Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 12 - Trade Practices and Frauds › Section 806 KAR 12:080 - Replacement of life insurance and annuity contracts

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.12-010,
				304.12-030
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.2-110 provides that the Executive
				Director of Insurance may make reasonable rules and regulations necessary for
				or as an aid to the effectuation of any provision of the Kentucky Insurance
				Code.
				KRS
				304.12-030 establishes minimum standards of
				conduct to be observed in replacement or proposed replacement of life insurance
				policies and annuity contracts. This administrative regulation sets forth the
				procedures to be followed in the replacement or proposed replacement of life
				insurance policies and annuity contracts.
Section
			 1. Definitions.
(1)
			 "Conservation" means any attempt by the existing insurer or its agent to
			 continue existing life insurance in force after the existing insurer has
			 received a copy of the "Office Form A, Important Notice: Replacement of Life
			 Insurance or Annuities" as required by Section 3(2) of this administrative
			 regulation from a replacing insurer. A conservation effort does not include
			 routine administrative procedures.
(2) "Direct-response solicitation" is defined
			 in
			 KRS
			 304.12-030(1)(f).
(3) "Executive director" is defined by
			 KRS
			 304.1-050(1).
(4) "Existing life insurance" is defined in
			 KRS
			 304.12-030(1)(d).
(5) "Existing insurer" is defined in
			 KRS
			 304.12-030(1)(b).
(6) "Financed purchase" is defined in
			 KRS
			 304.12-030(1)(e).
(7) "Illustration" means a presentation or
			 depiction that includes nonguaranteed elements of a policy of life insurance
			 over a period of years.
(8)
			 "Office" is defined by
			 KRS
			 304.1-050(2).
(9) "Policy summary" means:
(a) For policies or contracts other than
			 universal life policies, a written statement regarding a policy or contract
			 which shall contain, to the extent applicable, the following information:
1. The current death benefit;
2. The annual contract premium;
3. The current cash surrender
			 value;
4. The current dividend;
			 and
5. The amount of outstanding
			 loans; or
(b) For
			 universal life policies, a written statement that contains, at a minimum, the
			 following information:
1. The beginning and
			 end dates of the current reporting period;
2. The policy value at the end of the
			 previous reporting period and at the end of the current reporting
			 period;
3. The total amounts that
			 have been credited or debited to the policy value during the current reporting
			 period, identifying each by type;
4. The current death benefit at the end of
			 the current reporting period on each life covered by the policy;
5. The net cash surrender value of the policy
			 as of the end of the current reporting period; and
6. The amount of outstanding loans, if any,
			 as of the end of the current reporting period.
(10) "Registered contract" means a variable
			 annuity contract or variable life insurance policy subject to the prospectus
			 delivery requirements of the Securities Act of 1933,
			 15
			 U.S.C. 77a et seq.
(11) "Replacement" is defined in
			 KRS
			 304.12-030(1)(a).
(12) "Replacing insurer" is defined in
			 KRS
			 304.12-030(1)(c).
(13) "Sales material" means a sales
			 illustration and any other written, printed, or electronically-presented
			 information created, completed, or provided by the company or agent and used in
			 the presentation to the policy or contract owner related to the policy or
			 contract purchased.
(14) "Universal
			 life insurance policy" means a life insurance policy where separately
			 identified interest credits, other than in connection with dividend
			 accumulations, premium deposit funds, or other supplementary accounts, and
			 mortality and expense charges are made to the policy. A universal life
			 insurance policy may provide for other credits and charges, such as charges for
			 the cost of benefits provided by the rider.