375.1512. Basic illustration, requirements, contents.
Basic illustration, requirements, contents.
375.1512. 1. A basic illustration shall conform with the followingrequirements:
(1) The illustration shall be labeled with the date on which it wasprepared;
(2) Each page, including any explanatory notes or pages, shall benumbered and show its relationship to the total number of pages in theillustration;
(3) The assumed dates of payment receipt and benefit payout within apolicy year shall be clearly identified;
(4) If the age of the proposed insured is shown as a component of thetabular detail, it shall be issue age plus the numbers of years the policyis assumed to have been in force;
(5) The assumed payments on which the illustrated benefits and valuesare based shall be identified as premium outlay or contract premium, asapplicable. For policies that do not require a specific contact premium,the illustrated payments shall be identified as premium outlay;
(6) Guaranteed death benefits and values available upon surrender, ifany, for the illustrated premium outlay or contract premium shall be shownand clearly labeled guaranteed;
(7) If the illustration shows any nonguaranteed elements, they cannotbe based on a scale more favorable to the policy owner than the insurer'sillustrated scale at any duration. These elements shall be clearly labelednonguaranteed;
(8) The guaranteed elements, if any, shall be shown beforecorresponding nonguaranteed elements and shall be specifically referred toon any page of an illustration that shows or describes only thenonguaranteed elements;
(9) The account or accumulation value of a policy, if shown, shall beidentified by the name this value is given in the policy being illustratedand shown in close proximity to the corresponding value available uponsurrender;
(10) The value available upon surrender shall be identified by thename this value is given in the policy being illustrated and shall be theamount available to the policy owner in a lump sum after deduction ofsurrender charges, policy loans and policy loan interest as applicable;
(11) Illustrations may show policy benefits and values in graphic orchart form in addition to the tabular form;
(12) Any illustration of nonguaranteed elements shall be accompaniedby a statement indicating that:
(a) The benefits and values are not guaranteed;
(b) The assumptions on which they are based subject to change by theinsurer; and
(c) Actual results may be more or less favorable;
(13) If the illustration shows that the premium payer may have theoption to allow policy charges to be paid using nonguaranteed values, theillustration shall clearly disclose that a charge continues to be requiredand that, depending on actual results, the premium payer may need tocontinue or resume premium outlays. Similar disclosure shall be made forpremium outlay of lesser amounts or shorter durations than the contractpremium. If a contract premium is due, the premium outlay display shallnot be left blank or show zero unless accompanied by an asterisk or similarmark to draw attention to the fact that the policy is not paid up;
(14) If the applicant plans to use dividends or policy values,guaranteed or nonguaranteed, to pay all or a portion of the contractpremium or policy charges, or for any other purpose, the illustration mayreflect those plans and the impact on future policy benefits and values.
2. A basic illustration shall include the following:
(1) A brief description of the policy being illustrated, including astatement that it is a life insurance policy;
(2) A brief description of the premium outlay or contract premium, asapplicable, for the policy. For a policy that does not require payment ofa specific contract premium, the illustration shall show the premium outlaythat shall be paid to guarantee coverage for the term of the contract,subject to maximum premiums allowable to qualify as a life insurance policypursuant to the applicable provisions of the Internal Revenue Code;
(3) A brief description of any policy features, riders or options,guaranteed or nonguaranteed, shown in the basic illustration and the impactthey may have on the benefits and values of the policy;
(4) Identification and a brief definition of column headings and keyterms used in the illustration; and
(5) A statement containing in substance the following: "Thisillustration assumes that the currently illustrated nonguaranteed elementswill continue unchanged for all years shown. This is not likely to occur,and actual results may be more or less favorable than those shown.".
3. Following the narrative summary, a basic illustration shallinclude a numeric summary of the death benefits and values and the premiumoutlay and contract premium, as applicable. For a policy that provides fora contract premium, the guaranteed death benefits and values shall be basedon the contract premium. This summary shall be shown for at least policyyears five, ten and twenty and at age seventy, if applicable, on the threebases shown in subdivisions (1) to (3) of this subsection. For multiplelife policies the summary shall show policy years five, ten, twenty andthirty:
(1) Policy guarantees;
(2) Insurer's illustrated scale;
(3) Insurer's illustrated scale used but with the nonguaranteedelements reduced as follows:
(a) Dividends at fifty percent of the dividends contained in theillustrated scale used;
(b) Nonguaranteed credited interest at rates that are the average ofthe guaranteed rates and the rates contained in the illustrated scale used;and
(c) All nonguaranteed charges, including but not limited to, terminsurance charges, mortality and expense charges, at rates that are theaverage of the guaranteed rates and the rates contained in the illustratedscale used.
In addition, if coverage would cease prior to policy maturity or age onehundred, the year in which coverage ceases shall be identified for each ofthe three bases.
4. Statements substantially similar to the following shall beincluded on the same page as the numeric summary and signed by theapplicant, or the policy owner in the case of an illustration provided attime of delivery, as required in sections 375.1500 to 375.1527:
(1) A statement to be signed and dated by the applicant or policyowner reading as follows: "I have received a copy of this illustration andunderstand that any nonguaranteed elements illustrated are subject tochange and could be either higher or lower. The agent has told me they arenot guaranteed."; and
(2) A statement to be signed and dated by the insurance producer orother authorized representative of the insurer reading as follows: "Icertify that this illustration has been presented to the applicant and thatI have explained that any nonguaranteed elements illustrated are subject tochange. I have made no statements that are inconsistent with theillustration.".
5. (1) A basic illustration shall include the following for at leasteach policy year from one to ten and for every fifth policy thereafterending at age one hundred, policy maturity or final expiration; and exceptfor term insurance beyond the twentieth year, for any year in which thepremium outlay and contract premium, if applicable, is to change:
(a) The premium outlay and mode the applicant plans to pay and thecontract premium, as applicable;
(b) The corresponding guaranteed death benefit, as provided in thepolicy; and
(c) The corresponding guaranteed value available upon surrender, asprovided in the policy.
(2) For a policy that provides for a contract premium, the guaranteeddeath benefit and value available upon surrender shall correspond to thecontract premium.
(3) Nonguaranteed elements may be shown if described in the contract.In the case of an illustration for a policy on which the insurer intends tocredit terminal dividends, they may be shown if the insurer's currentpractice is to pay terminal dividends. If any nonguaranteed elements areshown, they shall be shown at the same durations as the correspondingguaranteed elements, if any. If no guaranteed benefit or value isavailable at any duration for which a nonguaranteed benefit or value isshown, a zero shall be displayed in the guaranteed column.
(L. 1998 S.B. 722 § 10)