Wyo. Code R. 044-0002-40
General Agency, Board or Commission Rules
Chapter 40: Universal Life Insurance
Effective Date: 05/15/1985 to 12/31/1996
Rule Type: Superceded Rules & Regulations
Reference Number: 044.0002.40.05151985
Effective May 3, 1984
This regulation is promulgated pursuant to W.S. 26-2-110 and the Wyoming Administrative Procedure Act (W.S. 16-3-101 through 16-3-115).
The purpose of this regulation is to supplement existing regulations on life insurance policies in order to accommodate the development and issuance of universal life insurance plans.
(a) 'Universal life insurance policy' means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplemental accounts) and mortality and expense charges are made to the policy. A universal life insurance policy may provide for other credits and charges, such as charges for the cost of benefits provided by rider.
(b) 'Flexible premium universal life insurance policy' means a universal life insurance policy which permits the policyowner to vary, independently of each other, the amount or timing of one or more premium payments or the amount of insurance.
(c) 'Fixed premium universal life insurance policy' means a universal life insurance policy other than a flexible premium universal life insurance policy.
(d) 'Interest-indexed universal life insurance policy' means any universal life insurance policy where the interest credits are linked to an external referent.
(e) 'Net Cash Surrender Value' means the maximum amount payable to the policyowner upon surrender.
(f) 'Cash Surrender Value' means the Net Cash Surrender Value plus any amounts outstanding as policy loans.
(g) 'Policy Value' means the amount to which separately identified interest credits and mortality, expense, or other charges are made under a universal life insurance policy.
(h) 'May' is permissive.
(i) 'Shall' is mandatory.
(j) 'Commissioner' means the Insurance Commissioner of the State of Wyoming.
This regulation encompasses all individual universal life insurance policies except those policies defined under W.S. 26-16-502.
The policy shall provide the following:
(a) Periodic Disclosure to Policyowner. The policy shall provide that the policyowner will be sent, without charge, at least annually, a report which will serve to keep such policyowner advised as to the status of the policy. The end of the current report period must be not more than three months previous to the date of the mailing of the report. Specific requirements of this report are detailed in Section 7.
(b) Illustrative Reports. The policy shall provide for an illustrative report which will be sent to the policyowner upon request. Minimum requirements of such report are the same as those set forth in Section 6. The insurer may not charge the policyowner a fee for providing such report on an annual basis. If the policyowner requests reports of greater frequency, a reasonable fee may be charged only for such additional reports.
(c) Policy Guarantees. The policy shall provide guarantees of minimum interest credits and maximum mortality and expense charges. All values and data shown in the policy shall be based on guarantees. No figures based on nonguarantees shall be included in the policy.
(d) Calculation of Cash Surrender Values. The policy shall contain at least a general description of the calculation of cash surrender values including the following information:
(i) The guaranteed maximum expense charges and loads.
(ii) Any limitation on the crediting of additional interest. Interest credits shall not remain conditional for a period longer than twelve months.
(iii) The guaranteed minimum rate or rates of interest.
(iv) The guaranteed maximum mortality charges.
(v) Any other guaranteed charges.
(vi) Any surrender or partial withdrawal charges.
(e) Changes in Basic Coverage. If the policyowner has the right to change the basic coverage, any limitation on the amount or timing of such change shall be stated in the policy. If the contract confers upon the policyowner the right to increase the basic coverage without the consent of the insurer, no new period of contestability or exclusion for suicide shall be permitted on such increased coverage.
(f) Grace Period and Lapse. The policy shall provide for written notice to be sent to the policyowner's last known address at least thirty days prior to termination of coverage.
A flexible premium policy shall provide for a grace period of at least thirty days after lapse. Unless otherwise defined in the policy, lapse shall occur on that date on which the net cash surrender value first equals zero.
(g) Maturity Date. If a policy provides for a 'maturity date,' 'end date,' or similar date, then the policy shall also contain a statement, in close proximity to that date, that it is possible that coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner, if such is the case.
In connection with any advertising, solicitation, negotiation, or procurement of a universal life insurance policy:
(a) Any statement of policy cost factors or benefits shall contain:
(i) The corresponding guaranteed policy cost factors or benefits, clearly identified.
(ii) A statement explaining the nonguaranteed nature of any current interest rates, charges, or other fees applied to the policy, including the insurer's right to alter any of these factors.
(iii) Any limitations on the crediting of interest, including identification of those portions of the policy, premium or payments therefor, to which a specified interest rate shall be credited.
(b) Any illustration of the policy value shall be accompanied by the corresponding net cash surrender value.
(c) Any statement regarding the crediting of a specific current interest rate shall also contain the frequency and timing by which such rate is determined.
(d) If any statement refers to the policy being interest-indexed, the index shall be described. In addition, a description shall be given of the frequency and timing of determining the interest rate and of any adjustments made to the index in arriving at the interest rate credited under the policy.
(e) Any illustrated benefits based upon nonguaranteed interest, mortality, or expense factors shall be accompanied by a statement indicating that these benefits are not guaranteed.
(f) If the guaranteed cost factors or initial policy cost assumptions will result in policy values becoming exhausted prior to the policy's maturity date, such facts shall be disclosed in the policy or in an illustration of policy values delivered to the insured not later than the date of delivery of the policy.
(a) Requirements. The policy shall provide that the policyowner will be sent, without charge, at least annually, a report which will serve to keep such policyowner advised of the status of the policy. The end of the current report period shall be not more than three months previous to the date of the mailing of the report.
Such report shall include the following:
(i) The beginning and end of the current report period.
(ii) The policy value at the end of the previous report period and at the end of the current report period.
(iii) The total amounts which have been credited or debited to the policy value during the current report period, identifying each by tape (e.g., interest, mortality, expense and riders).
(iv) The current death benefit at the end of the current report period on each life covered by the policy.
(v) The net cash surrender value of the policy as of the end of the current report period.
(vi) The amount of outstanding loans, if any, as of the end of the current report period.
(vii) For fixed premium policies: If, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report.
(viii) For flexible premium policies: If, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report.
(a) Initial Filing Requirements. The following information shall be submitted in connection with any filing of interest-indexed universal life insurance policies ('interest-indexed policies'). All such information received shall be treated confidentially to the extent permitted by law.
(i) A description of how the interest credits are determined, including:
(A) a description of the index.
(B) the relationship between the value of the index and the actual interest rate to be credited.
(C) the frequency and timing of determining the interest rate.
(D) the allocation of interest credits, if more than one rate of interest applies to different portions of the policy value.
(ii) The insurer's investment policy, which includes a description of the following:
(A) how the insurer addressed the reinvestment risks.
(B) how the insurer plans to address the risk of capital loss on cash outflows.
(C) how the insurer plans to address the risk that appropriate investments may not be available or not available in sufficient quantities.
(D) how the insurer plans to address the risk that the indexed interest rate may fall below the minimum contractual interest rate guaranteed in the policy.
(E) the amount and type of assets currently held for interest indexed policies.
(F) the amount and type of assets expected to be acquired in the future.
(iii) If policies are linked to an index for a specified period less than to the maturity date of the policy, a description of the method used (or currently contemplated) to determine interest credits upon the expiration of such period.
(iv) A description of any interest guarantee in addition to or in lieu of the index.
(v) A description of any maximum premium limitations and the conditions under which they apply.
(b) Additional Filing Requirements.
(i) Annually, every insurer shall submit a Statement of Actuarial Opinion by the insurer's actuary similar to the example contained in subsection (c) of this section.
(ii) Annually, every insurer shall submit a description of the amount and type of assets currently held by the insurer with respect to its interest-indexed policies.
(iii) Prior to implementation, every domestic insurer shall submit a description of any material change in the insurer's investment strategy or method of determining the interest credits. A change is considered to be material if it would affect the form or definition of the index (i.e. any change in the information supplied in subsection (a) above) or if it would significantly change the amount or type of assets held for interest-indexed policies.
(c) Statement of Actuarial Opinion for Interest-Indexed Universal Life Insurance Policies.
*** SIGNATURE PAGE HERE ***
I am a member of the American Academy of Actuaries (or if not, state other qualifications to sign annual statement actuarial opinions).
I have examined the interest-indexed universal life insurance policies of the Insurer in force as of December 31, 19XX, encompassing _ number of policies and $_ of insurance in force.
I have considered the provisions of the policies. I have considered any reinsurance agreements pertaining to such policies, the characteristics of the identified assets and the investment policy adopted by the Insurer as they affect future insurance and investment cash flows under such policies and related assets. My examination included such tests and calculations as I considered necessary to form an opinion concerning the insurance and investment cash flows arising from the policies and related assets.
I relied on the investment policy of the Insurer and on projected investment cash flows as provided by ___, Chief Investment Officer of the Insurer.
The tests were conducted under various assumptions as to future interest rates, and particular attention was given to those provisions and characteristics that might cause future insurance and investment cash flows to vary with changes in the level and prevailing interest rates.
In my opinion, the anticipated insurance and investment cash flows referred to above make good and sufficient provision for the contractual obligations of the Insurer under these insurance policies.
*** SIGNATURE PAGE HERE ***
(Section) 9 Effective date
This regulation becomes effective immediately upon filing with the Secretary of State.