information, as part of, in support of, or concerning a fact material to an application for the issuance of a life settlement contract or a policy; the underwriting of a life settlement contract or a policy; a claim for payment or benefit under a life settlement contract or a policy; premiums paid on an insurance policy; payments and changes in ownership or beneficiary made in accordance with the terms of a life settlement contract or a policy; the reinstatement or conversion of a policy; the solicitation, offer, effectuation, or sale of a life settlement contract or a policy; the issuance of written evidence of a life settlement contract or a policy; or a financing transaction.
Employing any plan, device, scheme, or artifice to defraud in the business of life settlements.
Failing to disclose to an insurer, if the request for such disclosure has been made by the insurer, that the prospective owner has undergone a life expectancy evaluation by any person or entity other than the insurer or its authorized representatives in connection with the issuance of the policy.
Any of the following acts that any person does, or permits its employees or agents to do, in the furtherance of a fraud or to prevent the detection of a fraud:
Removing, concealing, altering, destroying, or sequestering from the commissioner the assets or records of a licensee or other person engaged in the business of life settlements.
Misrepresenting or concealing the financial condition of a licensee, financing entity, insurer, or other person.
Transacting the business of life settlements in violation of laws requiring a license, certificate of authority, or other legal authority for the transaction of the business of life settlements.