Chapter 632

632.62(1)(b)2. 2. Annuities beginning within one year of the making of the contract.

632.62(1)(b)3. 3. Such term insurance policies as the commissioner may exempt by rule.

632.62(1)(b)4. 4. Funding agreements authorized under s. 632.66.

632.62(2) (2) Participation. Every participating policy shall by its terms make its holder eligible to share annually in the part of the surplus to be distributed as provided in sub. (4) (b).

632.62(3) (3) Accounting. Every insurer issuing both participating and nonparticipating policies shall separately account for the 2 classes of business and no part of the surplus allocated to the participating class may be voluntarily transferred to the nonparticipating class.

632.62(4) (4) Dividend payments.

632.62(4)(a) (a) Deferred dividends. No life insurance policy or certificate may be issued in which the distribution of dividends, if any, is deferred for a period longer than one year.

632.62(4)(b) (b) Payment. Every insurer doing a participating business shall annually ascertain the surplus over required reserves and other liabilities. After setting aside such amounts as may be lawful and considered necessary by the insurer’s board of directors for providing for the growth of the company and for protecting the ability to meet ongoing and future claims and other obligations and needs under both normal and stressed environments, and after making provision for the payment of reasonable dividends upon capital stock as determined by the insurer’s board of directors and such sums as are required by prior contracts to be held on account of deferred dividend policies, an insurer shall distribute as dividends the remaining surplus, if any, attributable to participating life insurance and annuity policies in such amounts, including zero, and in such allocations among the participating life insurance and annuity policies as its board of directors determines to be reasonably proportioned to its calculation of the life insurance and annuity policies’ contribution to the distributable surplus. A dividend may be conditioned on the payment of the succeeding year’s premium only on the first and second anniversaries of the policy.

632.62 History History: 1975 c. 373, 375, 422; 1979 c. 102; 2015 a. 90; 2021 a. 114.

632.62 Annotation 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, 03-1432.

632.63 632.63 Unclaimed life insurance and annuities.

632.63(1) (1) Definitions. In this section:

632.63(1)(a) (a) “Contract” means an annuity contract. “Contract” shall not include an annuity used to fund an employment-based retirement plan or program where the insurer does not perform the record-keeping services or the insurer is not committed by terms of the annuity contract to pay death benefits to the beneficiaries of specific plan participants.

632.63(1)(b) (b) “Death master file” means the federal social security administration’s death master file or any other database or service that is at least as comprehensive as the federal social security administration’s death master file for determining that a person has reportedly died.

632.63(1)(c) (c) “Death master file match” means a search of the death master file that results in a match of a person’s name and social security number or the name and date of birth.

632.63(1)(d) (d) “Knowledge of death” means one of the following:

632.63(1)(d)1. 1. Receipt of an original or valid copy of a certified death certificate.

632.63(1)(d)2. 2. A death master file match validated by the insurer in accordance with sub. (2) (a) 1. a.

632.63(1)(e) (e) “Person” means an insured, contract owner, or retained asset account holder.

632.63(1)(f) (f) “Policy” means any policy or certificate of life insurance that provides a death benefit. “Policy” does not include any of the following:

632.63(1)(f)1. 1. A policy or certificate of life insurance that provides a death benefit under an employee benefit plan subject to the Employee Retirement Income Security Act of 1974 or under any federal employee benefit program.

632.63(1)(f)2. 2. A policy or certificate of life insurance that is used to fund a preneed funeral contract or prearrangement.

632.63(1)(f)3. 3. A policy or certificate of credit life or accidental death insurance.

632.63(1)(f)4. 4. A policy issued to a group master policyholder for which the insurer does not provide record-keeping services.

632.63(1)(g) (g) “Record-keeping services” means those circumstances under which the insurer has agreed with a group policy or contract customer to be responsible for obtaining, maintaining, and administering in its own or its agents’ systems information about each individual insured under an insured’s group insurance contract, or a line of coverage thereunder, at least the following information:

632.63(1)(g)1. 1. Social security number or name and date of birth.

632.63(1)(g)2. 2. Beneficiary designation information.

632.63(1)(g)3. 3. Coverage eligibility.

632.63(1)(g)4. 4. Benefit amount.

632.63(1)(g)5. 5. Premium payment status.

632.63(1)(h) (h) “Retained asset account” means any mechanism whereby the settlement of proceeds payable under a policy or contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into an account with check or draft writing privileges, where those proceeds are retained by the insurer or its agent, pursuant to a supplementary contract not involving annuity benefits other than death benefits.

632.63(2) (2) Insurer conduct.

632.63(2)(a) (a) An insurer shall perform a comparison of its insureds’ in-force policies, contracts, and retained asset accounts against a death master file, on at least a semi-annual basis, by using the full death master file once, and thereafter using the death master file update files for future comparisons, to identify potential matches of its insureds. For those potential matches identified as a result of a death master file match, the insurer shall do all of the following:

632.63(2)(a)1. 1. Within 90 days of a death master file match:

632.63(2)(a)1.a. a. Complete a good faith effort, which shall be documented by the insurer, to confirm the death of the insured or retained asset account holder against other available records and information.

632.63(2)(a)1.b. b. Determine whether benefits are due in accordance with the applicable policy or contract.

632.63(2)(a)2. 2. If benefits are due in accordance with the applicable policy or contract:

632.63(2)(a)2.a. a. Use good faith efforts, which shall be documented by the insurer, to locate the beneficiary or beneficiaries.

632.63(2)(a)2.b. b. Provide the appropriate claims forms or instructions to the beneficiary or beneficiaries to make a claim, including the need to provide an official death certificate, if applicable under the policy or contract.

632.63(2)(b) (b) With respect to group life insurance, insurers are required to confirm the possible death of an insured when the insurers maintain at least the following information of those covered under a policy or certificate:

632.63(2)(b)1. 1. Social security number or name and date of birth.

632.63(2)(b)2. 2. Beneficiary designation information.

632.63(2)(b)3. 3. Coverage eligibility.

632.63(2)(b)4. 4. Benefit amount.

632.63(2)(b)5. 5. Premium payment status.

632.63(2)(c) (c) Every insurer shall implement procedures to account for all of the following:

632.63(2)(c)1. 1. Initials used in lieu of a first or middle name, use of a middle name, compound first and middle names, and interchanged first and middle names.

632.63(2)(c)2. 2. Compound last names; maiden or married names; and hyphens, blank spaces, or apostrophes in last names.

632.63(2)(c)3. 3. Transposition of the month and date portions of the date of birth.

632.63(2)(d) (d) To the extent permitted by law, the insurer may disclose minimum necessary personal information about the insured or beneficiary to a person who the insurer reasonably believes may be able to assist the insurer to locate the beneficiary or a person otherwise entitled to payment of the claims proceeds.

632.63(2)(e) (e) The insurer comparison of in-force policies, contracts, and retained asset accounts shall be conducted first to the extent that such records are available electronically and then using the most easily accessible insurer records for records that are not available electronically.

632.63(2)(f) (f) Nothing in this section shall limit the insurer from requesting a valid death certificate as part of any claims validation process.

632.63(3) (3) Fees and costs. An insurer or its service provider shall not charge any beneficiary or other authorized representative for any fees or costs associated with a death master file search or verification of a death master file match conducted pursuant to this section.

632.63(4) (4) Payment of benefits. The benefits from a policy, contract, or a retained asset account, plus any applicable accrued contractual interest, shall first be payable to the designated beneficiaries or owners and, in the event said beneficiaries or owners cannot be found, shall escheat to the state as unclaimed property under ch. 177. Interest payable under s. 628.46 shall not be payable as unclaimed property under subch. II of ch. 177.

632.63(5) (5) Unclaimed proceeds. An insurer shall report and remit unclaimed insurance proceeds in accordance with the requirements of ch. 177.

632.63(6) (6) Unfair marketing practices. Failure to meet any requirement of this section with such frequency as to constitute a general business practice is a violation of s. 628.34. Nothing in this section shall be construed to create or imply a private cause of action for a violation of this section.

632.63(7) (7) Orders. The commissioner may make an order regarding any of the following:

632.63(7)(a) (a) Limiting an insurer’s death master file comparisons required under sub. (2) (a) to the insurer’s electronic searchable files or approving a plan and timeline for conversion of the insurer’s files to electronic searchable files.

632.63(7)(b) (b) Exempting an insurer from the death master file comparisons required under sub. (2) (a) or permitting an insurer to perform such comparisons less frequently than semi-annually upon a demonstration of hardship by the insurer.

632.63(7)(c) (c) Phasing in compliance with this section according to a plan and timeline approved by the commissioner.

632.63(8) (8) Rules. The commissioner may adopt rules implementing and administering this section.

632.63 History History: 2017 a. 192; 2021 a. 87.

632.64 632.64 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.

632.64 History History: 1981 c. 55; 2009 a. 113.

632.65 632.65 Annuities exempt from regulation.

632.65(1) (1) In this section, “qualified charitable gift annuity” means an annuity that satisfies all of the following:

632.65(1)(a) (a) The annuity is established under a transaction that, for federal income tax purposes, is treated partly as a charitable contribution under section 170 of the Internal Revenue Code and partly as an investment in an annuity contract under section 72 of the Internal Revenue Code.

632.65(1)(b) (b) The annuity meets the requirements of an annuity for which the obligation to pay is excluded from the definition of “acquisition indebtedness” under section 514 (c) (5) of the Internal Revenue Code.

632.65(2) (2) 

632.65(2)(a) (a) Notwithstanding any provision of chs. 600 to 646 to the contrary and except as provided in this section, a qualified charitable gift annuity is not subject to regulation under chs. 600 to 646.

632.65(2)(b) (b) A charitable organization may not issue a qualified charitable gift annuity unless the charitable organization has been in continuous existence for at least 3 years, or is a successor or affiliate of a charitable organization that has been in continuous existence for at least 3 years.

632.65(2)(c) (c) A qualified charitable gift annuity contract must include the following disclosure statement: “A qualified charitable gift annuity is not insurance under the laws of this state and is not subject to regulation by the commissioner of insurance of this state or protected by an insurance guaranty fund or an insurance guaranty association.”

632.65(3) (3) This section applies to qualified charitable gift annuities in existence on or after April 18, 2014. A person that issued before April 18, 2014, a qualified charitable gift annuity that is in existence on April 18, 2014, shall provide notice of the provisions of this section to the policy owner or beneficiary, whichever is appropriate, of the qualified charitable gift annuity.

632.65 History History: 2013 a. 271; 2015 a. 195 s. 82.

632.66 632.66 Annuity contracts without life contingencies.

632.66(1) (1) 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.

632.66(2) (2) 

632.66(2)(a) (a) In this subsection, “funding agreement” means an annuity without life contingencies that is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in fixed or variable amounts, or both, that are not based on mortality or morbidity contingencies.

632.66(2)(b) (b) A domestic insurer that holds a valid certificate of authority to transact the business of life insurance and annuities in this state may issue a funding agreement if all of the following conditions are met:

632.66(2)(b)1. 1. The domestic insurer’s board of directors, or an authorized committee of the board, approves the domestic insurer’s plan relating to funding agreements.

632.66(2)(b)2. 2. The commissioner determines that the issuance of funding agreements by the domestic insurer is not adverse to the interests of the policyholders of the domestic insurer, except that no determination from the commissioner is required if the domestic insurer has more than $200 billion in admitted assets. In making a determination under this subdivision, the commissioner shall consider the domestic insurer’s specific policy objective and strategies, investment and risk management guidelines, and aggregate maximum limits on the funding agreement business.

632.66(2)(b)3. 3. No amounts may be guaranteed or credited under the funding agreement except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of a given class of the funding agreement.

632.66(2)(b)4. 4. The domestic insurer complies with the form filing requirements under s. 631.20 with respect to the funding agreement.

632.66(2)(c) (c) The issuance or delivery of a funding agreement by an insurer in this state shall constitute doing an insurance business herein.

632.66(2)(d) (d) A domestic insurer may offer funding agreements directly through the domestic insurer and is not required to use licensed intermediaries when marketing funding agreements.

632.66(2)(e) (e) Amounts paid to the domestic insurer, and proceeds applied under optional modes of settlement, under funding agreements may be allocated to one or more separate accounts pursuant to s. 611.24.

632.66(2)(f) (f) Notwithstanding ch. 551, the commissioner has sole authority to regulate the issuance and sale of funding agreements, including the persons selling funding agreements on behalf of insurers.

632.66(2)(g) (g) Notwithstanding s. 601.465 (1m) and subch. II of ch. 19, any materials submitted to the commissioner pursuant to an approval under par. (b) 2. or pursuant to a request from the commissioner related to a funding agreement shall be held confidential pursuant to s. 601.465 (1n).

632.66(2)(h) (h) The commissioner may promulgate rules as necessary for the implementation of this subsection.