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Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Accident and Sickness Insurance Advertising › Section R. 500.668 - Enforcement

Current through Vol. 24-12, July 15, 2024
Rule 18.
(1) Each
				insurer shall maintain, at its home or principal office, a complete file
				containing every printed, published, or prepared advertisement of its
				individual policies and typical printed, published, or prepared advertisements
				of its blanket, franchise, and group policies and certificates disseminated in
				this state, with a notation attached to each advertisement which indicates the
				manner and the extent of distribution and the form number of any policy
				advertised. The files shall be made available for periodic inspection by the
				bureau. All advertisements shall be maintained in the file for a period from
				the previous regular report on examination through the next report on
				examination. Following the completion of a regular report on examination,
				noncurrent advertising material may be removed from the file.
(2) Each agent shall maintain, at the home
				agency or principal office, a complete file containing every printed,
				published, or prepared advertisement which is generated by the agency and which
				is not product or company specific. Each advertisement on file shall have a
				notation attached which indicates the manner and the extent of distribution and
				shall be kept on file by the agency for at least 3 years beyond its last date
				of use.
(3) Each insurer that is
				required to file an annual statement which now is, or which hereafter becomes,
				subject to these rules shall file with the bureau, with its annual statement, a
				certificate of compliance executed by an authorized officer of the insurer. The
				certificate shall contain a statement that, to the best of the officer's
				knowledge, information, and belief, the advertisements which were disseminated
				by the insurer during the preceding statement year complied, or were made to
				comply, in all respects with these rules and the insurance laws of this
				state.
(4) Advertising intended for
				use in this state shall meet the standards of these rules. National advertising
				that is not intended for use in this state shall contain a disclaimer for this
				state.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Loss Ratios Applicable to Individual or Family Expense Coverage › Section R. 500.801 - Applicability

Current through Vol. 24-12, July 15, 2024
Rule 1. These rules apply to individual policies of
				  disability insurance as defined in section 3400 of the act and family expense
				  insurance policies as defined in section 3620 of the act. These rules do not
				  apply to credit accident and health policies as defined in section 3 of Act No.
				  173 of the Public Acts of 1958, being S550.603 of the Michigan Compiled Laws,
				  or a policy of insurance with an annual premium of $7.50 or less. Where a
				  policy covers a contingency for a period of coverage less than a year, the
				  premium for that period is considered the annual premium.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Loss Ratios Applicable to Individual or Family Expense Coverage › Section R. 500.803 - Benefits unreasonable in relation to premiums

Current through Vol. 24-12, July 15, 2024
Rule 3.
(1) The
				policy or rate filings shall include an actuarial certification that the
				benefits provided are reasonable in relation to the premium charged and shall
				show the anticipated loss ratio. The benefits provided are presumed
				unreasonable in relation to the premiums charged if the anticipated loss ratio
				does not equal or exceed the following standards:
(a) Sixty-five percent for rated by age
				insurance.
(b) Sixty percent for
				collectively renewable insurance or optionally renewable insurance.
(c) Fifty-five percent for guaranteed
				renewable insurance or nonrenewable for stated reasons only
				insurance.
(d) Fifty percent for
				noncancellable insurance, noncancellable and guaranteed renewable insurance or
				individual accident insurance.
(e)
				Fifty-five percent for all other insurance.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Loss Ratios Applicable to Individual or Family Expense Coverage › Section R. 500.804 - Actuarial certification

Current through Vol. 24-12, July 15, 2024
Rule 4. The actuarial certification shall include a
				  description of the gross premiums, the anticipated loss ratios and
				  certification that, to the best of the actuary's knowledge and belief, the
				  benefits provided are reasonable in relation to the premiums charged. The
				  information used to support the certification should include the following and
				  shall be available on request:
(a) The
				specific formula and assumptions used in calculating gross premiums.
(b) The expected claim costs.
(c) Identification of morbidity and mortality
				tables or experience studies used, sufficient explanation for evaluation of
				their validity, including copies of such tables if they are not currently
				published.
(d) The experience of
				the insurer on similar coverages or on the same policy if the policy is in
				effect on the date these rules take effect.
(e) The applicability of the filing to
				in-force business on substantially similar forms.
(f) Lapse rate experience.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Loss Ratios Applicable to Individual or Family Expense Coverage › Section R. 500.805 - Withdrawal and withholding of approval

Current through Vol. 24-12, July 15, 2024
Rule 5.
(1) Approval
				is withdrawn on September 30, 1974, from policies of individual insurance which
				bear an approval date prior to the effective date of these rules, where the
				anticipated loss ratio percentage of such insurance policies does not satisfy
				requirements stated in
				R
				500.804 or where the anticipated loss ratio percentage
				of such insurance policies satisfies the requirement stated in
				R
				500.804 but the loss ratio experience indicates to the
				insurance bureau that the minimum anticipated loss ratio required by
				R
				500.804 will not be achieved.
(2) Approval will not be granted for new
				policies of individual insurance which are submitted to the insurance bureau
				for approval after the effective date of these rules where the anticipated loss
				ratio percentage of the policies is not at least equal to the minimum loss
				ratio percentage stated in
				R
				500.804.
(3) Approval shall be withdrawn from such
				policies of insurance which are submitted to the insurance bureau for approval
				after the effective date of these rules where experience data show the
				insurance does not appear capable of developing the anticipated loss ratio
				projected in the actuarial certification filed.
(4) Approval shall not be withdrawn or
				withheld where it has been demonstrated to the satisfaction of the insurance
				bureau that the benefits of the insurance are reasonable in relation to the
				premiums charged even though the anticipated loss ratio for the insurance does
				not equal the minimum loss ratio percentage stated in
				R
				500.804. The insurance bureau's decision to withdraw
				or withhold approval may be contested pursuant to the administrative procedures
				act, Act No. 306 of the Public Acts of 1969, as amended, being SS24.201 to
				24.328 of the Michigan Compiled Laws.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Loss Ratios Applicable to Individual or Family Expense Coverage › Section R. 500.806 - Identification of policies

Current through Vol. 24-12, July 15, 2024
Rule 6. To record whether or not approval has been withdrawn
				  by these rules each insurer shall identify for the insurance bureau before
				  September 30, 1974, all policies of individual insurance which have been
				  previously approved by the insurance bureau and which meet the standards set
				  forth in
				  R
				  500.804 and shall furnish the bureau with an actuarial
				  certification and experience data for all such policies. Experience data shall
				  relate to policies of insurance in force in this state when
				  possible.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Personal Protection Insurance › Section R. 500.811 - Work loss benefit; annual adjustment

Current through Vol. 24-12, July 15, 2024
Rule 1. Annually the commissioner shall adjust the maximum
				  work loss benefit prescribed in subdivision (b) of section 3107 of the
				  insurance code by the ratio of the national consumer price index as calculated
				  by the United States department of labor for all items for June of each year to
				  the corresponding consumer price index 1 year earlier, rounded to the nearest
				  dollar. If the index is unavailable, the commissioner shall make a reasonable
				  approximation. The effective date of the adjustment is October 1 of each year.
				  The commissioner shall notify all interested parties of the
				  adjustment.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Excess Loss Insurance for Multiple Employer Welfare Arrangements (MEWAS) › Section R. 500.821 - Definitions

Current through Vol. 24-12, July 15, 2024
Rule 1. As used in these rules:
(a) "Annual aggregate retention amount or
				attachment point" for any 1 policy year, or fraction thereof if the policy
				terminates during the policy year, means the cumulative total of the number of
				covered units each month for which premium has been accepted, multiplied by
				such covered units' corresponding monthly aggregate retention amount factor,
				applied each month, or the minimum annual aggregate retention amount, whichever
				is greater.
(b) "Code" means Act
				No. 218 of the Public Acts of 1956, as amended, being S500.100 et seq. of the
				Michigan Compiled Laws.
(c) "Plan"
				means an employee benefit plan of a multiple employer welfare arrangement
				authorized under chapter 70 of the code. Reference to actions of a plan
				includes actions by the plan's designated agents.
(d) "Policy" is the excess insurance policy
				issued by the insurer to the MEWA which indemnifies the MEWA for losses
				incurred under a plan in excess of a specified retention amount.
(e) "Policyholder" means the covered entity
				to which the policy is issued.
(f)
				"Policy year" means a 12-consecutive-month period, or fraction thereof,
				beginning on the effective date of the policy and ending on the expiration date
				of the policy.
(g) "Specific
				retention amount" means the uninsured deductible amount or specific attachment
				point specified in the policy; that is, the amount of risk retained by the
				contract holder per covered individual in excess of which coverage
				applies.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Excess Loss Insurance for Multiple Employer Welfare Arrangements (MEWAS) › Section R. 500.822 - Maintenance of excess loss insurance policies with specific retention amount; maintenance of aggregate excess loss insurance; expiration dates of multiple excess loss insurance policies

Current through Vol. 24-12, July 15, 2024
Rule 2. All of the following requirements are applicable to a
				  MEWA which seeks authorization in this state or which has authorization to
				  operate in this state:
(a) A MEWA
				shall submit, for approval by the commissioner, a policy or policies of
				specific excess loss insurance, as required by section 7011(c) of the
				code.
(b) Except as provided in
				subdivision (c) of this rule, a MEWA shall demonstrate to the commissioner that
				the proposed specific retention amount would not be detrimental to the solvency
				and stability of the MEWA, considering the plan's past and expected experience,
				size, reserves, contribution rates, and proposed excess rates.
(c) A MEWA which submits a policy for excess
				loss insurance with a specific retention level of not more than $25,000.00
				shall not be required to meet the requirements set forth in subdivision (b) of
				this rule.
(d) A MEWA shall not
				change the retention level for a specific excess policy without the prior
				written approval of the insurance commissioner.
(e) A MEWA shall not be required to purchase
				an aggregate excess loss policy unless the commissioner determines that
				coverage is necessary. The determination shall be based upon the financial
				solvency and stability of the MEWA, considering the plan's past and expected
				experience, size, reserves, expenses, and contribution rates. An aggregate
				excess loss policy purchased by a MEWA shall provide for the insurer to assume
				all liability in excess of an annual aggregate attachment point.
(f) If more than 1 excess loss insurance
				policy is obtained in fulfillment of the excess loss requirements, the policy
				expiration dates shall be the same.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Excess Loss Insurance for Multiple Employer Welfare Arrangements (MEWAS) › Section R. 500.823 - Excess loss policy provisions; minimum requirements

Current through Vol. 24-12, July 15, 2024
Rule 3. Excess loss policies issued to a MEWA in this state
				  for the purposes of section 7040(1)(c) of the code shall be in compliance with
				  all of the following requirements:
(a)
				All specific excess loss policies shall provide for the insurer to indemnify
				the MEWA for all losses in excess of a specified amount per covered person, per
				year, for all medical, surgical, hospital care, accident, disability, or death
				benefits the MEWA offers.
(b) The
				specific excess loss insurance policy may be in the form of incurred basis
				stop-loss insurance or paid basis stop-loss insurance. Plans using paid basis
				stop-loss insurance shall provide for the liability in excess of the specified
				amount of losses incurred while the paid basis stop-loss insurance was in
				force, but paid after its termination or nonrenewal. The reporting period under
				paid basis insurance shall be not less than 3 months after the MEWA year
				conclusion. An expense will be considered to be incurred by the policyholder at
				the time service has been rendered or the service to which it relates is
				provided. Incurred losses include both reported and unreported losses. "Paid
				losses" means the total amount of money actually paid for benefits for which
				eligible employees and dependents who are covered under the employee benefit
				plan become entitled under the plan.
(c) Required excess loss insurance policies
				shall be noncancelable for a minimum of 1 year for any cause except nonpayment
				of premium, for which the MEWA shall be given a minimum grace period of 31
				days.
(d) The insurer shall have
				neither the right nor obligation under the excess loss policy to directly pay
				any covered person or provider of professional services or supplies for any
				benefit which the policyholder has agreed to provide under the terms of the
				employee benefit plan. The insurer's sole liability shall be to the
				policyholder, subject to the terms, conditions, and limitations of the
				agreement.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Excess Loss Insurance for Multiple Employer Welfare Arrangements (MEWAS) › Section R. 500.824 - Liability indemnified by insurer

Current through Vol. 24-12, July 15, 2024
Rule 4. A liability that is indemnified by an insurer under
				  these rules shall not, directly or indirectly, be returned to a MEWA, a member,
				  or a member's parent, subsidiary, or affiliate. This does not prohibit the
				  insurer from seeking reimbursement from the MEWA or a member.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.841 - Definitions

Current through Vol. 24-12, July 15, 2024
Rule 1. As used in these rules:
(a) "Affiliate" of an insurer means any of
				the following:
(i) Any person, directly or
				indirectly, controlling, controlled by, or under common control with, such
				insurer.
(ii) Any person who
				regularly furnishes investment advice to an insurer with respect to its
				variable life insurance separate accounts for which a specific fee or
				commission is charged.
(iii) Any
				person who is a director, officer, partner, or employee, or a member of the
				immediate family of any person who is a director, officer, partner or employee
				of any person described in paragraph (i) or (ii) of this subdivision.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.843 - Qualification of insurer to issue life insurance contracts on variable basis

Current through Vol. 24-12, July 15, 2024
Rule 3. All of the following requirements are applicable to
				  all insurers that are seeking authority to issue variable life insurance in
				  this state or that have authority to issue variable life insurance in this
				  state:
(a) An insurer shall not
				deliver or issue for delivery in this state any variable life insurance policy
				unless both of the following requirements are satisfied:
(i) The insurer has a certificate of
				authority to engage in the life insurance business in this state.
(ii) The insurer has obtained the written
				approval of the commissioner for the issuance of variable life insurance
				policies in this state.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.844 - Standards of suitability

Current through Vol. 24-12, July 15, 2024
Rule 4.
(1) Every
				insurer seeking approval to enter into the variable life insurance business in
				this state shall establish, maintain, and file with the commissioner a written
				statement specifying the standards of suitability to be used by the insurer.
				Such standards of suitability shall be binding on the insurer and those to whom
				the standards of suitability refer and shall specify that no recommendation
				shall be made to an applicant to purchase a variable life insurance policy and
				that no variable life insurance policy shall be issued in the absence of
				reasonable grounds to believe that the purchase of such policy is suitable for
				such applicant on the basis of information furnished after reasonable inquiry
				of such applicant concerning the applicant's insurance and investment
				objectives, financial situation and needs, and any other information known to
				the insurer or to the agent making the recommendation.
(2) "Suitability" means the likelihood that
				the purchase of variable life insurance is reasonably consistent with all of
				the following:
(a) The expressed insurance
				objectives and needs as perceived by the prospective insured.
(b) The reasonable objectives and needs of
				the prospective insured as determined objectively by a professional agent after
				a diligent reasonable inquiry into relevant financial, family, and other
				background information concerning the prospective insured.
(c) The potential that the prospective
				insured will persist with the policy for such a period of time that the
				insurer's acquisition costs are amortized over a reasonable period of
				time.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.845a - Sales illustrations

Current through Vol. 24-12, July 15, 2024
Rule 5a. Any sales illustration shown or furnished in
				  connection with the sale of variable life insurance shall conform to all of the
				  following requirements:
(a) All of the
				following requirements apply only to the variable portion of contracts with
				fixed and variable funding options:
(i) The
				hypothetical interest rates used to illustrate accumulated policy values shall
				be the rates which would actually be credited to the policy after deduction for
				taxes, management fees, and any other contract charges.
(ii) Illustrations of accumulated policy
				values shall include 1 illustration based solely on the policy contract
				guarantees. Such illustration shall include, among other guarantees, the effect
				of the maximum mortality and administrative charges specified in the
				contract.
(iii) Except for
				illustrations contained in the prospectus, the pattern of premium payments used
				in an illustration shall be the initial pattern requested by the proposed
				policyholder at inception or upon changes in fact amount requested by the
				policyholder.
(iv) If the
				illustrated policy contact provides for a variety of investment options, the
				illustration may use an asset charge which is reasonably representative of a
				typical blend of such options or it may use the asset charge of a particular
				option.
(v) The illustration shall
				disclose the transaction charges which will be levied against the contract
				because of transactions requested in accordance with rights and privileges
				specified in the policy contract. Any charge for the exercise of a right or
				privilege upon which the illustration is based shall be reflected in the
				illustrated values. The nature of any such charges shall be disclosed in a
				clear statement accompanying such illustrations.
(vi) A clear statement shall be made
				following the table of illustrated accumulated policy values that use of
				hypothetical investment results does not in any way represent actual results or
				suggest that such results will be achieved and shall indicate that the policy
				values which actually arise will differ from those shown when the actual
				investment results differ from the hypothetical rates illustrated. Assumptions
				upon which illustrations are based shall be clearly disclosed.
(vii) Any sales illustration to a prospective
				policyholder shall accurately reflect the policy being presented. Misleading
				statements or captions or other misrepresentations are prohibited.
(viii) The requested sales illustration shall
				be printed clearly and legibly on hard paper copy. An illustration displayed on
				a computer screen may be used in addition to, but not as a substitute for, hard
				paper copy.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.846 - Service contracts between insurer and supplier; requirements

Current through Vol. 24-12, July 15, 2024
Rule 6. Any contract between an insurer and suppliers of
				  consulting, investment, administrative, sales, marketing, custodial, or other
				  services which are material with respect to variable life insurance operations
				  shall be in writing and provide that the supplier of such services shall
				  furnish the commissioner with any information or reports in connection with
				  such services which the commissioner may request in order to ascertain whether
				  the variable life insurance operations of the insurer are being conducted in a
				  manner consistent with these rules and any other applicable law or regulations;
				  shall be fair and equitable to all policyholders of the insurer in this state;
				  shall not relieve the insurer from any responsibilities or obligations imposed
				  upon the operations of its variable life insurance business by this rule or any
				  law or regulation.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.847 - Reports to the commissioner

Current through Vol. 24-12, July 15, 2024
Rule 7.
(1) Any
				insurer authorized to transact the business of variable life insurance in this
				state shall submit to the commissioner, in addition to any other materials
				which may be required by this rule or any other applicable laws or regulations,
				all of the following:
(a) An annual statement
				of the business of its variable life insurance separate account or accounts in
				such form as shall be prescribed by the commissioner.
(b) Prior to the use in this state, a copy of
				any information furnished to applicants as provided for in
				R 500.863.
(c) Prior to the use in this state, a copy of
				any of the forms required by subdivision (a) of
				R
				500.865 and a copy of any of the reports to
				policyholders as used to satisfy subdivision (b) of
				R
				500.865.
(d) Such additional information concerning
				its variable life insurance operations or its variable life insurance separate
				accounts as the commissioner shall deem necessary.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.848 - Variable life insurance policies and related documents; forms; filing and approval; exception

Current through Vol. 24-12, July 15, 2024
Rule 8.
(1) All
				forms of variable life insurance policies, riders, endorsements, applications,
				and other related documents which are to be attached to and made a part of the
				policy shall be filed with the commissioner and shall be subject to approval
				before delivery or issuance for delivery in this state. The procedures and
				requirements for filing and approval shall be, to the extent appropriate and
				not inconsistent with this rule, the same as those otherwise applicable to
				other life insurance policies.
(2)
				The commissioner may approve variable life insurance policies and related forms
				with provisions the commissioner deems to be not less favorable to the
				policyholder and the beneficiary than those required by this rule.
(3) The requirements of
				R 500.849(a) do not
				apply to variable life insurance policies and related forms issued in
				connection with corporate pension and profit-sharing plans and retirement
				income plans which are exempt pursuant to section 3(c)(11) of the investment
				company act of 1940, 15 U.S.C. S80a-3(c)(11), and, where applicable, other
				provisions of the federal securities laws because of their tax qualified
				status.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.849a - Variable life nonforfeiture values

Current through Vol. 24-12, July 15, 2024
Rule 9a.
(1) Minimum
				cash surrender values for variable life insurance policies shall be determined
				separately for the basic policy and any benefits and riders for which premiums
				are paid separately. The methods pertain to a basic policy and any benefits and
				riders for which premiums are not paid separately.
(2) The method of computation of minimum cash
				surrender values for variable life policies shall be determined using the
				retrospective method, the prospective method, or the maximum charge method.
(a) When variable life policy funds are
				solely in 1 or more separate accounts, the retrospective method or the maximum
				charge method may be used to compute minimum cash surrender values.
(b) In case of a combination general account
				and separate account product providing for 1 basic amount of insurance but with
				the policy value allocated among the general account and 1 or more separate
				accounts and with mortality charges applicable to the difference between the
				death benefit and the policy value, the applicable cash surrender value
				procedures used may be either the maximum charge method or the retrospective
				method. The method used shall be applicable to both the general account and the
				separate account portions and all of the following provisions shall apply:
(i) The policy shall specify a guaranteed
				rate of interest for the portion of the fund accumulated in the general
				account.
(ii) Additions or amounts
				derived from more favorable interest, mortality, and expense than those
				guaranteed in the policy on the general account fund and credited within 12
				months before surrender may be subject to forfeiture upon surrender.
(iii) At least once each year the insured has
				the option to transfer all separate account funds to the general account and
				apply his or her cash surrender value to purchase a guaranteed fixed paid-up
				benefit.
(iv) Any amount of paid-up
				whole life insurance provided under paragraph (iii) of this subdivision shall
				be at least as great as that computed using the mortality table on which the
				maximum mortality charges have been calculated and the interest rate guaranteed
				in the policy. Any period of extended term insurance provided under paragraph
				(iii) of this subdivision shall be at least as long as that using an extended
				term insurance mortality table appropriate to the mortality table for the
				maximum mortality charges and the interest rate guaranteed in the
				policy.
(v) The annual report shall
				note the availability of the option under paragraph (iii) of this
				subdivision.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.850 - Variable life insurance policy; mandatory provisions

Current through Vol. 24-12, July 15, 2024
Rule 10. Every variable life insurance policy delivered or
				  issued for delivery in this state shall contain, at a minimum, all of the
				  following:
(a) A cover page or pages
				corresponding to the cover page of each policy which shall contain all of the
				following items:
(i) A prominent statement,
				either in contrasting color or in boldface type, that the amount or duration of
				death benefit may be variable or fixed under specified conditions and that cash
				values may increase or decrease in accordance with the experience of the
				separate account, subject to any specified minimum guarantees.
(ii) A statement describing the minimum death
				benefit required pursuant to
				R
				500.849(b).
(iii) The method, or a reference to the
				policy provision which describes the method, for determining the amount of
				insurance payable at death.
(iv) A
				captioned provision which provides that the policyholder may return the
				variable life insurance policy to the insurer or agent within 45 days of the
				date of the execution of the application or within 10 days of receipt of the
				policy by the policyholder, whichever is later, and receive a refund of all
				premium payments for such policy.
(v) Such other items as are currently
				required for fixed benefit life insurance policies and which are not
				inconsistent with this rule.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.851 - Variable life insurance policy; nonforfeiture, partial withdrawal, policy loan, and partial surrender provisions

Current through Vol. 24-12, July 15, 2024
Rule 11. Every variable life insurance policy delivered or
				  issued for delivery in this state shall contain all of the following
				  provisions:
(a) A provision for
				nonforfeiture insurance benefits, so that at least 1 such benefit is offered on
				a fixed basis from the due date of the premium in default. Variable extended
				term insurance shall not be offered. A given nonforfeiture option need not be
				offered on both a fixed and a variable basis. The insurer may establish a
				reasonable minimum cash surrender value below which any nonforfeiture insurance
				options will not be available.
(b)
				A provision for policy loans after the policy has been in force for 3 full
				years. Such provision shall be not less favorable to the policyholder than any
				of the following provisions:
(i) The
				policyholder may borrow at least 75% of the cash surrender value.
(ii) The amount borrowed shall bear interest
				at a rate not to exceed the rate charged on comparable fixed benefit
				policies.
(iii) Any indebtedness
				shall be deducted from the proceeds payable on death.
(iv) Any indebtedness shall be deducted from
				the cash surrender value upon surrender or in determining any nonforfeiture
				benefit.
(v) For scheduled premium
				policies, when the indebtedness exceeds the cash surrender value, the insurer
				shall give notice of intent to cancel the policy if the excess indebtedness is
				not repaid within 31 days after the date of mailing of such notice, by
				registered mail, return receipt requested, to the last known address of the
				policyholder.
(vi) For flexible
				premium policies, when the total charges authorized by the policy that are
				necessary to keep the policy in force until the next following policy
				processing day exceed the amounts available under the policy to pay such
				charges, a report shall be sent to the policyholder containing the information
				specified by
				R
				500.865(d).
(vii) The policy may provide that if, at any
				time, so long as premiums are duly paid, the variable death benefit is less
				than it would have been if no loan or withdrawal had ever been made, the
				policyholder may increase such variable death benefit up to what it would have
				been if there had been no loan or withdrawal by paying an amount not exceeding
				110% of the corresponding increase in cash value and by furnishing such
				evidence of insurability as the insurer may request.
(viii) The policy may specify a reasonable
				minimum amount which may be borrowed at any time, but such minimum shall not
				apply to any automatic premium loan provision.
(ix) A policy loan provision is not required
				if the policy is under the extended insurance nonforfeiture option.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.852 - Variable life insurance policy; suicide exclusion; incidental insurance benefits on fixed basis; dividends; election of automatic premium loan

Current through Vol. 24-12, July 15, 2024
Rule 12. Any of the following provisions may in substance be
				  included in a variable life insurance policy or related form delivered or
				  issued for delivery in this state:
(a)
				An exclusion for suicide committed within 2 years of the policy issue date.
				However, to the extent of the increased death benefits only, the policy may
				provide an exclusion for suicide within 2 years of any increase in death
				benefits which result from an application of the owner subsequent to the policy
				issue date.
(b) Incidental
				insurance benefits may be offered on a fixed basis or variable basis.
(c) Policies issued on a participating basis
				shall offer to pay dividend amounts in cash. In addition, such policies may
				offer the following dividend options:
(i) The
				amount of the dividend may be credited against premium payments.
(ii) The amount of the dividend may be
				applied to provide amounts of additional fixed benefit life
				insurance.
(iii) The amount of the
				dividend may be applied to provide amounts of additional variable life
				insurance.
(iv) The amount of the
				dividend may be deposited in the general account at a specified minimum rate of
				interest.
(v) The amount of the
				dividend may be applied to provide paid-up amounts of fixed-benefit, 1-year
				term insurance.
(vi) The amount of
				the dividend may be deposited as a variable deposit in a separate
				account.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.854 - Separate accounts generally

Current through Vol. 24-12, July 15, 2024
Rule 14. The following apply to separate accounts for
				  variable life insurance:
(a) An
				insurer issuing variable life insurance in this state shall establish 1 or more
				separate accounts pursuant to section 925 of the insurance code of 1956, as
				amended, being S500.925 of the Michigan Compiled Laws.
(b) An insurer shall not, without the prior
				written approval of the commissioner, employ, in any material connection with
				the handling of separate account assets, any person, who:
(i) Within the last 10 years, has been
				convicted of any felony or a misdemeanor arising out of such person's conduct
				involving embezzlement, fraudulent conversion, or misappropriation of funds or
				securities or involving violation of 18 U.S.C. SS1341, 1342, or 1343;
				or
(ii) Within the last 10 years,
				has been found by any state regulatory authority to have violated, or has
				acknowledged violation of, any provision of any state insurance law involving
				fraud, deceit, or knowing misrepresentation; or
(iii) Within the last 10 years, has been
				found by federal or state regulatory authorities to have violated, or has
				acknowledged violation of, any provision of federal or state securities laws
				involving fraud, deceit, or knowing misrepresentation.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.855 - Separate accounts; assets

Current through Vol. 24-12, July 15, 2024
Rule 15. The insurer shall maintain, in each variable life
				  insurance separate account, assets with a fair market value at least equal to
				  the greater of the valuation reserves for the variable portion of the variable
				  life insurance policies or the benefit base for such
				  policies.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.856 - Separate accounts; investments

Current through Vol. 24-12, July 15, 2024
Rule 16. All of the following provisions apply to investments
				  of separate accounts of variable life insurance:
(a) A sale, exchange, or other transfer of
				assets shall not be made by an insurer or any of its affiliates between any of
				its separate accounts or between any other investment account and 1 or more of
				its separate accounts unless both of the following requirements are satisfied:
(i) In case of a transfer into a separate
				account, such transfer is made solely to establish the account or to support
				the operation of the policies with respect to the separate account to which the
				transfer is made.
(ii) Such
				transfer, whether into or from a separate account, is made by a transfer of
				cash; but other assets may be transferred if approved by the commissioner in
				advance.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.857 - Separate accounts; limitations on ownership of securities

Current through Vol. 24-12, July 15, 2024
Rule 17. The following apply to limitations on ownership by a
				  separate account for variable life insurance:
(a) A variable life insurance separate
				account shall not purchase or otherwise acquire the securities of any issuer,
				other than securities issued or guaranteed as to principal and interest by the
				United States, if immediately after such purchase or acquisition the value of
				such investment, together with prior investments of such separate account in
				such security valued as required by these rules, would exceed 10% of the value
				of the assets of the separate account. The commissioner may waive this
				limitation in writing if he believes such waiver will not render the operation
				of the separate account hazardous to the public or the policyholders in this
				state.
(b) No separate account
				shall purchase or otherwise acquire the voting securities of any issuer if as a
				result of such acquisition the insurer and its separate accounts, in the
				aggregate, will own more than 10% of the total issued and outstanding voting
				securities of such issuer. The commissioner may waive this limitation in
				writing if he believes such waiver will not render the operation of the
				separate account hazardous to the public or the policyholders in this state or
				jeopardize the independent operation of the issuer of such
				securities.
(c) The percentage
				limitation specified in subdivision (a) of this rule shall not be construed to
				preclude the investment of the assets of separate accounts in shares of
				investment companies registered pursuant to the investment company act of 1940
				if the investments and investment policies of such investment companies comply
				substantially with the provisions of
				R
				500.856 and other applicable rules.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.858 - Separate accounts; valuation of assets

Current through Vol. 24-12, July 15, 2024
Rule 18. The following apply to valuation of assets of a
				  separate account for variable life insurance:
(a) Investments of the separate account shall
				be valued at their market value on the date of valuation. Market value for
				investments traded on the recognized exchanges means the last reported sale
				price on the date of valuation. If there has been no sale on that date, the
				market value means the last reported bid quotation on the date of valuation.
				Market value for investments listed on the NASDAQ system means the last
				representative bid quotation on the valuation date. If an investment ceases to
				be listed but continues to be traded over the counter, it shall be valued at
				the lowest bid quotation as it appears on the national quotation bureau
				sheets.
(b) If the valuation date
				referred to in subdivision (a) above is a day when the exchange or the NASDAQ
				system is not open for business, the valuation date shall be the last date when
				the exchange or the NASDAQ system was open for business.
(c) If an investment ceases to be traded, it
				shall be valued at fair value as determined in good faith by, or at the
				direction of, the committee of the separate account, or if there is no such
				committee, the board of directors of the insurer, but not in excess of the last
				reported bid quotation. Within 30 days notification of cessation of trading of
				any investment shall be reported by the insurer to the commissioner of the
				state of domicile of the insurer, who shall within a reasonable period of time
				determine the method of valuation or disposition of such investment.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.860 - Separate accounts; allowable charges

Current through Vol. 24-12, July 15, 2024
Rule 20. The insurer shall disclose, in writing, before or at
				  the time of delivery of the policy, all charges that may be made against the
				  variable life insurance separate account, including, but not limited to, all of
				  the following:
(a) Taxes or reserves
				for taxes attributable to investment gains and income of the separate
				account.
(b) Actual cost of
				reasonable brokerage fees and similar direct acquisition and sales costs
				incurred in the purchase or sale of separate account assets.
(c) Actuarially determined costs of insurance
				(tabular costs) and the release of reserves and benefit base consistent with
				the release of separate account liabilities.
(d) Charges for administrative expenses and
				investment management expenses, including internal costs attributable to the
				investment management of assets of the separate account.
(e) A charge for mortality and expense
				guarantees at a rate specified in the policy.
(f) Any amount in excess of those required to
				be held in the separate account.
(g) Any charges for incidental insurance
				benefits.
Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.862 - Investment advisory contracts

Current through Vol. 24-12, July 15, 2024
Rule 22.
(1) An
				insurer shall not enter into a contract under which any person undertakes, for
				a fee, to regularly furnish investment advice to such insurer with respect to
				its separate accounts maintained for variable life insurance policies unless:
(a) The person providing such advice is
				registered as an investment adviser under the investment advisors act of
				1940;
(b) The person providing such
				advice is an investment manager under the employee retirement income security
				act of 1974, 88 Stat. 829, with respect to the assets of each employee benefit
				plan allocated to the separate account; or
(c) The insurer has filed with the
				commissioner and continues to file annually the following information and
				statements concerning the proposed adviser:
(i) The name and form of organization, state
				of organization, and its principal place of business.
(ii) The names and addresses of its partners,
				officers, directors, and persons performing similar functions or, if such an
				investment adviser be an individual, or such individual.
(iii) A written standard of conduct complying
				in substance with the requirements of subdivision (a) of
				R 500.861 which has been adopted by
				the investment adviser and is applicable to the investment adviser, its
				officers, directors, and affiliates; and any other persons or entities
				performing similar functions.
(iv)
				A statement provided by the proposed adviser as to whether the adviser or any
				person associated therewith:
(A) Has been
				convicted within 10 years of any felony or misdemeanor arising out of such
				person's conduct as an employee, salesman, officer or director of an insurance
				company, a bank, an insurance agent, a securities broker, or an investment
				adviser; involving embezzlement, fraudulent conversion, or misappropriation of
				funds or securities, or involving the violation of 18 U.S.C. SS1341, 1342, and
				1343.
(B) Has been permanently or
				temporarily enjoined by order, judgment, or decree of any court of competent
				jurisdiction from acting as an investment adviser, underwriter, broker, or
				dealer, or as an affiliated person or as an employee of any investment company,
				bank, or insurance company, or from engaging in, or continuing any conduct or
				practice in connection with, any such activity.
(C) Has been found by federal or state
				regulatory authorities to have willfully violated, or has acknowledged willful
				violation of, any provision of federal or state securities laws or state
				insurance laws or of any rule or regulation under any such laws.
(D) Has been censured, denied an investment
				adviser registration, had a registration as an investment adviser revoked or
				suspended from being associated with an investment adviser by order of federal
				or state regulatory authorities.