1. (1) The investment policies of a separate account for variable life insurance operated by insurers authorized under R 500.843 shall not be changed without first filing such change with the insurance commissioner.
2. (2) A material change in the investment policy of a separate account operated by a domestic insurer or an alien insurer entering the United States through this state and filed under R 500.843(c)(iii) shall not be made without first filing such change with the commissioner not less than 60 days before the effective date of the change.
3. (3) A material change in the investment policy of a separate account operated by a foreign insurer or an alien insurer not entering the United States through this state, pursuant to the section of the insurance law of the insurer's state of domicile which corresponds to R 500.843(c)(iii), shall not be made without first filing such change with the commissioner not less than 60 days before the effective date of the change.
4. (4) Any change filed pursuant to this rule shall be effective 60 days after the date it was filed with the commissioner, unless the commissioner notifies the insurer before the end of such 60-day period of his or her disapproval of the proposed change. At any time the commissioner may, after notice and public hearing, disapprove any change that has become effective pursuant to this rule if he or she determines that the change would be detrimental to the interests of the policyholders participating in such separate accounts.

5. (5) If any policyholder objects to a proposed material change in the investment policy of a separate account and the change becomes effective, the objecting policyholder shall be given the option of converting, within 60 days after the effective date of the change or the receipt of a notice of the options available, whichever is later, without evidence of insurability, under 1 of the following options, to a fixed benefit life insurance policy issued by the insurer or an affiliate:

   1. (a) If the policy is a scheduled premium policy, as defined by R 500.841 and is in force on a premium paying basis, an insurer shall offer either or both of the following options:
   2. (i) A conversion as of the original issue age to a substantially comparable form of general account life insurance, based on the insurer's premium rates for a general account life insurance policy at the original issue age, for an amount of insurance not exceeding the death benefit of the variable life insurance policy on the date of conversion. If the cash value of the variable life insurance policy exceeds the cash value of the general account life insurance policy, the difference shall be paid to the policyholder. If the cash value of the general account life insurance policy exceeds the cash value of the variable life insurance policy, the difference shall be paid by the policyholder.

   3. (ii) Conversion as of the attained age to a substantially comparable form of general account life insurance for an amount of insurance not exceeding the excess of the death benefit of the variable life insurance policy on the date of conversion over either of the following:

      1. (A) Its net cash surrender value on the date of conversion if the withdrawing policyholder elects to surrender the variable life policy for its net cash surrender value.
      2. (B) The death benefit payable under any paid-up insurance option if the withdrawing policyholder elects such nonforfeiture option under the variable life policy.
   4. (b) If the policy is in force as paid-up variable life insurance, then conversion shall be to a substantially comparable paid-up general account life insurance policy for an amount of insurance not exceeding the death benefit of the variable life insurance policy on the date of conversion.
   5. (c) If the policy is a flexible premium policy, as defined by R 500.841 and is in force, an insurer shall offer a conversion to a substantially comparable flexible premium general account life insurance policy for an amount of insurance not exceeding the death benefit of the variable life insurance policy on the date of conversion. If the cash value of the variable life insurance policy exceeds the cash value of the general account life insurance policy, the difference shall be paid to the policyholder. If the cash value of the general account life insurance policy exceeds the cash value of the variable life insurance policy, the difference shall be paid by the policyholder.

History: 1979 AC; 1988 AACS.