Register March 2017 No. 735
Chapter Ins 2
LIFE INSURANCE
Ins 2.01   Estoppel by report of medical examiner.
Ins 2.02   Stock life insurance corporations writing participating policies.
Ins 2.03   Policies not dated back to lower insurance age.
Ins 2.04   Substandard risk rates.
Ins 2.05   Separate statement of premiums for certain disability insurance benefits included in life or endowment insurance policies.
Ins 2.07   Replacement of life insurance or annuity contracts; disclosure requirements.
Ins 2.08   Special policies and provisions; prohibitions, regulations, and disclosure requirements.
Ins 2.09   Separate and distinct representations of life insurance.
Ins 2.12   Exceptions to unfair discrimination.
Ins 2.13   Separate accounts and variable contracts.
Ins 2.14   Life insurance solicitation.
Ins 2.15   Annuity benefit solicitations.
Ins 2.16   Advertisements of and deceptive practices in life insurance and annuities.
Ins 2.17   Life insurance illustrations.
Ins 2.18   Life settlement contracts.
Ins 2.19   Military sales practices.
Ins 2.20   Unisex nonforfeiture values in certain life insurance policies.
Ins 2.30   Annuity mortality tables.
Ins 2.35   Smoker and nonsmoker mortality tables for minimum reserve liabilities and minimum nonforfeiture benefits.
Ins 2.40   Annuity contracts without life contingencies.
Ins 2.45   Charitable organizations; insurable interest.
Ins 2.80   Valuation of life insurance policies.
Ins 2.81   Recognition of the 2001 CSO mortality table for use in determining minimum reserve liabilities and nonforfeiture benefits.
Ins 2.01 Ins 2.01Estoppel by report of medical examiner. No company or fraternal benefit society shall issue in this state a contract, based on a medical examination, providing for disability benefits, the provisions of which are in conflict with ss. 632.50 and 632.71, Stats., or shall indulge in any practice which is at variance with said section.
Ins 2.01 History History: 1-2-56; emerg. am. eff. 6-22-76; am. Register, September, 1976, No. 249, eff. 10-1-76.
Ins 2.02 Ins 2.02Stock life insurance corporations writing participating policies.
Ins 2.02(1) (1)Purpose. The repeal of the rule previously in effect and the adoption of this rule is for the purpose of revising the formal interpretation of certain statutes consistent with statutes and business methods now in existence. This rule implements and interprets applicable statutes including ss. 601.04, 601.42, 601.43, 628.34, 632.62, Stats., and chs. 611 and 618, Stats.
Ins 2.02(2) (2)Scope. This rule shall apply to stock insurance corporations when transacting the kinds of insurance authorized by s. Ins 6.75 (1) (a) in the form of participating policies.
Ins 2.02(3) (3)Limitation of profits inuring to the benefit of stockholders. The protection of the interest of the public purchasing participating policies and contracts issued by stock life insurance corporations requires a reasonable limitation of the profits on participating business that shall be made available to stockholders. In consideration of the amount of life insurance customarily transacted in relation to the capital contribution of stockholders and to safeguard the interest of policyholders in this state, no profits on participating policies and contracts in excess of the larger of a) 10% of such profits or b) 50¢ per year per $1,000 of participating life insurance in force at the end of the year shall inure to the benefit of stockholders.
Ins 2.02(4) (4)License requirements. No stock life insurance corporation doing business in this state in which policyholders are entitled to share in the surplus shall be licensed or relicensed to transact business in this state unless the corporation shall file an agreement (evidenced by a resolution of its board of directors or other appropriate body having the power to bind such corporation and its stockholders) to the effect that:
Ins 2.02(4)(a) (a) No profits on participating policies and contracts in excess of the larger of 10% of such profits or 50¢ per year per $1,000 of participating life insurance in force at the end of the year shall inure to the benefit of stockholders.
Ins 2.02(4)(b) (b) The profits on its participating policies and contracts shall be ascertained annually by allocating to such policies and contracts specific items of gain, expense, or loss attributable to such policies and contracts and an equitable proportion of the general gains or outlays of the company.
Ins 2.02(4)(c) (c) Such profits as shall inure to the benefit of stockholders shall be determined and apportioned annually.
Ins 2.02(4)(d) (d) The accounts of the participating and nonparticipating classes will be kept separate.
Ins 2.02(4)(e) (e) No part of the funds accumulated or belonging to the participating class shall be transferred to the nonparticipating class.
Ins 2.02(4)(f) (f) The agreement shall remain in effect so long as any outstanding participating policies or contracts of such company are held by persons resident in Wisconsin except as the applicable requirements of statute or administrative rule may be modified or superseded by subsequent enactments.
Ins 2.02(5) (5)Exceptions. In accordance with s. 632.62, Stats., the agreement required by sub. (4) (e) may be modified to the extent necessary to be consistent with the existing charter of the stock life insurance corporation.
Ins 2.02(6) (6)Annual filing. No stock life insurance corporation doing business in this state in which policyholders are entitled to share in the surplus shall be licensed or relicensed to transact business in this state unless the corporation shall annually file the information required by s. 601.42, Stats.
Ins 2.02 Note Note: Before issuing a new or renewal license to transact insurance in this state, the commissioner of insurance is required by ss. 201.045 and 201.34, Stats., to be satisfied that the methods and practices of the insurer adequately safeguard the interests of its policyholders and the people of this state. Section 206.13, Stats., provides for the issuance of participating life insurance policies by stock companies.
Ins 2.02 Note The nature of participating policies is that the premium charge includes an additional loading which acts as the safety factor to provide for various contingencies that may develop during the term of the policy. The additional premium thus collected is then returned to the policyholder in the form of dividends. Section 201.36, Stats., provides for the annual apportionment and return of such sums after making provision for required reserves and liabilities.
Ins 2.02 Note In respect to those policies in which the policyholder is entitled to share in the surplus, s. 206.36, Stats., provides for the payment of authorized dividends on capital stock from the surplus accumulations of the participating business of the company. Section 201.54, Stats., authorizes distribution of savings, earnings, or surplus to any class of policyholder by filing a schedule thereof with the commissioner in those cases where such a distribution was not specified in the policy. In such cases the commissioner has an obligation to be satisfied that the methods and practices of the company are such as to safeguard the interest of the policyholders.
Ins 2.02 Note The principal portion of the earnings on participating policies is due to the additional loading in the premium charged for the policy. It would be a misrepresentation of the participating provisions of any such policy or contract if a substantial portion of the profits accruing from such policies or contracts were not to be returned to the policyholders. Sections 206.51 (1) and 207.04 (1) (a), Stats., prohibit the misrepresentation of the dividends or share in surplus to be received on any policy.
Ins 2.02 Note It is evident that a stock insurance corporation should not have complete freedom in determining the amounts that are to be removed from the funds accumulated or belonging to the participating class of policyholders and used for the benefit of stockholders. A reasonable limitation in the amounts that shall inure to the benefit of stockholders is necessary for the fair and equitable treatment of stock life insurance corporations, stockholders, and policyholders. Section 216 (6) of the New York insurance statutes provides for a limitation comparable to that stated in the rule. The record in that state indicates such a limitation to be reasonable and workable and we believe it to be a proper safeguard of the interests of the people of this state. All present tense statutory references herein are to 1973 Stats.
Ins 2.02 History History: 1-2-56; r. and recr. Register, August, 1962, No. 80, eff. 9-1-62; renum. (4) (d) to be (4) (f) cr. (4) (d), (4) (e), (5) and (6), Register, January, 1964, No. 97, eff. 2-1-64; am. (1) and (6), Register, May, 1975, No. 233, eff. 6-1-75; emerg. am. (1), (2), (5) and (6), eff. 6-22-76; am. (1), (2), (5) and (6), Register, September, 1976, No. 249, eff. 10-1-76; am. (1) and (2), Register, March, 1979, No. 279, eff. 4-1-79.
Ins 2.03 Ins 2.03Policies not dated back to lower insurance age.
Ins 2.03(1)(1) No company shall issue for delivery in this state any policy or contract of life insurance which purports to be issued or take effect as of a date more than 6 months before the application therefor was made, if thereby the premium on such policy or contract is reduced below the premium which would be payable thereon as determined by the nearest birthday of the insured at the time when such application was made. The date of application must be considered to be the date on which the application (Part I) or the medical examination (Part II) is completed, whichever is the later.
Ins 2.03(2) (2) This ruling does not prohibit the exchange, alteration or conversion of policies of life insurance as of the original date of such policies if the amount of insurance provided under the new policy does not exceed the amount of insurance under the original policy or the amount of insurance which the premium paid for the original policy would have purchased if the new policy had been originally applied for, whichever is greater; nor prohibit the exercise of any conversion privilege contained in any policy or contract.
Ins 2.04 Ins 2.04Substandard risk rates. Life insurance companies may charge premiums in excess of the maximum premiums as defined in s. 206.26, 1973 Stats., provided the addition to the maximum premium is made to cover the extra risk owing to the fact that the person is a substandard risk, or is engaged in a hazardous occupation.
Ins 2.04 History History: 1-2-56; emerg. am. eff. 6-22-76; am. Register, September, 1976, No. 249, eff. 10-1-76.
Ins 2.05 Ins 2.05Separate statement of premiums for certain disability insurance benefits included in life or endowment insurance policies.
Ins 2.05(1) (1)Purpose. This rule provides guidelines to determine which disability coverages may be included in life or endowment insurance policies without a separate statement of premium charge. This rule interprets and implements the separation of premium requirements stated in s. 632.44 (1), Stats., as they relate to the inclusion of disability insurance by policy provision or rider in life or endowment insurance policies such as authorized by s. Ins 6.70 and s. 627.06, Stats.
Ins 2.05(2) (2)Scope. This rule shall apply to the kinds of disability insurance authorized by s. Ins 6.75 (1) (a) and (c), when such insurance is provided in a life or endowment policy either by specific policy provision or by a rider attached to such policy.
Ins 2.05(3) (3)Definitions.
Ins 2.05(3)(a)(a) Life or endowment insurance. The basic life or endowment insurance coverage provided by the policy and additional disability benefits which have been determined by the standards in sub. (4) to be benefits which are life or endowment insurance or an integral part of such coverages.
Ins 2.05(3)(b) (b) Disability insurance benefit. Insurance coverages written under the authority of s. Ins 6.75 (1) (a) and (c), to indemnify persons in whole or in part for financial loss due to bodily injury, death by accident, or health of persons.
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.