Wisconsin Administrative Code › Office of the Commissioner of Insurance › Chapter Ins 2 - Life Insurance › Section Ins 2.08 - Special policies and provisions; prohibitions, regulations, and disclosure requirements

Current through June 24, 2024
(1) PURPOSE. The interest of the public and
			 the maintenance of a fair and honest life insurance market must be safeguarded
			 by identifying and prohibiting certain types of policy forms and policy
			 provisions and by requiring certain insurance premiums to be separately stated.
			 This rule implements and interprets applicable statutes including ss.
			 628.34,
			 631.20,
			 632.44(1)
			 and
			 632.62,
			 Stats.
(2) SCOPE. This rule shall
			 apply to the kinds of insurance authorized by s.
			 Ins 6.75(1)
			 (a), and shall also apply to fraternal
			 benefit societies.
(3) DEFINITIONS.
			 For the purpose of this rule certain life insurance policy forms and provisions
			 referred to herein shall have the following meaning:
(a) "Coupon policy" is any policy form which
			 includes a series of coupons prominently and attractively featured in
			 combination with an insurance contract. Such coupons are one-year pure
			 endowments whether or not so identified and whether or not physically attached
			 to the insurance contract. The coupons are devised to give the appearance of
			 the interest coupons that are frequently attached to investment bonds. Although
			 the face amount of the coupon benefit is essentially a refund of premium
			 previously paid by a policyholder, it is frequently represented that is the
			 earnings or return on the investment of the policyholder in life
			 insurance.
(b) "Charter policy" is
			 a term or name assigned by an insurance company to a policy form. Such a policy
			 is usually issued by a newly organized company and it is sold on the basis that
			 its availability will be limited to a specific predetermined number of units of
			 a fixed dollar amount. Such policies generally provide that the policyholder
			 shall participate in the earnings resulting from either or both participating
			 policies and non-participating policies. It is characteristic of such a policy
			 that in its presentation to the public it is represented that the policyholder
			 will receive a special advantage in any future distribution of earnings,
			 profits, dividends or abatement of premium. It is also represented that such
			 advantage will not be made available to the persons holding other types of
			 policies issued by the company. Other names such as Founders, President, and
			 Executive Special are frequently used for policies of the type herein
			 described, and for the purpose of this rule when they are so used they shall be
			 considered as charter policies.
(c)
			 A "Profit-sharing policy" is any policy form which contains provisions
			 representing that the policyholder will be eligible to participate, with
			 special advantage not available to the persons holding other types of policies
			 issued by the same company, in any future distribution of general corporate
			 profits. Such policy forms are so drafted that it appears to a prospective
			 policyholder that he or she is purchasing a preferential share of the future
			 profit and earnings of the insurance corporation rather than purchasing a life
			 insurance policy which may be subject to refund of excess premium payments. The
			 provisions of the policy may incorrectly represent the amount and source of
			 surplus that will be available for apportionment and return to policyholders in
			 the form of dividends. Policy forms using such terms as profits, surplus, or
			 surplus-sharing in the manner herein described shall, for the purpose of this
			 rule, be considered as profit-sharing policies.