Iowa Administrative Code › Agency 191 - Insurance Division › Unfair Trade Practices › Chapter 14 - Life Insurance Illustrations Model Regulation › Rule 191-14.4 - Definitions

Current through Register Vol. 47, No. 3, July 24, 2024
For the purposes of these rules:
"Actuarial Standards Board"
means the board
				  established by the American Academy of Actuaries to develop and promulgate
				  standards of actuarial practice.
"Contract premium"
means the gross premium
				  that is required to be paid under a fixed premium policy, including the premium
				  for a rider for which benefits are shown in the illustration.
"Currently payable scale"
means a scale of
				  nonguaranteed elements in effect for a policy form as of the preparation date
				  of the illustration or declared to become effective within the next 95
				  days.
"Disciplined current scale"
means a scale of
				  nonguaranteed elements constituting a limit on illustrations currently being
				  illustrated by an insurer that is reasonably based on actual recent historical
				  experience, as certified annually by an illustration actuary designated by the
				  insurer. Further guidance in determining the disciplined current scale as
				  contained in standards established by the Actuarial Standards Board may be
				  relied upon if the standards:
1. Are
				consistent with all provisions of these rules;
2. Limit a disciplined current scale to
				reflect only actions that have already been taken or events that have already
				occurred;
3. Do not permit a
				disciplined current scale to include any projected trends of improvements in
				experience or any assumed improvements in experience beyond the illustration
				date; and
4. Do not permit assumed
				expenses to be less than minimum assumed expenses.
"Generic name"
means a short title
				  descriptive of the policy being illustrated such as "whole life," "term life"
				  or "flexible premium adjustable life."
"Guaranteed elements"
and
"nonguaranteed elements."
1. "Guaranteed elements" means the premiums,
				benefits, values, credits or charges under a policy of life insurance that are
				guaranteed and determined at issue.
2. "Nonguaranteed elements" means the
				premiums, benefits, values, credits or charges under a policy of life insurance
				that are not guaranteed or not determined at issue.
"Illustrated scale"
means a scale of
				  nonguaranteed elements currently being illustrated that is not more favorable
				  to the policyowner than the lesser of:
1. The disciplined current scale;
				or
2. The currently payable
				scale.
"Illustration"
means a presentation or
				  depiction that includes nonguaranteed elements of a policy of life insurance
				  over a period of years and that is one of the three types defined below:
1. "Basic illustration" means a ledger or
				proposal used in the sale of a life insurance policy that shows both guaranteed
				and nonguaranteed elements.
2.
				"Supplemental illustration" means an illustration furnished in addition to a
				basic illustration that meets the applicable requirements of this regulation,
				and that may be presented in a format differing from the basic illustration,
				but may only depict a scale of nonguaranteed elements that is permitted in a
				basic illustration.
3. "In-force
				illustration" means an illustration furnished at any time after the policy that
				it depicts has been in force for one year or more.
"Illustration actuary"
means an actuary
				  meeting the requirements of rule
				  191-14.11 (507B) who certifies
				  illustrations based on the standard of practice promulgated by the Actuarial
				  Standards Board.
"Lapse-supported illustration"
means an
				  illustration of a policy form failing the test of self-supporting as defined in
				  these rules, under a modified persistency rate assumption using persistency
				  rates underlying the disciplined current scale for the first five years and 100
				  percent policy persistency thereafter.
"Minimum assumed expenses"
means the minimum
				  expenses that may be used in the calculation of the disciplined current scale
				  for a policy form. The insurer may choose to designate each year the method of
				  determining assumed expenses for all policy forms from the following:
1. Fully allocated expenses;
2. Marginal expenses; and
3. A generally recognized expense table based
				on fully allocated expenses representing a significant portion of insurance
				companies and approved by the National Association of Insurance
				Commissioners.
Marginal expenses may be used only if greater than a
				  generally recognized expense table. If no generally recognized expense table is
				  approved, fully allocated expenses must be used.
"Nonterm group life"
means a group policy or
				  individual policies of life insurance issued to members of an employer group or
				  other permitted group where:
1. Every
				plan of coverage was selected by the employer or other group
				representative;
2. Some portion of
				the premium is paid by the group or through payroll deduction; and
3. Group underwriting or simplified
				underwriting is used.
"Policyowner"
means the owner named in the
				  policy or the certificate holder in the case of a group policy.
"Premium outlay"
means the amount of premium
				  assumed to be paid by the policyowner or other premium payer out of
				  pocket.
"Self-supporting illustration"
means an
				  illustration of a policy form for which it can be demonstrated that, when using
				  experience assumptions underlying the disciplined current scale, for all
				  illustrated points in time on or after the fifteenth policy anniversary or the
				  twentieth policy anniversary for second-or-later-to-die policies (or upon
				  policy expiration if sooner), the accumulated value of all policy cash flows
				  equals or exceeds the total policyowner value available. For this purpose,
				  policyowner value will include cash surrender values and any other illustrated
				  benefits amounts available at the policyowner's election.