See also ss. Ins 2.05
, and 3.26
, Wis. adm. code.
Contracts providing variable benefits. 632.45(1)(1)
Any contract issued under s. 611.25
or under any section of chs. 600
incorporating s. 611.25
by reference which provides for payment of benefits in variable amounts shall contain a statement of the essential features of the procedure to be followed by the insurer in determining the dollar amount of the variable benefits. It shall contain appropriate nonforfeiture benefits in lieu of those under s. 632.43
and a grace provision appropriate to such a contract in lieu of the provision required by s. 632.44
. Any such individual contract and any such certificate issued under a group contract shall state that the dollar amount may decrease or increase and shall conspicuously display on its first page a statement that the benefits thereunder are on a variable basis, with a statement where in the contract the details of the variable provisions may be found.
Any contract under sub. (1)
shall state whether it may be amended as to investment policy, voting rights, and conduct of the business and affairs of any segregated account. Subject to any preemptive provision of federal law, any such amendment is subject to filing under s. 631.20
and approval by a majority of the policyholders in the segregated account.
Contracts under sub. (1)
, if they are not forms, may be issued only within the terms of a general marketing plan approved by the commissioner. The marketing plan shall be designed to protect the interests of the policyholders in regard to any voting rights and operation of the segregated account and amendment of the contract.
Incontestability and misstated age. 632.46(1)(1)
Incontestability of individual policies.
Except under sub. (3)
or for nonpayment of premiums, no individual life insurance policy may be contested after it has been in force from the date of issue for 2 years during the lifetime of the person whose life is at risk.
Incontestability of group policies.
Except under sub. (3)
or for nonpayment of premiums, no group life insurance policy may be contested after it has been in force for 2 years from its date of issue and no coverage of any insured thereunder may be contested on the basis of a statement made by the insured relative to his or her insurability after the coverage has been in force on the insured for 2 years during the lifetime of the insured. No such statement may be used to contest coverage unless contained in a written instrument signed by the insured person.
Subject to par. (b)
, if the age or sex of the person whose life is at risk is misstated in an application for a policy of life insurance and the error is not adjusted during the person's lifetime the amount payable under the policy is what the premium paid would have purchased if the age or sex had been stated correctly.
If the person whose life is at risk was, at the time the insurance was applied for, beyond the maximum age limit designated by the insurer, the insurer shall refund at least the amount of the premiums collected under the policy.
Disability coverages and additional accident benefits.
Despite subs. (1)
, disability coverages and additional accident benefits may be contested at any time on the ground of fraudulent misrepresentation.
History: 1975 c. 373
; 1979 c. 102
Assignment of life insurance rights. 632.47(1)(1)
Except as provided in sub. (3)
, the owner of any rights under a life insurance policy or annuity contract may assign any of those rights, including any right to designate a beneficiary and the rights secured under s. 632.57
or any other statute. An assignment valid under general contract law vests the assigned rights in the assignee subject, so far as reasonably necessary for the protection of the insurer, to any provisions in the insurance policy or annuity contract inserted to protect the insurer against double payment or obligation.
Relative rights of assignee and beneficiary.
The rights of a beneficiary under a life insurance policy or annuity contract are subordinate to those of an assignee, unless the beneficiary was effectively designated as an irrevocable beneficiary prior to the assignment.
Prohibition on assignment.
Assignment may be expressly prohibited by any of the following:
A group contract providing annuities as retirement benefits.
An annuity contract that is subject to transferability restrictions under any federal or state tax, employee benefit or securities law.
History: 1975 c. 373
; 1999 a. 30
Life insurance policy loans. 632.475(1)(a)
“Policy" includes a life insurance policy, a certificate issued by a fraternal benefit society and an annuity contract.
“Policy loan" means a loan by an insurer, including a premium loan, secured by the cash surrender value of a policy issued by the insurer.
“Policy year" means a year beginning on the anniversary date of a policy.
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 percent per year.
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 percent 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.
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.
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 percent 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 percent 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.
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.
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)(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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
Such term insurance policies as the commissioner may exempt by rule.
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)
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.
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.
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.
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