Date:January 8, 1998
To:All Insurers Authorized to Write Life Insurance in Wisconsin
From:Randy Blumer, Commissioner of Insurance
Subject:Sections Ins 2.14 and 2.16, Wis. Adm. Code, Relating to Life Insurance Solicitations and Advertisements

The purpose of this memorandum is to summarize the important changes made to s. Ins 2.14, Wis. Adm. Code, pertaining to life insurance solicitation and to s. Ins 2.16, Wis. Adm. Code, pertaining to life insurance advertisements. The changes were necessary due to the requirements of the new life illustration rule, s. Ins 2.17, Wis. Adm. Code, which becomes effective January 1, 1998. The changes are being made by emergency rule to coincide with the effective date of s. Ins 2.17, Wis. Adm. Code, and are effective January 1, 1998.

Section Ins 2.14 (3) (d), Wis. Adm. Code

Instead of using the previous state specific, "Buyer's Guide to Life Insurance," insurers and their agents are required to provide prospective purchasers a copy of the "Life Insurance Buyer's Guide" which is published by the National Association of Insurance Commissioners, at the time an application is taken. Copies of the "Life Insurance Buyer's Guide" can be obtained from the National Association of Insurance Commissioners, 120 West 12th Street, Suite 1100, Kansas City, MO 64105-1925.

Section Ins 2.14 (4) (a), Wis. Adm. Code

The rule is amended to only require an insurer to provide a Policy Summary upon delivery of a policy, if the policy form was identified by the insurer as one to be marketed without an illustration. If a basic illustration is provided at the time of sale or delivery of a policy, insurers are not required to also provide a Policy Summary upon delivery of the policy.

Section Ins 2.14 (3) (f), Wis. Adm. Code

Changes have been made to the information that s. Ins 2.14 (3) (f), Wis. Adm. Code, requires to be included in the Policy Summary. These changes include:

  • The Policy Summary may describe or illustrate only the guaranteed elements of the policy. Dividends and other nonguaranteed elements can no longer be shown.
  • The Policy Summary must show, where applicable, the annual premiums, guaranteed death benefits and cash surrender values for the first 20 policy years (rather than the first 5 policy years), and at least one age from 60 through 65 or maturity, whichever is earlier.
  • Surrender Cost Indexes are no longer required to be shown in the Policy Summary.

Section Ins 2.14 (3) (a), (e), and (g), Wis. Adm. Code

Since only guaranteed elements may be used in the calculation of cost comparison indexes, the formulas for calculating the net payment cost index and the surrender cost index have been revised in the definition of each index, and the reference to "equivalent level annual dividend" has been deleted from the rule.

Section Ins 2.14 (4) (d), (e), (f), and (g), Wis. Adm. Code

Cost comparison indexes, if illustrated, shall be representative of guaranteed values only, and must be shown for 10 and 20 years. The surrender cost index and the net payment cost index are the only cost comparison indexes which may be illustrated. In addition, if cost comparison indexes are illustrated, insurers must disclose the use of the cost comparison indexes, including an explanation that indexes are useful only for the comparison of the relative costs of 2 or more similar policies, and disclose that a further explanation of the intended use of the indexes is provided in the Life Insurance Buyer's Guide.

Section Ins 2.16 (1), Wis. Adm. Code

The rule is amended to clarify that the requirements of the life advertisement rule are in addition to and not a substitute for the new life illustration requirements in s. Ins 2.17, Wis. Adm. Code.

Section Ins 2.16 (3) (a) 2, Wis. Adm. Code

The rule is amended to exclude an illustration as defined in s. Ins 2.17 (3) (i), Wis. Adm. Code, from the definition of an advertisement. Basic, supplemental, and in-force illustrations, as defined in s. Ins 2.17 (3), are not advertisements and are not subject to s. Ins 2.16, Wis. Adm. Code. Other types of illustrations that insurers and agents present to consumers will continue to be considered advertisements and are subject to the requirements of s. Ins 2.16, Wis. Adm. Code.

For a copy of the rules, send a written request, along with a large self-addressed, stamped envelope, to Meg Gunderson in OCI's Central Files Section. If you have questions concerning the changes to the rules, you may contact John Kitslaar at (608) 267-7322.

Thank you for your cooperation.