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.
Filing with the commissioner or the chief insurance regulatory official of another jurisdiction a document containing false information or otherwise concealing information about a material fact from the commissioner or official.
Embezzlement, theft, misappropriation, or conversion of monies, funds, premiums, credits, or other property of a life settlement provider, insurer, insured, owner, or any other person engaged in the business of life settlements or insurance.
Recklessly entering into, negotiating, brokering, or otherwise dealing in a life settlement contract, the subject of which is a life insurance policy that was obtained by presenting false information concerning any fact material to the policy or by concealing for the purpose of misleading another information concerning any fact material to the policy, where the person or persons intended to defraud the policy's issuer, the provider, or the owner.
Attempting to commit; assisting, aiding, or abetting in the commission of; or conspiring to commit the acts or omissions specified in this paragraph.
Misrepresenting the state of residence of an owner to be a state that does not have a law substantially similar to this section for the purpose of evading or avoiding the provisions of this section.
"Licensee" means a provider or broker that holds a license under sub. (2)
"Life expectancy" means the arithmetic mean, considering medical records and appropriate experiential data, of the number of months an insured under the policy to be settled can be expected to live.
"Life settlement" means an agreement regarding the terms under which compensation or any thing of value will be paid, which compensation or thing of value is less than the expected death benefit of the policy but greater than the cash surrender value or accelerated death benefit available under the policy at the time of the application for the life settlement, in return for the owner's present or future assignment, transfer, sale, devise, or bequest of the death benefit or any interest in a policy. "Life settlement" includes all of the following:
The transfer for compensation or value of ownership or beneficial interest in a trust or other entity that owns a policy that insures the life of a person residing in this state, if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more policies or certificates of insurance.
A written agreement for a loan or other lending transaction, secured primarily by an individual or group policy.
A premium finance loan made for a policy on, before, or after the date of issuance of the policy but only if the loan proceeds are not used solely to pay premiums for the policy and any costs or expenses incurred by the lender or the borrower in connection with the financing, or if the owner receives on the date of the premium finance loan a guarantee of the future life settlement value of the policy, or if the owner agrees on the date of the premium finance loan to sell the policy or any interest in its death benefit on any date following the issuance of the policy.
"Life settlement" does not include any of the following:
A policy loan by a life insurance company pursuant to the terms of the policy or accelerated death provisions contained in the policy, whether issued with the original policy or as a rider.
Except as provided in subd. 1. c.
, a premium finance loan or any loan made by a bank or other licensed financial institution, provided that neither default on such loan nor the transfer of the policy in connection with such default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this section.
A loan made by a lender that does not violate s. 138.12
, if the loan is not described in subd. 1. c.
and is not otherwise a life settlement contract.
An agreement where all the parties are closely related to the insured by blood or law, or have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or are trusts or other entities established primarily for the benefit of such parties.
Any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee.
A bona fide business succession planning arrangement between one or more shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by or for the benefit of its shareholders; between one or more partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by or for the benefit of its partners; or between one or more members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by or for the benefit of its members.
An agreement, contract, or transaction that the commissioner excludes by rule under sub. (20) (a)
after determining that the agreement, contract, or transaction is not intended to be regulated by this section.
"Life settlement contract" means a written document providing for and establishing the terms of a life settlement.
"Owner" means the owner of a policy or a certificate holder under a group policy who resides in this state, unless the context requires otherwise, and enters or seeks to enter into a life settlement contract. "Owner" does not include any of the following:
A licensee under this section, including a producer acting as a broker under this section.
"Policy" means an individual or group policy, certificate, contract, or arrangement of life insurance owned by a resident of this state, regardless of whether delivered or issued for delivery in this state.
"Premium finance loan" means a loan made primarily for the purpose of making premium payments on a policy that is secured by an interest in the policy.
"Producer" means any person licensed in this state as a resident or nonresident insurance intermediary or agent who has received qualification or authority for life insurance coverage or a life line of coverage pursuant to s. 628.04
"Provider" means a person, other than an owner, that enters into or effectuates a life settlement contract with an owner. "Provider" does not include:
A bank, savings bank, savings and loan association, credit union, or other licensed lending institution that takes an assignment of a policy solely as collateral for a loan.
A premium finance company making premium finance loans and exempted by the commissioner from the licensing requirement under the premium finance law under s. 138.12
that takes an assignment of a policy solely as collateral for a loan.