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Maine Bureau of Insurance
Form Filing Review Requirements Checklist
Variable Life

L06G, L06I, L08
(Amended 11/2011)

REVIEW REQUIREMENTS

REFERENCE                                             

DESCRIPTION OF REVIEW STANDARDS REQUIREMENTS

LOCATION OF STANDARD IN FILING

Standards of Suitability

Rule 300
Article V §3 and Article X §2

No insurer or agent shall recommend to an applicant a VL policy if, on the basis of information furnished after reasonable inquiry of such applicant, that such policy is unsuitable to applicant. (Insurance, investment objectives, affordability, risk aversion, etc.)

 

Mortality and Expense Risks

Rule 300
Article VI §2(a)

Mortality and expense risks shall be borne by the insurer

 

Minimum Death Benefit

Rule 300
Article VI §2(b)

For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy as long as premiums are duly paid.

 

Investment Experience

Rule 300
Article VI §2(c)

The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer must demonstrate that the reflection of investment experience in the VL policy is actuarially sound.

 

Full amount of the net investment return applied to the benefit base

Rule 300
Article VI §2(d)

Each VL policy shall be created with the full amount of the net investment return applied to the benefit base.

 

Changes in Variable Death Benefits

Rule 300
Article VI §2(e)

Any changes in the variable death benefits of each VL policy shall be determined at least annually.

 

Determination of Cash Value

Rule 300
Article VI §2(f)

The cash value of each VL policy shall be determined at least monthly.

 

Computation of Values

Rule 300
Article VI §2(g)

The computation of values required for each VL policy may be based upon reasonable and necessary approximations.

 

Contents of Cover Page

Rule 300
Article VI §3 (a)

The cover page shall contain:
1) A prominent statement in either contrasting color or in boldface type that the amount or duration of death may be variable or fixed under specified conditions:
2) A prominent statement in either contrasting color or in boldface type that cash values may increase or benefit may be variable or fixed under specified conditions; decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;
3) A statement describing any minimum death benefit required;
4) The method, or reference to the policy provision which describes the method, for determining the amount of insurance payable at death;
5) A captioned provision that the policyholder may return the policy within ten (10) days of receipt and receive a refund equal to the sum of (A) the difference between the premiums paid including any policy fees or other charges and the amounts allocated to any separate accounts and (B) the value of the amounts allocated to any separate accounts under the policy, on the date the returned policy is received by the insurer or its agent, to the extent permitted by Maine law.
6) Such other items as currently required for fixed benefit life insurance policies which are not inconsistent with this rule.

 

Grace Period

Rule 300
Article VI §3 (b)

1) For scheduled premium policies, a provision for grace period of not less than 31 days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium.
2) For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the contract. Such grace period will end on a date not less than 61 days aver the mailing date of the Report to Policyholders.

 

Reinstatement Provision

Rule 300
Article VI §3 (c)

For scheduled premium policies, a provision that the policy will be reinstated at any time within 2 years from the date of default: written application, E of I satisfactory to the insurer, payment of any outstanding indebtedness together with accrued interest. See this section of the Rule for calculations on premiums/cash value repayment.

 

Description of benefit base & method of calculation and application of factors used to adjust variable benefits

Rule 300
Article VI §3 (d)

Full description of the benefit base and the method of calculation and application of any factors used to adjust the variable benefits under the policy.

 

Designating Separate Accounts

Rule 300
Article VI §3 (e)

Provision designating the separate accounts. See also Article VIII and 24-A § 2537 with regard to the establishment and administration of separate accounts as defined by the Investment Act of 1940.

 

Designation of Officers & statements made by the insured are considered representations and not warranties

Rule 300
Article VI §3 (f)

A designation of the officers empowered to make an agreement on behalf of the insurer and that statements made by the insured are considered representations and not warranties.

 

Designation of Owner of Insurance Contract

Rule 300
Article VI §3 (g)

Ownership provision

 

Beneficiary Designation

Rule 300
Article VI §3 (h)

Beneficiary designation conditions or requirements.

 

Assignment

Rule 300
Article VI §3 (i)

Assignment conditions or requirements.

 

Incontestestability

Rule 300
Article VI §3 (j)

A provision that the policy shall be incontestable after it has been in force for two (2) years during the lifetime of the insured. Any increase in coverage subject to E of I is incontestable from the date of issue of the increase.

 

Investment Policy of Separate Accounts

Rule 300
Article VI §3 (k)

The investment policy of the separate accounts shall not be changed without the approval of the insurance supervisory official of the state of domicile of the insurer and that they insurer will notify the policyholder not less than 30 days prior to such planned change.

 

 

Conditions for Deferral of Death Benefit Payment

Rule 300
Article VI §3 (l)

A provision that payment of any death benefits in excess of the minimum DB, CV, loan or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred:
1) For up to six (6) months from the date of request, if such payments are based on policy values which do not depend on the investment performance of the separate account; or
2) Otherwise, for any period during which the NYSE is closed for trading (except normal holiday closing) or when the SEC has determined that a state of emergency exists which may such payment impractical.

 

Settlement Options

Rule 300
Article VI §3(m)

If settlement options are provided, at least one such option shall be provided on a fixed basis only.

 

Description of the Basis for Computing Cash Value & the CSV

Rule 300
Article VI §3 (n)

A description of the basis for computing the cash value and the CSV under the policy shall be included.

 

Statement of Premium/Charges for Incidental Insurance Benefits

Rule 300
Article VI §3 (o)

Premiums or charges for incidental insurance benefits shall be stated separately.

 

Non-Forfeiture Benefits

Rule 300
Article VI §3(r)

A provision for non-forfeiture benefits. The insurer may establish a reasonable minimum cash value below which any nonforfeiture insurance options will not be available.

 

CSV Provisions and Requirements

Rule 300
Article VI § 4

At least 75% of the policy's CSV may be borrowed. Interest may not exceed that permitted by 24-A M.R.S.A. § 2552 and § 2553.
For scheduled premium policies, when the indebtedness exceeds the CSV, the insurer shall give notice to cancel at least thirty-one (31) days from date of mailing of notice for repayment of indebtedness.
Amounts paid to the policyholder upon exercise of a policy loan shall be withdrawn from the separate account and shall be returned to the separate account upon repayment, except that a stock insurer may provide the amounts for policy loans from the general account.
For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay such charges a report must be sent to the policy holder containing the information specified by Section 3 of Article XI

 

Suicide

Rule 300
Article VI § 5 (a)
(c)

An exclusion for suicide within two (2) years of the date of issue of the policy.
Policies issued on a participating basis shall offer to pay dividend amounts in cash and may off dividend options as outlined in this section.

 

Disclosure of all charges

Rule 300
Article VIII § 7

An insurer must disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made to against the separate account such as taxes, brokerage fees, acquisition and sales costs, cost of insurance, administrative and investment management expenses, M&E guarantees, cost of incidental benefits.

 

Reports to Policyholders

Rule 300
Article XI

Reports to Policyholders: Within thirty (30) days after each anniversary of the policy; Annually

 

AIDS and Medical Lifestyle Standards

Rule 490

The purpose of this rule is to clarify the standards applicable to written informed consent forms required to be completed by persons required to take a test for the presence of the antibody to the Human Immunodeficiency Virus (HIV) or for the Human Immunodeficiency Antigen by an insurer, nonprofit hospital service organization, nonprofit medical service organization, or a nonprofit health care plan, to establish standards for pretest and post-test counseling required to be provided to persons subject to testing as required by 5 M.R.S.A. Section 19203-A, and to establish standards for medical and lifestyle application questions and underwriting.

 

Notice Requirements
(For individual policies only)

Rule 585

All policies subject to this Rule shall include notice of the right:
1. To receive notification that an individual life insurance policy that has been in force for at least one year may not be terminated for nonpayment of premium, unless at least 21 days prior to the expiration of the policy’s grace period, the insurer has mailed a notice of cancellation to the policyholder and any third party designated by the policyholder by name and address in writing;
2. To designate a third party to receive notification pursuant to Section 4 of the Rule; and
3.  To change a third-party designation.

 

Third-Party Notice Request Form
(For individual policies only)

Rule 585

Insurers shall provide each policyholder with a "Third-Party Notice Request Form".  This form must comply with all requirements in Rule 585.

 

Reinstatement Due to Organic Brain Disease
(For individual policies only)

Rule 585

Pursuant to the requirements in Rule 585 all policies shall include notice of the right to seek reinstatement after cancellation, termination, or lapse, if loss of coverage is attributable to the policyholder’s affliction with organic brain disease.

 

Stranger Originated Life Insurance

24-A M.R.S.A. §6802-A(6) and §6802-A(12-A)

It is a fraudulent act for an insurance company or viatical settlement provider to commit, or permit its employees or its agents to engage in entering into stranger-originated life insurance.

"Stranger-originated life insurance" means an act or practice to initiate a life insurance policy for the benefit of a person who, at the time of the origination of the policy, has no insurable interest in the insured. "Stranger-originated life insurance" includes, but is not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person who, at the time of the inception of the policy, could not lawfully initiate the policy and when, at the time of policy inception, there is an arrangement or agreement to directly or indirectly transfer the ownership of the policy or the policy benefits to another person. A trust that is created to give the appearance of insurable interest and is used to initiate policies for investors violates insurable interest laws and the prohibition against wagering on life.”

 

Last Updated: August 22, 2012