Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-133 - LIFE INSURANCE AND ANNUITIES REPLACEMENT REGULATION › Section 482-1-133-.02 - Purpose And Scope

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The purpose
			 of this chapter is:
(a) To regulate the
			 activities of insurers and producers with respect to the replacement of
			 existing life insurance and annuities.
(b) To protect the interests of life
			 insurance and annuity purchasers by establishing minimum standards of conduct
			 to be observed in replacement or financed purchase transactions. It will:
(1) Assure that purchasers receive
			 information with which a decision can be made in his or her own best interest;
(ii) Reduce the opportunity for
			 misrepresentation and incomplete disclosure; and
(iii) Establish penalties for failure to
			 comply with requirements of this chapter.
(2) Unless otherwise specifically included,
			 this chapter shall not apply to transactions involving:
(a) Credit life insurance;
(b) Group life insurance or group annuities
			 where there is no direct solicitation of individuals by an insurance producer.
			 Direct solicitation shall not include any group meeting held by an insurance
			 producer solely for the purpose of educating or enrolling individuals or, when
			 initiated by an individual member of the group, assisting with the selection of
			 investment options offered by a single insurer in connection with enrolling
			 that individual. Group life insurance or group annuity certificates marketed
			 through direct response solicitation shall be subject to the provisions of Rule
			 482-1-133-.08;
(c) Group life insurance and annuities used
			 to fund prearranged funeral contracts;
(d) An application to the existing insurer
			 that issued the existing policy or contract when a contractual change or a
			 conversion privilege is being exercised; or, when the existing policy or
			 contract is being replaced by the same insurer pursuant to a program filed with
			 and approved by the commissioner; or, when a term conversion privilege is
			 exercised among corporate affiliates;
(e) Proposed life insurance that is to
			 replace life insurance under a binding or conditional receipt issued by the
			 same company;
(f)
(i) Policies or contracts used to fund (i) an
			 employee pension or welfare benefit plan that is covered by the Employee
			 Retirement and Income Security Act (ERISA); (ii) a plan described by Sections
			 401(a), 401(k) or 403(b) of the Internal Revenue Code, where the plan, for
			 purposes of ERISA, is established or maintained by an employer; (iii) a
			 governmental or church plan defined in Section 414, a governmental or church
			 welfare benefit plan, or a deferred compensation plan of a state or local
			 government or tax exempt organization under Section 457 of the Internal Revenue
			 Code; or (iv) a nonqualified deferred compensation arrangement established or
			 maintained by an employer or plan sponsor.
(ii) Notwithstanding Subparagraph (i), this
			 chapter shall apply to policies or contracts used to fund any plan or
			 arrangement that is funded solely by contributions an employee elects to make,
			 whether on a pre-tax or after-tax basis, and where the insurer has been
			 notified that plan participants may choose from among two (2) or more insurers
			 and there is a direct solicitation of an individual employee by an insurance
			 producer for the purchase of a contract or policy. As used in this rule, direct
			 solicitation shall not include any group meeting held by an insurance producer
			 solely for the purpose of educating individuals about the plan or arrangement
			 or enrolling individuals in the plan or arrangement or, when initiated by an
			 individual employee, assisting with the selection of investment options offered
			 by a single insurer in connection with enrolling that individual
			 employee;
(g) Where new
			 coverage is provided under a life insurance policy or contract and the cost is
			 borne wholly by the insured's employer or by an association of which the
			 insured is a member;
(h) Existing
			 life insurance that is a non-convertible term life insurance policy that will
			 expire in five (5) years or less and cannot be renewed;
(i) Immediate annuities that are purchased
			 with proceeds from an existing contract. Immediate annuities purchased with
			 proceeds from an existing policy are not exempted from the requirements of this
			 chapter; or
(j) Structured
			 settlements.
(3)
			 Registered contracts shall be exempt from the requirements of Rules
			 482-1-133-.06(1)(b)
			 and 482-1-133-.07(b)
			 with respect to the provision of illustrations or policy summaries; however,
			 premium or contract contribution amounts and identification of the appropriate
			 prospectus or offering circular shall be required instead.