Insurance 300

CHAPTER Ins 300 LIFE INSURANCE

Statutory Authority: RSA 400-A:15; RSA 410:3-a

PART Ins 301 LIFE INSURANCE SOLICITATION

Statutory Authority: RSA 400-A:15, I; RSA 417:4

Ins 301.01 Purpose.

(a) The purpose of this part is to require insurers to deliver to purchasers of life insurance, information that will improve the buyer's ability to select the most appropriate plan of life insurance for the buyer’s needs and improve the buyer's understanding of the basic features of the policy that has been purchased or is under consideration.

(b) This part does not prohibit the use of additional material that is not a violation of this part or any other New Hampshire statute or rule.

Source. #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.02 Scope.

(a) Except as hereafter exempted, this part shall apply to any solicitation, negotiation, or procurement of life insurance occurring within this state. This part shall apply to any issuer of life insurance contracts including fraternal benefit societies.

(b) This part shall not apply to:

(1) Individual and group annuity contracts;

(2) Credit life insurance;

(3) Group life insurance (except for disclosures relating to preneed funeral contracts or prearrangements; these disclosure requirements shall extend to the issuance or delivery of certificates as well as to the master policy); or

(4) Life insurance policies issued in connection with pension and welfare plans as defined by and which are subject to the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Section 1001 et seq. as amended.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-5-10

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.03 Definitions. For the purposes of this part, the following definitions shall apply:

(a) "Buyers’ guide" means a consumer disclosure document provided to prospective life insurance purchasers.

(b) “Current scale of nonguaranteed elements” means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration.

(d) “Nonguaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges, or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

(e) “Policy data” means a display or schedule of numerical values, both guaranteed and nonguaranteed for each policy year, or a series of designated policy years, of the following information:

(1) Illustrated annual, other periodic, and terminal dividend;

(2) Premiums;

(3) Death benefits;

(4) Cash surrender values; and

(5) Endowment benefits.

(f) "Policy summary" means a written statement describing the elements of the policy, including, but not limited to:

(1) A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION;

(2) The name and address of the insurance producer or, if no producer is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary;

(3) The full name and home office or administrative office address of the company in which the life insurance policy is to be or has been written;

(4) The generic name of the basic policy and each rider;

(5) The following amounts, where applicable, for the first 5 policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including at least one age from 60 through 65 and policy maturity:

a. The annual premium for the basic policy;

b. The annual premium for each optional rider;

c. The amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, that is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately;

d. The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and

e. Any endowment amounts payable under the policy that are not included under cash surrender values above;

(6) The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary shall also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law; and

(7) The date on which the policy summary is prepared.

(g) "Preneed funeral contract or prearrangement" means an agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; amd by #7536, eff 8-1-01; paragraphs (a)-(f) EXPIRED: 2-16-09; paragraph (g) EXPIRED: 8-1-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.04 Duties of Insurers.

(a) Requirements applicable generally:

(1) The insurer shall provide a buyer's guide to all prospective purchasers prior to accepting the applicant's initial premium or premium deposit. However, if the policy for which application is made contains an unconditional refund provision of at least 10 days, the buyer’s guide may be delivered with the policy or prior to delivery of the policy; and

(2) The insurer shall provide a policy summary to prospective purchasers where the insurer has identified the policy form as one that will not be marketed with an illustration. The policy summary shall show guarantees only. It shall consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure. Any amounts that remain level for 2 or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts in Ins 301.03(f)(5) shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider, death benefits shall be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed as a blank space. Delivery of the policy summary shall be consistent with the time for delivery of the buyer's guide as specified in (a)(1) above.

(b) Requirements applicable to existing policies:

(1) Upon request by the policy owner, the insurer shall furnish either policy data or an in force illustration as follows:

a. For policies issued prior to the 2017 effective date of Ins 309, the insurer shall furnish policy data or, at its option, an in force illustration meeting the requirements of Ins 309;

b. For policies issued after the 2017 effective date of Ins 309 that were declared not to be used with an illustration, the insurer shall furnish policy data, limited to guaranteed values, if it has chosen not to furnish an in force illustration meeting the requirements of this rule;

c. If the policy was issued after the 2017 effective date of Ins 309 and declared to be used with an illustration, an in force illustration shall be provided;

d. Unless otherwise requested, the policy data shall be provided for 20 consecutive years beginning with the previous policy anniversary. The statement of policy data shall include nonguaranteed elements according to the current scale, the amount of outstanding policy loans, and the current policy loan interest rate. Policy values shown shall be based on the current application of nonguaranteed elements in effect at the time of the request. The insurer may not charge a fee for the preparation of the statement;

(2) If a life insurance company changes its method of determining scales of nonguaranteed elements on existing policies, it shall, no later than when the first payment is made on the new basis, advise each affected policy owner residing in this state of this change and of its implication on affected policies. This requirement shall not apply to policies for which the amount payable upon death under the basic policy as of the date when advice would otherwise be required does not exceed $5,000; and

(3) If the insurer makes a material revision in the terms and conditions under which it will limit its right to change any nonguaranteed factor, it shall, no later than the first policy anniversary following the revision, advise each affected policy owner residing in this state.

Source. #1900, eff 1-1-82; amd by #2141, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.05 Preneed Funeral Contracts or Prearrangements. The following information shall be adequately disclosed at the time an application is made, prior to accepting the applicant's initial premium or deposit, for a preneed funeral contract or prearrangement that is funded or to be funded by a life insurance policy:

(a) The fact that a life insurance policy is involved or being used to fund a prearrangement;

(b) The nature of the relationship among the soliciting producer or producers, the provider of the funeral or cemetery merchandise or services, the administrator, and any other person;

(c) The relationship of the life insurance policy to the funding of the prearrangement, and the nature and existence of any guarantees relating to the prearrangement;

(d) The impact on the prearrangement:

(1) Of any changes in the life insurance policy, including but not limited to changes in the assignment, beneficiary designation, or use of the proceeds;

(2) Of any penalties to be incurred by the policyholder as a result of failure to make premium payments; and

(3) Of any penalties to be incurred or monies to be received as a result of cancellation or surrender of the life insurance policy.

(e) A list of the merchandise and services which are applied or contracted for in the prearrangement and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need;

(f) All relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the prearrangement;

(g) Any penalties or restrictions, including but not limited to geographic restrictions or the inability of the provider to perform, on the delivery of merchandise, services, or the prearrangement guarantee; and

(h) If so, the fact that a sales commission or other form of compensation is being paid and the identity of the individuals or entities to whom it is paid.

Source. #1900, eff 1-1-82; amd by #2141, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.06 Solicitation of Life Insurance General Rules.

(a) Each insurer shall maintain at its home office or principal office a complete file containing one copy of each document authorized and used by the insurer pursuant to this part. The file shall contain one copy of each authorized form for a period of 5 years following the date of its last authorized use unless otherwise provided by Ins 301. Insurers must also comply with RSA 400-B:4 and Ins 2602.

(b) A producer shall inform the prospective purchaser, prior to commencing a life insurance sales presentation, that they are acting as a life insurance producer and inform the prospective purchaser of the full name of the insurance company which the producer is representing to the buyer. In sales situations in which a producer is not involved, the insurer shall identify its full name.

(c) An insurance producer shall not use terms such as “financial planner”, “investment advisor”, “financial consultant”, or “financial counseling” in such a way as to imply that they are primarily engaged in an advisory business in which compensation is unrelated to sales, unless that is actually the case and the producer otherwise complies with RSA 402-J:3 and RSA 405:44-a. This provision is not intended to:

(1) Preclude persons who hold some form of formally recognized financial planning or consultant designation from using this designation even when they are only selling insurance;

(2) Preclude persons who are members of a recognized trade or professional association having such terms as part of its name from citing membership, providing that a person citing membership, if authorized only to sell insurance products, shall disclose that fact; or

(3) Permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation, or servicing of policies.

(d) Any reference to nonguaranteed elements shall include a statement that the item is not guaranteed and is based on the company's current scale of nonguaranteed elements using the appropriate special term such as "current dividend" or "current rate" scale. If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect shall be included in any reference to nonguaranteed elements. A presentation or depiction of a policy issued after the effective date of 2017 Ins 309 that includes nonguaranteed elements over a period of years shall be governed by this part. Solicitations pertaining to nonguaranteed elements shall also comply with Ins 2602.05(o).

Source. #1900, eff 1-1-82; amd by #2141, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.07 Suitability of Recommendation or Sale. Reasonable inquiry shall be made by insurers and producers to determine the suitability of any recommendations or sales, and all replacement of life insurance policies shall comply with Ins 302.

Source. #1900, eff 1-1-82; amd by #2141, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; amd by renumbering and deleting paragraph (h) and renumbering paragraphs (l) and (m) as (k) and (l) #7536, eff 8-1-01 (formerly Ins 301.09); paragraphs (a)-(l) EXPIRED: 2-16-09

New. #9651, eff 2-5-10; ss by #12423, eff 2-5-18

Ins 301.08 Failure to Comply. Failure of an insurer to provide or deliver a buyer's guide, an in force illustration, a policy summary, or policy data as provided in Ins 301.04 shall constitute an omission which misrepresents the benefits, advantages, conditions, or terms of an insurance policy.

Source. #9651, eff 2-5-10; ss by #12423, eff 2-5-18 (from Ins 301.07)

Ins 301.09 Life Insurance Buyer's Guide.

(a) The face page of the Buyer's Guide shall read as follows:

LIFE INSURANCE BUYER'S GUIDE

This guide can help you when you shop for life insurance. It discusses how to:

Find a Policy That Meets Your Needs and Fits Your Budget

Decide How Much Insurance You Need

Make Informed Decisions When You Buy a Policy

Prepared by the National Association of Insurance Commissioners

The National Association of Insurance Commissioners is an association of state insurance regulatory officials. This association helps the various insurance departments to coordinate insurance laws for the benefit of all consumers.

This Guide Does Not Endorse Any Company or Policy

Reprinted by (Company Name)

(Month and year of printing)

IMPORTANT THINGS TO CONSIDER:

(1) Review your own insurance needs and circumstances. Choose the kind of policy that

has benefits that most closely fit your needs. Ask a producer or company to help you.

(2) Be sure that you can handle premium payments. Can you afford the initial premium?

If the premium increases later and you still need insurance, can you still afford it?

(3) Don't sign an insurance application until you review it carefully to be sure all the

answers are complete and accurate.

(4) Don't buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.

(5) Don't drop one policy and buy another without a thorough study of the new policy and the one you have now. Replacing your insurance may be costly.

(6) Read your policy carefully. Ask your producer or company about anything that is not

clear to you.

(7) Review your life insurance program with your producer or company every few years to keep up with changes in your income and your needs.

(b) The remaining text of the Buyer's Guide shall begin on page 2 as follows:

Buying Life Insurance

When you buy life insurance, you want coverage that fits your needs

First, decide how much you need - and for how long - and what you can afford to pay. Keep in mind that the major reason you buy life insurance is to cover the financial effects of unexpected or untimely death. Life insurance can also be one of many ways you plan for the future.

Next, learn what kinds of policies will meet your needs and pick the one that best suits you.

Then, choose the combination of policy premium and benefits that emphasizes protection in case of early death, or benefits in case of long life, or a combination of both.

It makes good sense to ask a life insurance producer or company to help you. A producer can help you review your insurance needs and give you information about the available policies. If one kind of policy doesn't seem to fit your needs, ask about others.

This guide provides only basic information. You can get more facts from a life insurance producer or company or from your public library.

What About the Policy You Have Now?

If you are thinking about dropping a life insurance policy, here are some things you should consider:

(1) If you decide to replace your policy, don't cancel your old policy until you have received the new one. You then have a minimum period to review your new policy and decide if it is what you wanted.

(2) It may be costly to replace a policy. Much of what you paid in the early years of the policy you have now, paid for the company's cost of selling and issuing the policy. You may pay this type of cost again if you buy a new policy.

(3) Ask your tax advisor if dropping your policy could affect your income taxes.

(4) If you are older or your health has changed, premiums for the new policy will often be higher. You will not be able to buy a new policy if you are not insurable.

(5) You may have valuable rights and benefits in the policy you now have that are not in the new one.

(6) If the policy you have now no longer meets your needs, you may not have to replace it. You might be able to change your policy or add to it to get the coverage or benefits you now want.

(7) At least in the beginning, a policy may pay no benefits for some causes of death covered in the policy you have now.

In all cases, if you are thinking of buying a new policy, check with the producer or company that issued you the one you have now. When you bought your old policy, you may have seen an illustration of the benefits or your policy. Before replacing your policy, ask your producer or company for an updated illustration. Check to see how the policy has performed and what you might expect in the future, based on the amounts the company is paying now.

How Much Do You Need?

Here are some questions to ask yourself:

(1) How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?

(2) Do I have children for whom I'd like to set aside money to finish their education in the event of my death?

(3) How will my family pay final expenses and repay debts after my death?

(4) Do I have family members or organizations to whom I would like to leave money?

(5) Will there be estate taxes to pay after my death?

(6) How will inflation affect future needs?

As you figure out what you have to meet these needs, count the life insurance you have now, including any group insurance where you work or veteran's insurance. Don't forget Social Security and pension plan survivor's benefits. Add other assets you have: savings, investments, real estate and personal property. Which assets would your family sell or cash in to pay expenses after your death?

What Is the Right Kind of Life Insurance?

All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. Your choice should be based on your needs and what you can afford.

There are two basic types of life insurance: term insurance and cash value insurance. Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future. You may combine cash value life insurance with term insurance for the period of your greatest need for life insurance to replace income.

Term Insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value.

You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy in force for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase.

You may be able to trade many term insurance policies for a cash policy during a conversion period—even if you are not in good health. Premiums for the new policy will be higher than you have been paying for the term insurance.

Cash Value Life Insurance is a type of insurance where the premiums charged are higher at the beginning then they would be for the same amount of term insurance. The part of the premium that is not used for the cost of insurance is invested by the company and builds up a cash value that may be used in a variety of ways. You may borrow against a policy's cash value by taking a policy loan. If you don't payback the loan and the interest on it, the amount you owe will be subtracted from the benefits when you die, or from the cash value if you stop paying premiums and take out the remaining cash value. You can also use your cash value to keep insurance protection for a limited time or to buy a reduced amount without having to pay more premiums. You can also use the cash value to increase your income in retirement or to help pay for needs such as a child's tuition without canceling the policy. However, to build up this cash value, you must pay higher premiums in the earlier years of the policy. Cash value life insurance may be one of several types: whole life, universal life and variable life are all types of cash value insurance.

Whole Life Insurance covers you for as long as you live if your premiums are paid. You generally pay the same amount in premiums for as long as you live. When you first take out the policy, premiums can be several times higher than you would pay initially for the same amount of term insurance. But they are smaller than the premiums you would eventually pay if you were to keep renewing a term policy until your later years.

Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher since the premium payments are made during a shorter period.

Universal Life Insurance is a kind of flexible policy that lets you vary your premium payments. You can also adjust the face amount of your coverage. Increases may require proof that you qualify for the new death benefit. The premiums you pay, less expense charges, go into a policy account that earns interest. Charges are deducted from the account. If your yearly premium payment plus the interest in your account earns is less than the charges, your account value will become lower. If it keeps dropping, eventually your coverage will end. To prevent that, you may need to start making premium payments, or increase your premium payments, or lower your death benefits. Even if there is enough in your account to pay premiums, continuing to pay premiums yourself means that you build up more cash value.

Variable Life Insurance is a kind of insurance where the death benefits and cash values depend on the investment performance of one or more separate accounts, which may be invested in mutual funds or other investments allowed under the policy. Be sure to get the prospectus from the company when buying this kind of policy and STUDY IT CAREFULLY. You will have higher death benefits and cash value if the underlying investments do well. Your benefits and cash value will be lower or may disappear if the investments you choose didn't do as well as you expected. You may pay an extra premium for a guaranteed death benefit.

Life Insurance Illustrations

You may be thinking of buying a policy where cash values, death benefits, dividends or premiums may vary based on events or situations the company does not guarantee, such as interest rates. If so, you may get an illustration from the producer or company that helps explain how the policy works. The illustration will show how the benefits that are not guaranteed will change as interest rates and other factors change. The illustration will show you what the company guarantees. It will also show you what could happen in the future. Remember that nobody knows what will happen in the future. You should be ready to adjust your financial plans if the cash value doesn't increase as quickly as shown in the illustration. You will be asked to sign a statement that says you understand that some of the numbers in the illustration are not guaranteed.

Finding a Good Value in Life Insurance

After you have decided which kind of life insurance is best for you, compare similar policies from different companies to find which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. There are other things to consider. For example:

(1) Do premiums or benefits vary from year to year?

(2) How much do the benefits build up in the policy?

(3) What part of the premiums or benefits is not guaranteed?

(4) What is the effect of interest on money paid and received at different times on the policy?

(g) Remember that no one company offers the lowest cost at all ages for all kinds and amounts of insurance. You should also consider other factors:

(1) How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. A year-by-year display of values and benefits can be very helpful. (The producer or company will give you a policy summary or illustration that will show benefits and

premiums for selected years.)

(2) Are there special policy features that particularly suit your needs?

(3) How are nonguaranteed values calculated? For example, interest rates are important in determining policy returns. In some companies increases reflect the average interest earnings on all of that company's policies regardless of when issue. In others, the return for policies issued in a recent year, or a group of years, reflects the interest earnings on that group of policies; in this case, amounts paid are likely to change more rapidly when interest rates change.

Source. #12423, eff 2-5-18 (from Ins 301.08)

Ins 301.10 Waiver or Suspension of Rules.

(a) The commissioner, upon the commissioner’s own initiative or upon request by an insurer, shall waive any requirement of this chapter if such waiver does not contradict the objective or intent of the rule and:

(1) Applying the rule provision would result in a form that is inaccurate, would cause confusion, or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to or inconsistent with the form of policy;

(3) There are specific circumstances unique to the form such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any.

Source. #12423, eff 2-5-18

PART Ins 302 LIFE INSURANCE AND ANNUITIES REPLACEMENT

Statutory Authority: RSA 400-A:15, I; RSA 402-J:18; RSA 408:52, II

Ins 302.01 Purpose.

(a) The purpose of this part is:

(1) To regulate the activities of insurers and producers with respect to the replacement of existing life insurance and annuities; and

(2) To protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions. It will:

a. Assure that purchasers receive information with which a decision can be made in their own best interest;

b. Reduce the opportunity for misrepresentation and incomplete disclosure; and

c. Establish penalties for failure to comply with requirements of this part.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.02 Scope.

(a) Unless otherwise specifically included, this part shall not apply to transactions involving:

(1) Credit life insurance;

(2) Group life insurance or group annuities where there is no direct solicitation of individuals by an insurance[WC1] producer. Direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation shall be subject to the provisions of Ins 302.08;

(3) Group life insurance and annuities used to fund prearranged funeral contracts;

(4) An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

(5) Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company;

(6) Policies or contracts used to fund:

a. An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

b. A plan described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code where the plan, for purposes of ERISA, is established or maintained by an employer;

c. A governmental or church plan defined in Section 414, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the Internal Revenue Code; or

d. A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(7) Notwithstanding subparagraph (6) above, this rule shall apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurer has been notified that plan participants may choose from among 2 or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subsection, direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;

(8) Where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured’s employer or by an association of which the insured is a member;

(9) Existing life insurance that is a non-convertible term life insurance policy that will expire in 5 years or less and cannot be renewed; or

(10) Structured settlements.

(b) Registered contracts shall be exempt from the requirements of Ins 302.06(a)(2) and Ins 302.07(a)(1) with respect to the provision of illustrations or policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.03 Definitions.

(a) “Direct-response solicitation” means a solicitation through a sponsoring or endorsing entity or individually solely through mails, telephone, the Internet, or other mass communication media.

(b) “Existing insurer” means the insurance company whose policy or contract is or will be changed or affected in a manner described within the definition of “replacement”.

(c) “Existing policy or contract” means an individual life insurance policy or annuity contract in force, including a policy under a binding or conditional receipt or a policy or contract that is within an unconditional refund period.

(d) “Financed purchase” means the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal or surrender of, or by borrowing from values of an existing policy to pay all or part of any premium due on the new policy. For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender or borrowing involving the policy values of an existing policy is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within 4 months before or 13 months after the effective date of the new policy, it will be deemed prima facie evidence of the policyholder’s intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in Ins 302.05(a)(5).

(e) “Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as defined in Ins 309.

(f) “Policy summary” means:

(1) For policies or contracts other than universal life policies, means a written statement regarding a policy or contract which shall contain to the extent applicable, but need not be limited to, the following information:

a. Current death benefit;

b. Annual contract premium;

c. Current cash surrender value;

d. Current dividend;

e. Application of current dividend; and

f. Amount of outstanding loan;

(2) For universal life policies, means a written statement that shall contain at least the following information:

a. The beginning and end date of the current report period;

b. The policy value at the end of the previous report period and at the end of the current report period;

c. The total amounts that have been credited or debited to the policy value during the current report period, identifying each type, such as interest, mortality, expense, and riders;

d. The current death benefit at the end of the current report period on each life covered by the policy;

e. The net cash surrender value of the policy as of the end of the current report period; and

f. The amount of outstanding loans, if any, as of the end of the current report period.

(g) “Producer” shall be defined to include agents, brokers, and producers.

(h) “Replacing insurer” means the insurance company that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase.

(i) “Registered contract” means a variable annuity contract or variable life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933.

(j) “Replacement” means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposed producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be:

(1) Lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(2) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(3) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(4) Reissued with any reduction in cash value; or

(5) Used in a financed purchase.

(k) “Sales material” means a sales illustration and any other written, printed, or electronically presented information created, or completed or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.04 Duties of Producers.

(a) A producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts. If the answer is “no,” the producer’s duties with respect to replacement are complete.

(b) If the applicant answered “yes” to the question regarding existing coverage referred to in (a) above, the producer shall present and read to the applicant not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix A or other substantially similar form approved by the commissioner. However, no approval shall be required when amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced. The notice shall be signed by both the applicant and the producer attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud (in which case the producer need not have read the notice aloud) and left with the applicant.

(c) The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insured, the insurer or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.

(d) In connection with a replacement transaction the producer shall leave with the applicant at the time an application for a new policy or contract is completed the original or a copy of all sales material. With respect to electronically presented sales material, it shall be provided to the policy or contract owner in printed form no later than at the time of policy or contract delivery.

(e) Except as provided in Ins 302.06(c), in connection with a replacement transaction, the producer shall submit to the insurer, to which an application for a policy or contract is presented, a copy of each document required by this section, a statement identifying any preprinted or electronically presented company approved sales materials used, and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.05 Duties of Insurers that Use Producers.

(a) Each insurer shall maintain a system of supervision and control to insure compliance with the requirements of this rule that shall include at least the following:

(1) Inform its producers of the requirements of this rule and incorporate the requirements of this rule into all relevant producer training manuals prepared by the insurer;

(2) Provide to each producer a written statement of the company’s position with respect to the acceptability of replacements providing guidance to its producer as to the appropriateness of these transactions;

(3) A system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with paragraph (2) above;

(4) Procedures to confirm that the requirements of this rule have been met; and

(5) Procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this rule may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring.

(b) Each insurer shall have the capacity to monitor each producer’s life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the department. The capacity to monitor shall include the ability to produce records for each producer’s:

(1) Life replacements, including financed purchases, as a percentage of the producer’s total annual sales for life insurance;

(2) Number of lapses of policies by the producer as a percentage of the producer’s total annual sales for life insurance;

(3) Annuity contract replacements as a percentage of the producer’s total annual annuity contract sales;

(4) Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company’s monitoring system as required by (a)(5) above; and

(5) Replacements, indexed by replacing producer and existing insurer.

(c) Each insurer shall require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts.

(d) Each insurer shall require with each application for life insurance or an annuity that indicates an existing policy or contract a completed notice regarding replacements as contained in Appendix A.

(e) When the applicant has existing policies or contracts, each insurer shall be able to produce copies of any sales material required by Ins 302.04(e), the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the producer’s and applicant’s signed statements with respect to financing and replacement for at least 5 years after the termination or expiration of the proposed policy or contract.

(f) Each insurer shall ascertain that the sales material and illustrations required by Ins 302.04(e) of this rule meet the requirements of this rule and are complete and accurate for the proposed policy or contract.

(g) If an application does not meet the requirements of this rule, notify the producer and applicant and fulfill the outstanding requirements.

(h) Each insurer shall maintain records in paper, photograph, microprocess, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.06 Duties of Replacing Insurers that Use Producers.

(a) Where a replacement is involved in the transaction, the replacing insurer shall:

(1) Verify that the required forms are received and are in compliance with this rule;

(2) Notify any other existing insurer that may be affected by the proposed replacement within 5 business days of receipt of a completed application indicating replacement or when the replacement is identified, if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within 5 business days of a request from an existing insurer;

(3) Be able to produce copies of the notification regarding replacement required in Ins 302.04(b), indexed by producer, for at least 5 years or until the next regular examination by the insurance department of a company’s state of domicile, whichever is later; and

(4) Provide to the policy or contract owner notice of the right to return the policy or contract within 30 days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations imposed under such policy or contract; such notice may be included in Appendix A or C.

(b) In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control, allow credit for the period of time that has elapsed under the replaced policy’s or contract’s incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases, the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

(c) If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements made of an insurer pursuant to Ins 302.04(e), the insurer may:

(1) Require with each application a statement signed by the producer that:

a. Represents that the producer used only company-approved sales material; and

b. States that copies of all sales material were left with the applicant in accordance with Ins 302.04(d);

(2) Within 10 days of the issuance of the policy or contract:

a. Notify the applicant by sending a letter or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with Ins 302.04(d);

b. Provide the applicant with a toll free number to contact company personnel involved in the compliance function if such is not the case; and

c. Stress the importance of retaining copies of the sales material for future reference; and

(3) Be able to produce a copy of the letter or other verification in the policy file for at least 5 years after the termination or expiration of the policy or contract.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.07 Duties of the Existing Insurer.

(a) Where a replacement is involved in the transaction, the existing insurer shall:

(1) Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least 5 years or until the conclusion of the next regular examination conducted by the insurance department of its state of domicile, whichever is later;

(2) Send a letter to the policy or contract owner of the right to receive information regarding the existing policy or contract values including, if available, an in force illustration or policy summary if an in force illustration cannot be produced within 5 business days of receipt of a notice that an existing policy or contract is being replaced. The information shall be provided within 5 business days of receipt of the request from the policy or contract owner; and

(3) Upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice, advising the policy owner that the release of policy values may affect the guaranteed elements, non-guaranteed elements, face amount or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.08 Duties of Insurers with Respect to Direct Response Solicitations.

(a) In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B, or other substantially similar form approved by the commissioner.

(b) If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer shall:

(1) Provide to applicants or prospective applicants with the policy or contract a notice, as described in Appendix C, or other substantially similar form approved by the commissioner. In these instances the insurer may delete the references to the producer, including the producer’s signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the commissioner. The insurer’s obligation to obtain the applicant’s signature shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the notice referred to in this paragraph. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this section; and

(2) Comply with the requirements of Ins 302.06(a)(2), if the applicant furnishes the names of the existing insurers, and the requirements of Ins 302.06(a)(3), Ins 302.06(a)(4), and Ins 302.06(b).

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.09 Violations and Penalties.

(a) Any failure to comply with this rule shall be considered a violation of RSA 417:4. Examples of violations include:

(1) Any deceptive or misleading information set forth in sales material;

(2) Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;

(3) The intentional incorrect recording of an answer;

(4) Advising an applicant to respond negatively to any questions regarding replacement in order to prevent notice to the existing insurer; or

(5) Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company.

(b) Policy and contract owners have the right to replace existing life insurance policies or annuity contracts after indicating in or as a part of applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract owners of the same producer shall be deemed prima facie evidence of the producer’s knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer’s intent to violate this rule.

(c) Where it is determined that the requirements of this rule have not been met, the replacing insurer shall provide to the policy owner an in force illustration, if available, or policy summary for the replacement policy or available disclosure document for the replacement contract and the appropriate notice regarding replacements in Appendix A or C.

(d) Any violations of these rules shall be subject to the penalties imposed by RSA 402-J:12 and RSA 417:10 or subject to such suspension or revocation of certificate of authority or license, or administrative fine not to exceed $2,500 per violation, as may be applicable under Title XXXVII.

Source. #7537, eff 8-1-01; ss by #9571, eff 10-21-09; ss by #12375, eff 10-21-17

Ins 302.10 Waiver or Suspension of Rules.

(a) The commissioner, upon the commissioner’s own initiative or upon request by an insurer, shall waive any requirement of Ins 302 if such waiver does not contradict the objective or intent of the rule and:

(1) Applying the rule provision would cause confusion or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to the given circumstances;

(3) There are specific circumstances unique to the situation such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any.

Source. #12375, eff 10-21-17

APPENDIX A

IMPORTANT NOTICE:

REPLACEMENT OF LIFE INSURANCE OR ANNUITIES

This document must be signed by the applicant and the producer, if there is one,

and a copy left with the applicant.

You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements.

A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.

A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.

You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.

We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form.

1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? ___YES ___NO

2. Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract? ___YES ___NO

If you answered “yes” to either of the above questions, list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured or annuitant, and the policy or contract number if available) and whether each policy or contract will be replaced or used as a source of financing:

INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR

POLICY # ANNUITANT FINANCING (F)

Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision.

The existing policy or contract is being replaced because _____________________________________

I certify that the responses herein are, to the best of my knowledge, accurate:

_________________________________________ ______________________

Applicant’s Signature and Printed Name Date

_________________________________________ ______________________

Producer’s Signature and Printed Name Date

I do not want this notice read aloud to me.____ (Applicants must initial only if they do not want the notice read aloud.)

A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:

PREMIUMS: Are they affordable?

Could they change?

You’re older – are premiums higher for the proposed new policy?

How long will you have to pay premiums on the new policy? On the old policy?

POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.

Acquisition costs for the old policy may have been paid, you will incur costs for the new one.

What surrender charges do the policies have?

What expense and sales charges will you pay on the new policy?

Does the new policy provide more insurance coverage?

INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down.

You may need a medical exam for a new policy.

Claims on most new policies for up to the first two years can be denied based

on inaccurate statements.

Suicide limitations may begin anew on the new coverage.

IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY:

How are premiums for both policies being paid?

How will the premiums on your existing policy be affected?

Will a loan be deducted from death benefits?

What values from the old policy are being used to pay premiums?

IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT:

Will you pay surrender charges on your old contract?

What are the interest rate guarantees for the new contract?

Have you compared the contract charges or other policy expenses?

OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:

What are the tax consequences of buying the new policy?

Is this a tax free exchange? (See your tax advisor.)

Is there a benefit from favorable “grandfathered” treatment of the old policy under the federal tax code?

Will the existing insurer be willing to modify the old policy?

How does the quality and financial stability of the new company compare with your existing company?

APPENDIX B

NOTICE REGARDING REPLACEMENT

REPLACING YOUR LIFE INSURANCE POLICY OR ANNUITY?

Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one? If you are, your decision could be a good one – or a mistake. You will not know for sure unless you make a careful comparison of your existing benefits and the proposed policy or contract’s benefits.

Make sure you understand the facts. You should ask the company or agent that sold you your existing policy or contract to give you information about it.

Hear both sides before you decide. This way you can be sure you are making a decision that is in your best interest.

APPENDIX C

IMPORTANT NOTICE:

REPLACEMENT OF LIFE INSURANCE OR ANNUITIES

We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form.

1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? ___YES ___NO

2. Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract? ___YES ___NO

INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR

POLICY # ANNUITANT FINANCING (F)

I certify that the responses herein are, to the best of my knowledge, accurate:

_________________________________________ ______________________

Applicant’s Signature and Printed Name Date

PREMIUMS: Are they affordable?

Could they change?

You’re older – are premiums higher for the proposed new policy?

How long will you have to pay premiums on the new policy? On the old policy?

POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.

Acquisition costs for the old policy may have been paid, you will incur costs for the new one.

What surrender charges do the policies have?

What expense and sales charges will you pay on the new policy?

Does the new policy provide more insurance coverage?

INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down.

You may need a medical exam for a new policy.

Claims on most new policies for up to the first two years can be denied based on inaccurate statements.

Suicide limitations may begin anew on the new coverage.

IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY:

How are premiums for both policies being paid?

How will the premiums on your existing policy be affected?

Will a loan be deducted from death benefits?

What values from the old policy are being used to pay premiums?

IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT:

Will you pay surrender charges on your old contract?

What are the interest rate guarantees for the new contract?

Have you compared the contract charges or other policy expenses?

OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:

What are the tax consequences of buying the new policy?

Is this a tax free exchange? (See your tax advisor.)

Is there a benefit from favorable “grandfathered” treatment of the old policy under the federal tax code?

Will the existing insurer be willing to modify the old policy?

How does the quality and financial stability of the new company compare with your existing company?

PART Ins 303 DEPOSIT TERM LIFE INSURANCE

Ins 303.01 Purpose. The purpose of this part is to require insurance companies and agents to disclose certain information to purchasers of deposit term life insurance products prior to the consummation of the sale in order to guarantee that deposit term life insurance products are properly sold by the agent and fully explained to the buyer.

Source. #7450, eff 2-16-01

Ins 303.02 Scope.

(a) This part shall apply to all policies or plans of life insurance defined in Ins 303.03(a) as deposit term life insurance.

(b) This part does not prohibit the use of additional material which is not in violation of this part or any other statute or part.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01

Ins 303.03 Definitions.

(a) "Commissioner" means the insurance commissioner of the state of New Hampshire.

(b) "Deposit term life insurance" means those policies or plans which provide that an additional first year premium shall be paid in order that certain values and options will be available at the end of the initial term period or upon a specific policy anniversary and which additional first year premium is typically forfeited, in whole or in part, if the policy terminates for any reason in its early years other than for death of the insured deposit term life insurance includes term insurance, modified premium term insurance and modified premium whole life insurance.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01

Ins 303.04 Advertising and Solicitation Requirements.

(a) No insurer, agent, broker or any such person shall make any statement in any form in any sales presentation or advertisement for a deposit term life insurance policy which:

(1) Indicates or implies that the additional first year premium is or resembles a form of interest-bearing savings or investment;

(2) Indicates or implies that the pure endowment benefit of any such policy is or resembles a return of the additional first year premium together with an accumulation of interest;

(3) Describes the additional first year premium as a deposit; or

(4) Depicts a deposit term policy as a low cost policy or as a policy that will enable the purchaser to save money unless actual premiums or cost indexes are shown or presented in conjunction with that statement.

(b) Any written material presented in conjunction with a sales presentation or proposal coupling a deposit term life insurance policy with any form of side investment, including but not limited to deferred annuity contract, retirement deposit fund rider, and mutual funds, and which shows figures illustrating the premiums payable, the cash values and the death benefits shall show the figures for the deposit term life

insurance policy and the side investment in separate and distinct columns. Where the above figures are shown in separate and distinct columns, it shall be permissible to include columns combining these figures.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01

Ins 303.05 Disclosure Requirements.

(a) Prior to taking an application for a deposit term life insurance policy, the insurer, agent, broker or any other such person shall present to the applicant a completed Disclosure Statement for Policy with an Additional First Year Premium, the substance and format of which shall be substantially the same as that shown in Table 303-1. One copy of this statement, signed by the agent, shall be left with the applicant for the applicant’s records. Another copy of this statement shall be signed by the applicant as an acknowledgement of receipt and submitted with the application to the insurer.

(b) The Disclosure Statement for Policy with an Additional First Year Premium shown in Table 303-1 shall be used with the modified premium whole life type of deposit term policy on the market at the time this part became effective. It shall be appropriately altered to adapt it to other types of deposit term policies.

(1) Comply with the intent and spirit of this part; and

(2) Include a full disclosure of the following items:

a. With respect to the additional first year premium, its amount, forfeiture details, guaranteed values and ultimate disposition;

b. Face amount and premium information for at least the first 20 years;

c. Representative cash value information for the first 20 years; and

d. A complete description of each option existing under the policy at the maturity date of the pure endowment, typically, the end of the 10th policy year, to include a designation of the automatic option, if any.

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01

Ins 303.06 Penalty.

(a) Failure of an insurer or agent to comply with any of the requirements contained in Ins 303.04 or Ins 303.05 of this part shall be a violation of the part, subject to the penalties provided in RSA 400-A:15, subject to the requirements therein, in addition to any other penalties provided by the laws of this state.

(b) After appropriate notice and hearing, an administrative fine of $2,500 shall be levied for each finding of violation of RSA 400-A:15, III if the penalty of suspension or revocation as specified below is not appropriate.

(c) The insurer or agent may request at hearing a reduced fine or no fine imposed under (b) above through successful demonstration that:

(1) There is no or minimal damage or costs to consumers, the State or other insurance entities as a result of the violation; and

(2) The insurer or agent has not committed multiple or repeated violations.

(d) Insurers and agents shall be subject to suspension pursuant to RSA 400-A:15,III if one of the following occurs:

(1) The violation is continuing; or

(2) There is a high probability the violation will be repeated, based on findings of record; and

(3) Imposition of a penalty other than suspension, such as a fine, will not be a sufficient deterrent.

(e) Insurers and agents shall be subject to revocation pursuant to RSA 400-A:15, III if:

(1) The violative act or omission was intentional or committed in bad faith; or

(2) There was significant damage or cost to consumers, the State or other insurance entities as a result of the violation.

(f) Repeated or multiple violations of this part shall constitute separate violations subject to penalty.

Table 303-1 Disclosure Statement for Policy with an

Additional First Year Premium

You are invited to determine if your needs for a life insurance program can be adequately served by the (insert policy description) life policy being proposed. Note that this policy is designed to provide individuals with an incentive to maintain the policy in force for at least 10 full years. Conversely, it may be said that the policy design includes disincentives or penalties for individuals who lapse the policy prior to the 10 anniversary.

The premium payable in the first year is $ , and the premium payable in years two through ten is $ .

The difference between these amounts, $ , is the additional first year premium.

The cash values payable at the end of policy years one through ten under this policy are:

Policy Year Cash Value

1 $ _________________

2 $ _________________

3 $ _________________

4 $ _________________

5 $ _________________

6 $ _________________

7 $ _________________

8 $ _________________

9 $ _________________

10 $ _________________

If you choose to terminate this policy, only the cash value, less any policy loans, will be paid to you.

*Optional Benefits Included:

Premium Years Payable

Waiver of Premium $ _________ __________

Accidental Death Indemnity $ _________ __________

$ _________ __________

Policy options at the end of the 10th policy year are:

(a) Continue in 11th year as whole life policy

(b) Renew MPWL for second ten years

If the person insured or policyowner does not elect an option, the terms of the policy designate option no. ______ above as the automatic option.

The following is a brief outline of each option listed above:

Option 1. Continue as whole life insurance $ __________ face amount.

Premiums 11th year and thereafter $ __________

Cash values

10th year $ _________

15th year $ _________

20th year $ _________

Age 65 $ _________

Interest adjusted surrender cost ______%

10 years _____ 20 years _____

Disposition of pure endowment _____

Or tenth year cash value __________

Option 2. ** Renew MPWL for another 10 year $ __________

period for face amount.

* Premiums per year 11th through 20th year $ _________

** Additional first year premium 11th year $ _________

only

Ten year total premiums $ _________

Guaranteed cash value after 10 years $ _________

Interest adjusted surrender cost _________%

10 years ________ 20 years _________

Disposition of pure endowment or tenth

year cash value: $ _________

*Includes rider benefits

**Death benefit is increased by additional first year premium

Option 3. Convert to decreasing term to age $ _________

100 for face amount.

* Level premiums $ _________

Additional 11th year premium $ _________

Interest adjusted surrender cost %

10 years _________ 20 years _________

Disposition of pure endowment or tenth

year cash value: $ _________

You will have ten days from the day the (insert policy description) life policy is delivered to you to return it for cancellation. Should you elect to cancel, all premiums paid by you will be returned.

Insurance Company

(Insert Name)

Address:

Telephone No.

Agent's Signature

I acknowledge that I received a copy of this disclosure statement for policy with an additional first year premium on the date indicated below.

Applicant's Signature

Date

Source. #1900, eff 1-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01

PART Ins 304 FINANCING OF LIFE INSURANCE PREMIUMS

Statutory Authority RSA 400-A:15, I and RSA 415-B:12

Ins 304.01 Premium Financing Requirements.

(a) If a note is taken to finance less than the full first year premium, the balance shall be paid by the applicant at the time the application is taken.

(b) If a note is taken to finance all or part of the first year's premium, said note may be sold or otherwise negotiated or transferred by the payee with recourse only.

(c) One who becomes a payee of the note, whether that is the premium finance company, or any affiliate thereof, note purchaser, or any assignee of the note, shall notify the notemaker, the insured, and all co-makers of the note about the purchase or transfer of the note. In providing such notification, the life insurance policy, which is used as collateral for the note, shall be identified by policy number, named insured, and life insurance company.

(d) The giving of a promissory note in connection with the first premium shall be set out in the application over the applicant's signature, showing the amount of the note, the true annual rate of interest, and the amount of any downpayment made to the agent at the time of sale and, if applicable, the fact that the note becomes due and payable in full upon any default in premium payment.

(e) Any note may contain an acceleration clause to become operable not less than 31 days after default in the payment of any renewal premium. The obligation evidenced by a promissory note may be satisfied in advance of the maturity date without penalty. Where the applicant is an undergraduate college student, the maturity date of any promissory note payable in one lump sum at maturity, or the maturity date of any installment type note which provides for a balloon payment, shall not be less than 90 days after the anticipated graduation date from college of the applicant.

(f) Any downpayment shall be paid by the applicant, and any payment or reimbursement to or for the benefit of the applicant in connection with the sale, directly or indirectly, shall be presumed to be a rebate or an improper inducement.

(g) Any premium financing arrangement shall be fully set forth and described in the policy or policy rider, and a copy of any promissory note executed by the insured and any assignment thereof shall be attached to the policy.

(h) Upon delivery of the policy to the insured, a receipt or acceptance form shall be executed which recites that:

(1) The policy has been issued as represented; and

(2) The insured acknowledges and understands the obligation of the premium financing arrangement and the financial indebtedness that they have incurred.

(i) The premium finance company shall request the insured to sign and return the policy receipt or acceptance form to the company within 14 days of receipt by the insured. Such receipt or acceptance form outlined in Ins 304.01(h) shall be identified by number with the corresponding life insurance policy number and kept with other policy records of the insured in the company’s principal place of business.

(j) The blank receipts or acceptance forms referred to in Ins 304.01(h) shall not be made available to field representatives, agents, or producers but shall be furnished by the company only in transmittal of the policy to the writing agent.

(k) Until the executed policy receipt or acceptance form has been received and filed with the company, no promissory note executed by the insured shall be sold or otherwise transferred or assigned, and no commission on such sale shall be paid to any agent or producer.

(l) The maximum amount of any such premium financing arrangement which may be entered into in connection with the purchase of the policy shall be in accordance with reasonable and sound underwriting practices as determined by the company.

(m) Producers and companies shall comply with Ins 302 as to any partial or total replacement of an existing life policy that is associated with a premium finance arrangement.

(n) Producers of the company who are licensed by this state to represent the company as licensed life producers shall not represent, refer to, or hold themselves out to the public under any special title or as representatives of any special policy or company division unless otherwise identified as a licensed producer of the company for which they hold a license.

(o) In the case of a request being made by an insured expressing a desire to cancel such a policy and premium financing arrangement, the company, its agents, and its producers shall cooperate with the insured to work towards a satisfactory resolution of the matter. If such matter cannot be resolved in a timely manner, the premium finance company shall provide a notice to the insured that the insured may contact the consumer services division of the New Hampshire insurance department for assistance. Consumer services may be reached by phone at (800) 852-3416 or by email at consumerservices@ins.nh.gov.

(p) If, at the time the receipt or acceptance form is presented with the policy to the applicant for signature, the applicant decides not to proceed with the premium finance arrangement, the policy shall be returned to the company with the applicant’s signed request for release. The policy and note shall then be cancelled and the applicant released from any liability relative to the application and a refund made of any downpayment.

(q) If it is determined that the company or producer has violated this part, or if it is determined that there has been a material misrepresentation of the contract, then the policy shall be returned to the company with a signed request for release. The policy and note shall then be cancelled and the applicant released from any liability and refund made of any downpayment.

(r) Any cash value of the life insurance policy shown at the time of presentation of the premium finance arrangement shall be based upon the face amount of the policy being offered. For example, if a $10,000 policy is being sold, the value for this $10,000 policy, and not the values for a $50,000 or $75,000 policy, shall be given. If a sales presentation was made for an amount of insurance greater than what the applicant decided to purchase, an appropriate summary shall be given to the applicant for the correct cash value of the policy sold not later than the time that the applicant signs the application for the note.

(s) Companies shall notify their agents and producers of the requirements set forth in this part.

Source. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12399, eff 9-30-17

Ins 304.02 Exemption. Premium financing plans requiring the delivery of the prospectus filed with the Securities and Exchange Commission under the Securities Act of 1933 shall be exempt from the provisions and requirements of this part.

Source. #1942, eff 2-1-82; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12399, eff 9-30-17

Ins 304.03 Waiver or Suspension of Rules.

(a) The commissioner, upon the commissioner’s own initiative or upon request by an insurer, shall waive any requirement of this part if such waiver does not contradict the objective or intent of the rule and:

(1) Applying the rule provision would cause confusion or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to the given circumstances;

(3) There are specific circumstances unique to the situation such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any.

Source. #12399, eff 9-30-17

PART Ins 305 SUITABILITY IN ANNUITY TRANSACTIONS

Statutory Authority: RSA 400-A:15, I.

Ins 305.01 Purpose.

(a) The purpose of Ins 305 is to require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in a transaction involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.

(b) Nothing herein shall be construed to create or imply a private cause of action for violation of this rule except as provided in RSA 417:19.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.02 Applicability and Scope. Ins 305 shall apply to any recommendation to purchase, exchange or replace an annuity made to a consumer by an insurance producer, or an insurer where no producer is involved, that results in the purchase, exchange or replacement recommended.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.03 Exemptions. Unless otherwise specifically included, Ins 305 shall not apply to recommendations involving:

(a) Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to this rule;

(b) Contracts used to fund:

(1) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(2) A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer;

(3) A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC;

(4) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(5) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(6) Formal prepaid funeral contracts.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.04 Definitions.

(a) "Annuity" means a fixed annuity, including but not limited to an indexed annuity, or variable annuity that is individually solicited, whether the product is classified as an individual or group annuity.

(b) “Continuing education credit” or “CE credit” means one continuing education credit as defined in Ins 1303.03.

(c) “Continuing education provider” or “CE provider” means an individual or entity that is approved to offer continuing education courses pursuant to Ins 1303.05.

(d) “FINRA” means the Financial Industry Regulatory Authority or a succeeding agency.

(e) "Insurer" means a company required to be licensed under the laws of this state to provide insurance products, including annuities.

(f) “Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance, including annuities.

(g) "Recommendation" means advice provided by an insurance producer, or an insurer where no producer is involved, to an individual consumer that results in a purchase, exchange or replacement of an annuity in accordance with that advice.

(h) “Replacement” means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be:

(1) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(2) Converted to reduce paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(3) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(4) Reissued with any reduction in cash value; or

(5) Used in a financed purchase.

(i) “Suitability information” means information that is reasonably appropriate to determine the suitability of a recommendation, including the following:

(1) Age;

(2) Annual income;

(3) Financial situation and needs, including the financial resources used for the funding of the annuity;

(4) Financial experience;

(5) Financial objectives;

(6) Intended use of the annuity;

(7) Financial time horizon;

(8) Existing assets, including investment and life insurance holdings;

(9) Liquidity needs;

(10) Liquid net worth;

(11) Risk tolerance; and

(12) Tax status.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.05 Duties of Insurers and of Insurance Producers.

(a) In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer, or the insurer where no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to his or her investments and other insurance products and as to his or her financial situation and needs, including the consumer’s suitability information, and that there is a reasonable basis to believe all of the following:

(1) The consumer has been reasonably informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest returns, insurance and investment components and market risk;

(2) The consumer would benefit from certain features of the annuity, such as tax-deferred growth, annuitization or death or living benefit;

(3) The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable, and in the case of an exchange or replacement, the transaction as a whole is suitable, for the particular consumer based on his or her suitability information; and

(4) In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable including taking into consideration whether:

a. The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living or other contractual benefits, or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements;

b. The consumer would benefit from product enhancements and improvements; and

c. The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 36 months.

(b) Prior to the execution of a purchase, exchange or replacement of an annuity resulting from a recommendation, an insurance producer, or an insurer where no producer is involved, shall make reasonable efforts to obtain the consumer’s suitability information.

(c) Except as permitted under paragraph (d), an insurer shall not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity is suitable based on the consumer’s suitability information.

(d) (1) Except as provided under subparagraph (d)(2) of this subsection, neither an insurance producer, nor an insurer, shall have any obligation to a consumer under subsection (a) or (c) related to an annuity transaction if:

a. No recommendation is made;

b. A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer;

c. A consumer refuses to provide relevant suitability information and the annuity transaction is not recommended; or

d. A consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurer or the insurance producer.

(2) An insurer’s issuance of an annuity subject to paragraph (1) shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.

(e) An insurance producer or, where no insurance producer is involved, the responsible insurer representative, shall at the time of sale:

(1) Make a record of any recommendation subject to Ins 305.05 (a) of this rule.

(2) Obtain a customer signed statement documenting a customer’s refusal to provide suitability information, if any; and

(3) Obtain a customer signed statement acknowledging that an annuity transaction is not recommended if a customer decides to enter into an annuity transaction that is not based on the insurance producer’s or insurer’s recommendation.

(f) (1) An insurer shall establish a supervision system that is reasonably designed to achieve the insurer’s and its insurance producers’ compliance with this rule, including, but not limited to, the following:

a. The insurer shall maintain reasonable procedures to inform its insurance producers of the requirements of this rule and shall incorporate the requirements of this rule into relevant insurance producer training manuals;

b. The insurer shall establish standards for insurance producer product training and shall maintain reasonable procedures to require its insurance producers to comply with the requirements of Ins 305.06 of this rule;

c. The insurer shall provide product-specific training and training materials which explain all material features of its annuity products to its insurance producers;

d. The insurer shall maintain procedures for review of each recommendation prior to issuance of an annuity that are designed to ensure that there is a reasonable basis to determine that a recommendation is suitable. Such review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means including, but not limited to, physical review. Such an electronic system or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria;

e. The insurer shall maintain reasonable procedures to detect recommendations that are not suitable. This may include, but is not limited to, confirmation of consumer suitability information, systematic customer surveys, interviews, confirmation letters and programs of internal monitoring. Nothing in this clause prevents an insurer from complying with this clause by applying sampling procedures, or by confirming suitability information after issuance or delivery of the annuity; and

f. The insurer shall annually provide a report to senior management, including to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.

(2) a. Nothing in this paragraph restricts an insurer from contracting for performance of a function, including maintenance of procedures, required under subparagraph (f)(1). An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to Ins 305.07 of this rule regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with subparagraph b. of this paragraph.

b. An insurer’s supervision system under subparagraph (f)(1) shall include supervision of contractual performance under this subsection. This includes, but is not limited to, the following:

1. Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and

2. Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.

(3) An insurer is not required to include in its system of supervision an insurance producer’s recommendations to consumers of products other than the annuities offered by the insurer.

(g) An insurance producer shall not dissuade, or attempt to dissuade, a consumer from:

(1) Truthfully responding to an insurer’s request for confirmation of suitability information;

(2) Filing a complaint; or

(3) Cooperating with the investigation of a complaint.

(h) (1) Sales made in compliance with FINRA requirements pertaining to suitability and supervision of annuity transactions shall satisfy the requirements under this rule. This paragraph applies to FINRA broker-dealer sales of variable annuities and fixed annuities if the suitability and supervision is similar to those applied to variable annuity sales. However, nothing in this paragraph shall limit the insurance commissioner's ability to investigate and enforce the provisions of this rule.

(2) For subparagraph (h)(1) to apply, an insurer shall:

a. Monitor the FINRA member broker-dealer using information collected in the normal course of an insurer’s business; and

b. Provide to the FINRA member broker-dealer information and reports that are reasonably appropriate to assist the FINRA member broker-dealer to maintain its supervision system.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.06 Insurance Producer Training.

(a) An insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity and the insurance producer is in compliance with the insurer’s standards for product training. An insurance producer may rely on insurer-provided product-specific training standards and materials to comply with this paragraph.

(b) (1) a. An insurance producer who engages in the sale of annuity products shall complete a one-time 4 credit training course approved by the insurance department and provided by an insurance department approved education provider.

b. Insurance producers who hold a life insurance line of authority on the effective date of this rule and who desire to sell annuities shall complete the requirements of this subsection within 6 months after the effective date of this rule. Individuals who obtain a life insurance line of authority on or after the effective date of this rule may not engage in the sale of annuities until the annuity training course required under this subsection has been completed.

(2) The minimum length of the training required under this subsection shall be sufficient to qualify for at least 4 CE credits, but may be longer.

(3) The training required under this paragraph shall include information on the following topics:

a. The types of annuities and various classifications of annuities;

b. Identification of the parties to an annuity;

c. How fixed, variable and indexed annuity contract provisions affect consumers;

d. The application of income taxation of qualified and non-qualified annuities;

e. The primary uses of annuities; and

f. Appropriate sales practices, replacement and disclosure requirements.

(4) Providers of courses intended to comply with this subsection shall cover all topics listed in the prescribed outline and shall not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline.

(5) A provider of an annuity training course intended to comply with this subsection shall register as a CE provider in this state and comply with the rules and guidelines applicable to insurance producer continuing education courses as set forth in Part Ins 1303.

(6) Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with Part Ins 1303.

(7) Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with Part Ins 1303.

(8) The satisfaction of the training requirements of another state that are substantially similar to the provisions of this subsection shall been deemed to satisfy the training requirements of this subsection in this state.

(9) An insurer shall verify that an insurance producer has completed the annuity training course required under this subsection before allowing the producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this paragraph by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.07 Compliance Mitigation; Penalties.

(a) An insurer is responsible for compliance with Ins 305. If a violation occurs, either because of the action or inaction of the insurer or its insurance producer, the commissioner may order:

(1) An insurer to take reasonably appropriate corrective action for any consumer harmed by the insurer's, or by its insurance producer's, violation of Ins 305;

(2) A general agency, independent agency or the insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer's violation of Ins 305; and

(3) Appropriate penalties and sanctions.

(b) Any applicable penalty under RSA 400-A:15 or RSA 417 for a violation of Ins 305 may be reduced or eliminated, according to a schedule adopted by the commissioner, if corrective action for the consumer was taken promptly after a violation was discovered or the violation was not part of a pattern or practice.

Source. #9374, eff 1-30-09; ss by #10654, eff 1-1-15

Ins 305.08 Recordkeeping.

(a) Insurers, general agents, independent agencies and insurance producers shall maintain or be able to make available to the commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for 5 years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer.

(b) Records required to be maintained by this rule may be maintained in paper, photographic, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

Source. #10654, eff 1-1-15 (from Ins 305.07)

PART Ins 306 ANNUITY DISCLOSURE

Statutory Authority RSA 400-A:15, I; RSA 408:52, II

Ins 306.01 Purpose. The purpose of this part is to provide standards for the disclosure of certain minimum information about annuity contracts to protect consumers and foster consumer education. The rule specifies the minimum information which must be disclosed, the method for disclosing it, and the use and content of illustrations, if used, in connection with the sale of annuity contracts. The goal of this rule is to ensure that purchasers of annuity contracts understand certain basic features of annuity contracts.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.02 Applicability and Scope. This part applies to all group and individual annuity contracts and certificates, including annuity riders to any life insurance policy, regardless of the issuer. This part does not apply to the following:

(a) Immediate and deferred annuities that do not contain any non-guaranteed elements.

(b) (1) Annuities used to fund:

a. An employee pension plan which is covered by the Employee Retirement Income Security Act (ERISA);

b. A plan described by Sections 401(a), 40l(k) or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer;

c. A governmental or church plan defined in Section 414 or a deferred compensation plan of a state or local government or a tax exempt organization under Section 457 of the Internal Revenue Code; or

d. A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor; and

(2) Notwithstanding paragraph (b)(1), this part shall apply to annuities used to fund a plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurance company has been notified that plan participants may choose from among 2 or more fixed annuity providers, and there is a direct solicitation of an individual employee by a producer for the purchase of an annuity contract. As used in this section, direct solicitation shall not include any meeting held by a producer solely for the purpose of educating or enrolling employees in the plan or arrangement.

(c) Non-registered variable annuities issued exclusively to an accredited investor or qualified purchaser, as those terms are defined by the Securities Act of 1933 (15 U.S.C. Section 77a et seq.), the Investment Company Act of 1940 (15 U.S.C. Section 80a·l et seq.), or the rules promulgated under either of those acts, and offered for sale and sold in a transaction that is exempt from registration under the Securities Act of 1933 (15 U.S.C. Section 77a et seq.).

(d) (1) Transactions involving variable annuities and other registered products in compliance with Securities and Exchange Commission (SEC) rules and Financial Industry Regulatory Authority (FINRA) rules relating to disclosures and illustrations, provided that compliance with Ins 306.04 shall be required after the 2018 effective date of this part, unless or until such time as the SEC has adopted a summary prospectus rule or FINRA has approved for use a simplified disclosure form applicable to variable annuities or other registered products; and

(2) Notwithstanding paragraph (d)(1), the delivery of the Buyer’s Guide is required in sales of variable annuities and, when appropriate, in sales of other registered products.

(e) Structured settlement annuities.

(f) Charitable gift annuities.

(g) Funding agreements.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.03 Definitions. For the purposes of this part:

(a) "Buyer's Guide" means the National Association of Insurance Commissioner's approved Annuity Buyer's Guide, available as referenced in Appendix B.

(b) "Charitable gift annuity" means a transfer of cash or other property by a donor to a charitable organization in return for an annuity payable over one or 2 lives, under which the actuarial value of the annuity is less than the value of the cash or other property transferred and the difference in value constitutes a charitable deduction for federal tax purposes, as defined in RSA 403-E:1, but does not include a charitable remainder trust or a charitable lead trust or other similar arrangement where the charitable organization does not issue an annuity and incur a financial obligation to guarantee annuity payments.

(c) "Contract owner" means the owner named in the annuity contract or certificate holder in the case of a group annuity contract.

(d) "Determinable elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges, or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable elements only or from both determinable and guaranteed elements.

(e) "Funding agreement" means “funding agreement” as defined in RSA 408-E:2.

(f) "Generic name" means a short title descriptive of the annuity contract being applied for or illustrated such as "single premium deferred annuity".

(g) "Guaranteed elements'' means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges, or elements of formulas used to determine any of these, that are guaranteed or have determinable elements at issue. An element is considered guaranteed if all of the underlying elements that go into its calculation are guaranteed.

(h) "Illustration" means a personalized presentation or depiction prepared for and provided to an individual consumer that includes non-guaranteed elements of an annuity contract over a period of years.

(i) "Market Value Adjustment" or "MVA" feature is a positive or negative adjustment that may be applied to the account value and/or cash value of the annuity upon withdrawal, surrender, contract annuitization, or death benefit payment based on either the movement of an external index or on the company's current guaranteed interest rate being offered on new premiums or new rates for renewal periods, if that withdrawal, surrender, contract annuitization, or death benefit payment occurs at a time other than on a specified guaranteed benefit date.

(j) "Non-guaranteed elements" means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges, or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.

(k) "Registered product" means an annuity contract or life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933.

(l) ''Structured settlement annuity" means a "qualified funding asset" as defined in section 130(d) of the Internal Revenue Code or an annuity that would be a qualified funding asset under section 130(d) but for the fact that it is not owned by an assignee under a qualified assignment.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.04 Standards for the Disclosure Document and Buyer's Guide.

(a) (1) Where the application for an annuity contract is taken in a face-to-face meeting, the applicant shall, at or before the time of application, be given both the disclosure document described in Ins 306.04(b) and the Buyer's Guide, if any; or

(2) Where the application for an annuity contract is taken by means other than in a face-to-face meeting, the applicant shall be sent both the disclosure document and the Buyer's Guide no later than 5 business days after the completed application is received by the insurer; and:

a. With respect to an application received as a result of a direct solicitation through the mail:

1. Providing a Buyer's Guide in a mailing, inviting prospective applicants to apply for an annuity contract, shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than 5 business days after receipt of the application; and

2. Providing a disclosure document in a mailing, inviting a prospective applicant to apply for an annuity contract, shall be deemed to satisfy the requirement that the disclosure document be provided no later than 5 business days after receipt of the application;

b. With respect to an application received via the Internet:

1. Taking reasonable steps to make the Buyer's Guide available for viewing and printing on the insurer's website shall be deemed to satisfy the requirement that the Buyer's Guide be provided no later than 5 business days after receipt of the application; and

2. Taking reasonable steps to make the disclosure document available for viewing and printing on the insurer's website shall be deemed to satisfy the requirement that the disclosure document be provided no later than 5 business days after receipt of the application;

c. A solicitation for an annuity contract provided in other than a face-to-face meeting shall include a statement that the proposed applicant may contact the New Hampshire insurance department for a free annuity Buyer's Guide, available at https://www.nh.gov/insurance/consumers/annuitieslife.htm. In lieu of the foregoing statement, an insurer may include a statement that the prospective applicant may contact the insurer for a free annuity Buyer's Guide; and

d. Where the Buyer's Guide and disclosure document are not provided at or before the time of application, a free look period of no less than 15 days shall be provided for the applicant to return the annuity contract without penalty. This free look shall run concurrently with any other free look as provided under state law or rule.

(b) Aside from the foregoing, an insurer, including direct response insurers, shall provide a disclosure document to any prospective purchaser upon request.

(c) At a minimum, the following information shall be included in the disclosure document required to be provided under this regulation:

(1) The generic name of the contract, the company product name, if different, and form number, and the fact that it is an annuity;

(2) The insurer's legal name, physical address, website address, and telephone number;

(3) A description of the contract and its benefits, emphasizing its long-term nature, including

examples where appropriate, for:

a. The guaranteed and non-guaranteed elements of the contract, and their limitations, if any, including for fixed indexed annuities, the elements used to determine the index-based interest, such as the participation rates, caps, or spread, and an explanation of how they operate;

b. An explanation of the initial crediting rate or, for fixed indexed annuities, an explanation of how the index-based interest is determined, specifying any bonus or introduction portion, the duration of the rate, and the fact that rates may change from time to time and are not guaranteed;

c. Periodic income options, both on a guaranteed and non-guaranteed basis;

d. Any value reductions caused by withdrawals from or surrender of the contract;

e. How values in the contract can be accessed;

f. The death benefit, if available, and how it will be calculated;

g. A summary of the federal tax status of the contract and any penalties applicable on

withdrawal of values from the contract; and

h. Impact of any rider, including, but not limited to, a guaranteed living benefit or long-

term care rider;

(4) Specific dollar amount or percentage charges and fees shall be listed with an explanation of how they apply; and

(5) Information about the current guaranteed rate or indexed crediting rate formula, if applicable, for new contracts that contains a clear notice that the rate is subject to change.

(d) Insurers shall define terms used in the disclosure statement in language that facilitates the understanding by a typical person within the segment of the public to which the disclosure statement is directed.

(e) The name, age, and sex of the proposed annuitant and the date on which the disclosure document was prepared.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.05 Standards for Annuity Illustrations. Please see Appendix I for an example.

(a) An insurer or producer may elect to provide a consumer an illustration at any time, provided that the illustration is in compliance with this section and:

(1) Clearly labeled as an illustration;

(2) Includes a statement referring consumers to the disclosure document and Buyer's Guide provided to them at time of purchase for additional information about their annuity; and

(3) Is prepared by the insurer or third party using software that is authorized by the insurer prior to its use, provided that the insurer maintains a system of control over the use of

illustrations.

(b) An illustration furnished to an applicant for a group annuity contract or contracts issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

(d) When using an illustration, the illustration shall not:

(1) Describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(2) State or imply that the payment or amount of non-guaranteed elements is guaranteed; or

(3) Be incomplete.

(e) Costs and fees of any type shall be individually noted and explained.

(f) An illustration shall conform to the following requirements:

(1) The illustration shall be labeled with the date on which it was prepared;

(2) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the disclosure document (e.g., the fourth page of a seven-page disclosure document shall be labeled ''page 4 of 7 pages");

(3) The assumed dates of premium receipt and benefit payout within a contract year shall be clearly identified;

(4) If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the contract is assumed to have been in force;

(5) The assumed premium on which the illustrated benefits and values are based shall be clearly identified, including rider premium for any benefits being illustrated;

(6) Any charges for riders or other contract features assessed against the account value or the crediting rate shall be recognized in the illustrated values and shall be accompanied by a statement indicating the nature of the rider benefits or the contract features, and whether or not they are included in the illustration;

(7) Guaranteed death benefits and values available upon surrender, if any, for the illustrated contract premium shall be shown and clearly labeled “guaranteed”;

(8) The non-guaranteed elements underlying the non-guaranteed illustrated values shall be no more favorable than current non-guaranteed elements and shall not include any assumed future improvement of such elements. Additionally, non-guaranteed elements used in calculating non-guaranteed illustrated values at any future duration shall reflect any planned changes, including any planned changes that may occur after expiration of an initial guaranteed or bonus period;

(9) In determining the non-guaranteed illustrated values for a fixed indexed annuity:

a. The index-based interest rate and account value shall be calculated for three different scenarios:

1. One to reflect historical performance of the index for the most recent 10 calendar years;

2. One to reflect the historical performance of the index for the continuous period of 10 calendar years out of the last 20 calendar years that would result in the least index value growth (the ''low scenario"); and

3. One to reflect the historical performance of the index for the continuous period of 10 calendar years out of the last 20 calendar years that would result in the most index value growth (the "high scenario"); and

b. The following requirements apply:

1. The most recent 10 calendar years and the last 20 calendar years are defined to end on the prior December 31, except for illustrations prepared during the first 3 months of the year, for which the end date of the calendar year period may be the December 31 prior to the last full calendar year;

2. If any index utilized in determination of an account value has not been in existence for at least 10 calendar years, indexed returns for that index shall not be illustrated. If the fixed indexed annuity provides an option to allocate account value to more than one indexed or fixed declared rate account, and one or more of those indexes has not been in existence for at least 10 calendar years, the allocation to such indexed account(s) shall be assumed to be zero;

3. If any index utilized in determination of an account value has been in existence for at least 10 calendar years but less than 20 calendar years, the 10 calendar year periods that define the low and high scenarios shall be chosen from the exact number of years the index has been in existence;

4. The non-guaranteed element(s), such as caps, spreads, participation rates or other interest crediting adjustments, used in calculating the non-guaranteed index-based interest rate shall be no more favorable than the corresponding current element(s);

5. If a fixed indexed annuity provides an option to allocate the account value to more than one indexed or fixed declared rate account:

(i) The allocation used in the illustration shall be the same for all three scenarios; and

(ii) The 10 calendar year periods resulting in the least and greatest index growth periods shall be determined independently for each indexed account option;

6. The geometric mean annual effective rate of the account value growth over the 10 calendar year period shall be shown for each scenario;

7. If the most recent 10 calendar year historical period experience of the index is shorter than the number of years needed to fulfill the requirement of Ins 306.05(h), the most recent 10 calendar year historical period experience of the index shall be used for each subsequent 10 calendar year period beyond the initial period for the purpose of calculating the account value for the remaining years of the illustration;

8. A graphical presentation shall also be included comparing the movement of the account value over the 10 calendar year period for the low scenario, the high scenario, and the most recent 10 calendar year scenario. The low and high scenarios:

(i) Need not show surrender values, if different than account values;

(ii) Shall not extend beyond 10 calendar years, and therefore are not subject to the requirements of Ins 306.05(h) beyond Ins 306.05(h)(1)a.; and

(iii) May be shown on a separate page; and

9. The low and high scenarios should reflect the irregular nature of the index performance and should trigger every type of adjustment to the index-based interest rate under the contract. The effect of the adjustments should be clear; for example, additional columns showing how the adjustment applied may be included. If an adjustment to the index-based interest rate is not triggered in the illustration, because no historical values of the index in the required illustration range would have triggered it, the illustration shall so state;

(10) The guaranteed elements, if any, shall be shown before corresponding nonguaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements, e.g., "see page 1 for guaranteed elements";

(11) The account or accumulation value of a contract, if shown, shall be identified by the name this value is given in the contract being illustrated and shown in close proximity to the corresponding value available upon surrender;

(12) The value available upon surrender shall be identified by the name this value is given in the contract being illustrated and shall be the amount available to the contract owner in a lump sum after deduction of surrender charges, bonus forfeitures, contract loans, contract loan interest, and application of any market value adjustment, as applicable;

(13) Illustrations may show contract benefits and values in graphic or chart form in addition to the tabular form;

(14) Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:

a. The benefits and values are not guaranteed;

b. The assumptions on which they are based are subject to change by the insurer; and

c. Actual results may be higher or lower;

(15) Illustrations based on non-guaranteed credited interest and non-guaranteed annuity income rates shall contain equally prominent comparisons to guaranteed credited interest and guaranteed annuity income rates, including any guaranteed and non-guaranteed participation rates, caps, or spreads for fixed indexed annuities;

(16) The annuity income rate illustrated shall not be greater than the current annuity income rate unless the contract guarantees are, in fact, more favorable;

(17) Illustrations shall be concise and easy to read;

(18) Key terms shall be defined and then used consistently throughout the illustration;

(19) Illustrations shall not depict values beyond the maximum annuitization age or date;

(20) Annuitization benefits shall be based on contract values that reflect surrender charges or any other adjustments, if applicable; and

(21) Illustrations shall show both annuity income rates per $1000.00 and the dollar amounts of the periodic income payable.

(g) An annuity illustration shall include a narrative summary that includes the following, unless provided at the same time in a disclosure document:

(1) A brief description of any contract features, riders, or options, guaranteed and/or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the contract;

(2) A brief description of any other optional benefits or features that are selected, but not shown in the illustration, and the impact they have on the benefits and values of the contract;

(3) Identification and a brief definition of column headings and key terms used in the illustration;

(4) A statement containing, in substance, the following:

a. For other than fixed indexed annuities:

“This illustration assumes the annuity's current non-guaranteed elements will not change. It is likely that they will change and actual values will be higher or lower than those in this illustration but will not be less than the minimum guarantees.

“The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. Please review the entire Disclosure Document and Buyer's Guide provided with your Annuity Contract for more detailed information”; or

b. For fixed indexed annuities:

This illustration assumes the index will repeat historical performance and that the annuity's current non-guaranteed elements, such as caps, spreads, participation rates, or other interest crediting adjustments, will not change. It is likely that the index will not repeat historical performance, the non-guaranteed elements will change, and actual values will be higher or lower than those in this illustration but will not be less than the minimum guarantees.

(5) Additional explanations as follows:

a. Minimum guarantees shall be clearly explained;

b. The effect on contract values of contract surrender prior to maturity shall be explained;

c. Any conditions on the payment of bonuses shall be explained;

d. For annuities sold as an IRA, qualified plan, or in another arrangement subject to the required minimum distribution (RMD) requirements of the Internal Revenue Code, the effect of RMDs on the contract values shall be explained;

e. For annuities with recurring surrender charge schedules, a clear and concise

explanation of what circumstances will cause the surrender charge to recur; and

f. A brief description of the types of annuity income options available shall be explained,

including:

1. The earliest or only maturity date for annuitization, as the term is defined in the

contract;

2. For contracts with an optional maturity date, the periodic income amount for at least one of the annuity income options available, based on the guaranteed rates in the contract, at the later of age 70 or 10 years after issue, but in no case later than the maximum annuitization age or date in the contract;

3. For contracts with a fixed maturity date, the periodic income amount for at least one of the annuity income options available, based on the guaranteed rates in the contract at the fixed maturity date; and

4. The periodic income amount based on the currently available periodic income rates for the annuity income option in item 2. or item 3., above, if desired.

(h) Following the narrative summary, an illustration shall include a numeric summary which shall include at minimum, numeric values at the following durations:

(1) First 10 contract years or surrender charge period, if longer than 10 years, including any renewal surrender charge period(s);

(2) Every tenth contract year, up to the later of 30 years or age 70;

(3) Required annuitization age or required annuitization date.

(i) If the annuity contains a market value adjustment, hereafter referred to as MVA, the following provisions apply to the illustration:

(1) The MVA shall be referred to as such throughout the illustration;

(2) The narrative shall include an explanation, in simple terms, of the potential effect of the

MVA on the value available upon surrender;

(3) The narrative shall include an explanation, in simple terms, of the potential effect of the

MVA on the death benefit;

(4) A statement shall be included, containing, in substance, the following:

“When you make a withdrawal, the amount you receive may be increased or decreased by a Market Value Adjustment (MVA). If interest rates on which the MVA is based go up after you buy your annuity, the MVA likely will decrease the amount you receive. If interest rates go down, the MVA will likely increase the amount you receive”;

(5) Illustrations shall describe both the upside and the downside aspects of the contract features relating to the market value adjustment;

(6) The illustrative effect of the MVA shall be shown under at least one positive and one negative scenario. This demonstration shall appear on a separate page and be clearly labeled that it is information demonstrating the potential impact of a MVA, as the example in Appendix II shows;

(7) Actual MVA floors and ceilings as listed in the contract shall be illustrated; and

(8) If the MVA has significant characteristics not addressed by subparagraphs (1) – (6) above, the effect of such characteristics shall be shown in the illustration.

(j) Unless provided at the same time in a disclosure document, a narrative summary for a fixed indexed annuity illustration shall also include the following:

(1) An explanation, in simple terms, of the elements used to determine the index-based interest, including but not limited to the following elements:

a. The Index(es) which will be used to determine the index-based interest;

b. The Indexing Method, such as point-to-point, daily averaging, or monthly averaging;

c. The Index Term, which is the period over which indexed-based interest is calculated;

d. The Participation Rate, if applicable;

e. The Cap, if applicable; and

f. The Spread, if applicable;

(2) The narrative shall include an explanation, in simple terms, of how index-based interest is

credited in the indexed annuity;

(3) The narrative shall include a brief description of the frequency with which the company can re-set the elements used to determine the index-based credits, including the participation rate, the cap, and the spread, if applicable; and

(4) If the product allows the contract holder to make allocations to declared-rate segment, then the narrative shall include a brief description of:

a. Any options to make allocations to a declared-rate segment, both for new premiums and for transfers from the indexed-based segments; and

b. Differences in guarantees applicable to the declared-rate segment and the indexed-based segments.

(k) A numeric summary for a fixed indexed annuity illustration shall include, at a minimum, the following elements:

(1) The assumed growth rate of the index in accordance with Ins 306.05(f)(9);

(2) The assumed values for the participation rate, cap and spread, if applicable; and

(3) The assumed allocation between indexed-based segments and declared-rate segments, if applicable, in accordance with Ins 306.05(f)(9).

(l) If the contract is issued other than as applied for, a revised illustration conforming to the contract as issued shall be sent with the contract, except that non-substantive changes, including but not limited to changes in the amount of expected initial or additional premiums, any changes in amounts of exchanges pursuant to Section 1035 of the Internal Revenue Code, and rollovers or transfers which do not alter the key benefits and features of the annuity as applied for, will not require a revised illustration unless requested by the applicant.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.06 Report to Contract Owners. For annuities in the payout period that include non-guaranteed elements, and for deferred annuities in the accumulation period, the insurer shall provide each contract owner with a report on the status of the contract, at least annually, that contains at least the following information:

(a) The beginning and the end date of the current report period;

(b) The accumulation and cash surrender value;

(c) The total amounts, if any, that have been credited, charged to the contract value, or paid during the current report period; and

(d) The amount of outstanding loans, if any, as of the end of the current report period.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.07 Penalties. In addition to any other penalties provided by RSA 400-A15, III, an insurer or producer that violates a requirement of Ins 306 shall also be subject to the provisions of RSA 417:3

and 4.

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

New. #12521, eff 4-28-18

Ins 306.08 Waiver or Suspension of Rules.

(a) The commissioner, upon the commissioner’s own initiative or upon request by an insurer, shall waive any requirement of Ins 306 if such waiver does not contradict the objective or intent of the rule and:

(1) Applying the rule provision would cause confusion or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to the given circumstances;

(3) There are specific circumstances unique to the situation such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any

Source. #2143, eff 1-1-83; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01, EXPIRED: 2-16-09

Source. #12521, eff 4-28-18

PART Ins 307 MORTALITY TABLES FOR USE IN DETERMINING RESERVE LIABILITIES FOR ANNUITIES

Statutory Authority: RSA 400-A:15, I; RSA 410:3 - 7

Ins 307.01 Purpose. The purpose of this part is to recognize the following mortality tables, which are available as referenced in Appendix B, for use in determining the minimum standard of valuation for annuity and pure endowment contracts:

(a) The 1983 Table "a";

(b) The 1983 Group Annuity Mortality (1983 GAM) Table;

(d) The 2012 Individual Annuity Reserving (2012 IAR) Mortality Table; and

(e) The 1994 Group Annuity Reserving (1994 GAR) Table.

Source. #3163, eff 12-24-85; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; ss by #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.02 Scope. The provisions of this part shall be used by insurers to determine minimum standards of valuation for annuity and pure endowment contracts, subject to RSA 410:3.

Source. #3163, eff 12-24-85; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; ss by #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.03 Definitions.

(a) “Annuity 2000 Mortality Table” means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research.

(b) “Annuity 2012 IAR Mortality Table” means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in Ins 307.07.

(c) “Generational Mortality Table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next, based on a combination of a Period table and a projection scale containing rates of mortality improvement.

(d) "1983 Table 'a'" means that mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners.

(e) "1983 GAM Table" means that mortality table developed by the Society of Actuaries Committee on Annuities and adopted as recognized mortality tables for annuities in December 1983 by the National Association of Insurance Commissioners.

(f) “1994 GAR Table” means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force.

(g) “Period table” means a table of mortality rates applicable to a given calendar year known as the Period.

(h) “Projection Scale G2 (Scale G2)” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and is available as referenced in Appendix B.

(i) “2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table” means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research and is available as referenced in Appendix B.

Source. #3163, eff 12-24-85; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; ss by #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.04 Individual Annuity or Pure Endowment Contracts.

(a) Expect as provided in (b) and (c) below, the 1983 Table “a” is recognized and approved as an individual annuity mortality table for valuation and, at the option of the company, may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after August 1, 1979, but before December 31, 1985.

(b) Except as provided in (c) below, either the 1983 Table “a” or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after December 31, 1985 and before July 1, 2000.

(c) Except as provided in (d) below, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2000.

(d) Except as provided in (e) below, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2017.

(e) The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2000, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(1) Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

(2) Settlements involving similar actions such as workers' compensation claims; or

(3) Settlements of long-term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

Source. #3163, eff 12-24-85; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; amd by #7614, eff 12-24-01; ss by #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.05 Group Annuity or Pure Endowment Contracts.

(a) Except as provided in (b) and (c) below, the 1983 GAM Table, the 1983 Table “a” and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for any annuity or pure endowment purchased on or after August 1, 1979, but before December 31, 1985, under a group annuity or pure endowment contract.

(b) Except as provided in (c) below, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after December 31, 1985 and before July 1, 2000, under a group annuity or pure endowment contract.

(c) The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after July 1, 2000 under a group annuity or pure endowment contract.

Source. #3163, eff 12-24-85; ss by #4287, eff 7-1-87; ss by #5657, eff 7-1-93; ss by #7015, INTERIM, eff 7-1-99, EXPIRED: 10-29-99

New. #7450, eff 2-16-01; ss by #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.06 Application of the 1994 GAR Table. In using the 1994 GAR Table, the mortality rate for a person age x in years (1994 + n) is calculated as follows:

qx 1994+n = qx1994 (1 - AAx) n

where the qx1994 and AAxs are as specified in the 1994 GAR Table.

Source. #9494, eff 6-29-09; ss by #12034, eff 12-31-16

Ins 307.07 Application of the 2012 IAR Mortality Table. In using the 2012 IAR Mortality Table, the mortality rate for a person age x in years (2012+n) is calculated as follows:

qx2012+n = qx2012(1 - G2x)n

The resulting qx2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

For example, for a male age 30, qx2012 = 0.741:

(a) qx2013 = 0.741 * (1 - 0.010) ^ 1 = 0.73359, which is rounded to 0.734; and

(b) qx2014 = 0741 * (1 - 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.

A method leading to incorrect rounding would be to calculate qx2014 as qx2013 * (1 - 0.010), or

0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx2013 to calculate qx2014.

Source. #12034, eff 12-31-16

PART Ins 308 LIFE AND HEALTH REINSURANCE AGREEMENTS

Statutory Authority: RSA 400-A:15, I; RSA 405:51; RSA 405:52

Ins 308.01 Preamble.

(a) The New Hampshire insurance department recognizes that licensed insurers routinely enter into reinsurance agreements. These agreements can yield legitimate relief to the ceding insurer. A “ceding insurer” is an insurance company that passes a part or all of its risks from its insurance policy portfolio to another insurer (reinsurer).

(b) However, it is improper for a licensed insurer, in the capacity of a ceding insurer, to enter into reinsurance agreements for the principal purpose of producing significant surplus for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured. In substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements contained in the reinsurance agreement, such as catastrophic mortality or extraordinary survival. The terms of such agreements referred to herein and described in Ins 308.05 violate:

(1) RSA 400-A:36 and RSA 405:47 relating to financial statements which do not properly reflect the financial condition of the ceding insurer;

(2) RSA 405:47 relating to reinsurance reserve credits, thus resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and

(3) RSA 400-A:36, RSA 405:45, RSA 405:47 and Ins 1500 relating to creating a situation that may be hazardous to policyholders and the people of this state.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13; ss by #13494, eff 11-22-22

Ins 308.02 Purpose. The purpose of this rule is to establish requirements for life, accident and health insurers that cede insurance to reinsurers to assure that their financial statements properly reflect their financial condition thereby protecting policyholders and the public from possible future hazardous financial conditions.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13 (from Ins 308.01); ss by #13494, eff 11-22-22

Ins 308.03 Scope. This rule shall apply to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers that are not subject to a substantially similar regulation in their domiciliary state. This rule shall also similarly apply to licensed property and casualty insurers with respect to their accident and health business. This rule shall not apply to assumption reinsurance, yearly renewable term reinsurance or certain nonproportional reinsurance such as stop loss or catastrophe reinsurance.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13 (from Ins 308.02); ss by #13494, eff 11-22-22

Ins 308.04 Accounting Requirements.

(a) No ceding insurer subject to this rule shall reduce any liability or establish any asset in any financial statement whether or not filed with the insurance department if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist:

(1) Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period, are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall (using assumptions equal to the applicable statutory reserve basis on the business reinsured). Those expenses include commissions, premium taxes and direct expenses including, but not limited to, billing, valuation, claims and maintenance expected by the ceding insurer at the time the business is reinsured;

(2) The ceding insurer can be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer, except that termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, shall not be considered to be such a deprivation of surplus or assets;

(3) The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement. Negative experience shall not include (1) offsetting experience refunds against current and prior years' losses under the agreement or (2) payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement upon voluntary termination of in force reinsurance by the ceding insurer. Voluntary termination does not include situations where termination occurs because of unreasonable provisions that allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding insurer to prematurely terminate the reinsurance treaty;

(4) The ceding insurer shall, at specific points in time scheduled in the agreement or otherwise, terminate or automatically recapture all or part of the reinsurance ceded;

(5) The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts realized from the reinsured policies other than from income. For example, it is improper for a ceding insurer to pay reinsurance premiums, or other fees or charges to a reinsurer that are greater than the direct premiums collected by the ceding insurer;

(6) The treaty does not transfer all of the significant risk inherent in the business being reinsured. The following table identifies a representative sampling of products or type of business, the risks that are considered to be significant. For products not specifically included, the risks determined to be significant shall be consistent with this table:

Table 308.1 Risk Categories

Risk categories:

a. Morbidity;

b. Mortality;

c. Lapse

This is the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy;

d. Credit Quality (C1)

This is the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in interest rate;

e. Reinvestment (C3)

This is the risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase;

f. Disintermediation (C3)

This is the risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals;

+ - Significant 0 – Insignificant

	a	b	c	d	e	f

Health Insurance – other than LTC/LTD*	+	0	+	0	0	0
Health Insurance – LTC/LTD*	+	0	+	+	+	0
Immediate Annuities	0	+	0	+	+	0
Single Premium Deferred Annuities	0	0	+	+	+	+
Flexible Premium Deferred Annuities	0	0	+	+	+	+
Guaranteed Interest Contracts	0	0	0	+	+	+
Other Annuity Deposit Business	0	0	+	+	+	+
Single Premium Whole Life	0	+	+	+	+	+
Traditional Non-Par Permanent	0	+	+	+	+	+
Traditional Non-Par Term	0	+	+	0	0	0
Traditional Par Permanent	0	+	+	+	+	+
Traditional Par Term	0	+	+	0	0	0
Adjustable Premium Permanent	0	+	+	+	+	+
Indeterminate Premium Permanent	0	+	+	+	+	+
Universal Life Flexible Premium	0	+	+	+	+	+
Universal Life Fixed Premium	0	+	+	+	+	+
Universal Life Fixed Premium dump-in premiums allowed	0	+	+	+	+	+

*LTC = Long Term Care Insurance

LTD = Long Term Disability Insurance

(7) Assets:

a. The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding insurer does not (other than for the classes of business excepted in b. below) either transfer the underlying assets to the reinsurer or legally segregate such assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the commissioner that legally segregates, by contract or contract provision, the underlying assets;

b. Notwithstanding the requirements of paragraph a. above, the assets supporting the reserves for the following classes of business and any classes of business that do not have a significant credit quality, reinvestment or disintermediation risk may be held by the ceding insurer without segregation of such assets:

1. Health Insurance – LTC/LTD

2. Traditional Non-Par Permanent

3. Traditional Par Permanent

4. Adjustable Premium Permanent

5. Indeterminate Premium Permanent

6. Universal Life Fixed Premium (no dump-in premiums allowed)

c. The associated formula for determining the reserve interest rate adjustment shall use a formula that reflects the ceding insurer’s investment earnings and incorporates all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula:

Rate = 2 (I + CG)

X + Y – I – CG

Where:

I is the net investment income (Exhibit 2, Line 16, Column 7)

CG is the capital gains less capital losses (Exhibit 4, Line 10, Column 6)

X is the current year cash and invested assets (Page 2, Line 10A, Column 1) plus investment income due and accrued (Page 2, Line 16, Column 1) less borrowed money (Page 3, Line 22, Column 1)

Y is the same as X but for the prior year

(8) Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within 90 days of the settlement date;

(9) The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured;

(10) The ceding insurer is required to make representations or warranties about future performance of the business being reinsured; and

(11) The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business required and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.

(b) Notwithstanding (a) above, a ceding insurer subject to this rule may, with the prior approval of the commissioner, take such reserve credit or establish such asset as the commissioner may deem consistent with RSA 405:47, including actuarial interpretations or standards adopted by the department.

(1) Agreements entered into after the effective date of this rule that involve the reinsurance of business along with any subsequent amendments thereto, shall be filed by the ceding insurer with the commissioner within 30 days from its date of execution. Each filing shall include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion with respect to valuation of reserves shall consider this rule and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with this department. The actuary should maintain adequate documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that such work conforms to this rule; and

(2) Any increase in surplus net of federal income tax resulting from arrangements described in (c)(1) shall be identified separately on the insurer's statutory financial statement as a surplus item (aggregate write-ins for gains and losses in surplus in the Capital and Surplus Account, page 4 of the Annual Statement) and recognition of the surplus increase as income shall be reflected on a net of tax basis in the "Reinsurance ceded" line, page 4 of the Annual Statement as earnings emerge from the business reinsured.

For example, on the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block of business. Assuming a 34% tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) that is reported on the "Aggregate write-ins for gains and losses in surplus" line in the Capital and Surplus account. $6.8 million (34% of $20 million) is reported as income on the "Commissions and expense allowances on reinsurance ceded" line of the Summary of Operations.

At the end of year N+1 the business has earned $4 million. ABC has paid $.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund. Company ABC's annual statement would report $1.65 million (66% of ($4 million - $1 million - $.5 million) up to a maximum of $13.2 million) on the "Commissions and expense allowance on reinsurance ceded" line of the Summary of Operations, and -$1.65 million on the "Aggregate write-ins for gains and losses in surplus" line of the Capital and Surplus account. The experience refund would be reported separately as a miscellaneous income item in the Summary of Operations.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13 (from Ins 308.03); ss by #13494, eff 11-22-22

Ins 308.05 Written Agreements.

(a) No reinsurance agreement or amendment to any agreement may be used to reduce any liability or to establish any asset in any financial statement filed with the department, unless the agreement, amendment or a binding letter of intent has been duly executed by both parties no later than the "as of date" of the financial statement.

(b) In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement shall be executed within a reasonable period of time, not exceeding 90 days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.

(1) The agreement shall constitute the entire agreement between the parties with respect to the business being reinsured thereunder and that there are no understandings between the parties other than as expressed in the agreement; and

(2) Any change or modification to the agreement shall be null and void unless made by amendment to the agreement and signed by both parties.

Source. #5480, eff 10-1-92; ss by #6522, eff 6-6-97; ss by #8239, eff 1-3-05; ss by #10196, eff 1-3-13 (from Ins 308.04); ss by #13494, eff 11-22-22

Ins 308.06 Existing Agreements. Insurers subject to this rule shall reduce to zero by December 31, 1998 any reserve credits or assets established with respect to reinsurance agreements entered into prior to the effective date of this rule that, under the provisions of this rule would not be entitled to recognition of the reserve credits or assets; provided, however, that the reinsurance agreements shall have been in compliance with laws or rules in existence immediately preceding the effective date of this rule.

Source. #10196, eff 1-3-13 (from Ins 308.05); ss by #13494, eff 11-22-22

Ins 308.07 Waiver or Suspension of Rules.

(1) Applying the rule provision would cause confusion or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to the given circumstances;

(3) There are specific circumstances unique to the situation such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any.

(e) Waivers that are granted shall be in effect for the period of time requested and approved by the commissioner.

Source. #13494, eff 11-22-22

PART Ins 309 LIFE INSURANCE ILLUSTRATIONS

Statutory Authority: RSA 400-A:15 and RSA 417:4

Ins 309.01 Purpose. The purpose of this part is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The part provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this part are to ensure that illustrations do not mislead purchasers

of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

Source. #7195, eff 4-1-00, EXPIRED: 4-1-08

New. #9401, eff 3-9-09; ss by #12097, eff 3-9-17

Ins 309.02 Applicability and Scope.

(a) This part applies to all group and individual life insurance policies and certificates except:

(1) Variable life insurance;

(2) Individual and group annuity contracts;

(3) Credit life insurance; or

(4) Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

(b) If an illustration is required to be used in the sale of a policy under this part, the insurer shall not be required to also provide a policy summary under Ins 301.

Source. #7195, eff 4-1-00, EXPIRED: 4-1-08

New. #9401, eff 3-9-09; ss by #12097, eff 3-9-17

Ins 309.03 Definitions. For the purposes of this part:

(a) “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

(b) "Contract premium" means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(c) “Currently payable scale” means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within 95 days.

(d) “Disciplined current scale” means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actuarial recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in the standards established by the Actuarial Standards Board may be relied upon if the standards:

(1) Are consistent with all provisions of this part;

(2) Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(3) Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(4) Do not permit assumed expenses to be less than minimum assumed expenses.

(e) “Generic name” means a short title descriptive of the policy being illustrated such as “whole life”, “term life” or “flexible premium adjustable life”.

(f) “Guaranteed elements” and "non-guaranteed elements":

(1) "Guaranteed elements" means the premiums, benefits, values, credits, or charges under a policy of life insurance that are guaranteed and determined at issue; and

(2) "Non-guaranteed elements" means the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed or not determined at issue.

(g) “Illustrated scale” means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(1) The disciplined current scale; or

(2) The currently payable scale.

(h) “Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the 3 types defined below:

(1) "Basic illustration" means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements;

(2) "Supplemental illustration" means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this part, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration; or

(3) "In force illustration" means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(i) “Illustration actuary” means an actuary meeting the requirements of Ins 309.10, who certifies to illustrations based on the standards of practice promulgated by the Actuarial Standards Board.

(j) "Lapse-supported illustration" means an illustration of a policy form failing the test of self-supporting as defined in this part, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first 5 years and 100 percent policy persistency thereafter.

(k) “Minimum assumed expenses” means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:

(1) Fully allocated expenses;

(2) Marginal expenses; or

(3) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and published by the National Association of Insurance Commissioners and approved by the commissioner.

(l) Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses shall be used.

(m) “Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(1) Every plan of coverage was selected by the employer or other group representative;

(2) Some portion of the premium is paid by the group or through payroll deduction; and

(3) Group underwriting or simplified underwriting is used.

(n) “Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy.

(o) “Premium outlay” means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.

(p) "Self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies, or upon policy expiration if sooner, the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

Source. #7195, eff 4-1-00, EXPIRED: 4-1-08

New. #9401, eff 3-9-09; ss by #12097, eff 3-9-17

Ins 309.04 Policies to be Illustrated.

(a) Each insurer marketing policies to which this part is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this part, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this part, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner.

(b) If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

(c) If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this part is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant, unless the coverage is marketed to these individuals. The illustration furnished to an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives shall be either an individual or composite illustration, representative of the coverage on the lives of members of the group or the multiple lives covered.

(d) Potential enrollees of non-term group life subject to this part shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this part, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection.

In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.

Source. #7195, eff 4-1-00, EXPIRED: 4-1-08

New. #9401, eff 3-9-09; ss by #12097, eff 3-9-17

Ins 309.05 General Rules and Prohibitions.

(a) An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this part, be clearly labeled "life insurance illustration", and contain the following basic information:

(1) Name of insurer;

(2) Name and business address of producer or insurer’s authorized representative, if any;

(3) Name, age, and sex of proposed insured, except where a composite illustration is permitted under this part;

(4) Underwriting or rating classification upon which the illustration is based;

(5) Generic name of policy, the company product name, if different, and form number;