3 Alaska Admin. Code § 26.795

Current through September 25, 2024

Section 3 AAC 26.795 - Duties of an insurance producer

(a) An insurance producer who initiates a new application shall submit to the insurer, with or as part of the application, a statement as to whether the applicant has an existing life insurance policy or annuity contract. The statement must be signed by both the applicant and the insurance producer.

(b) If an applicant has an existing life insurance policy or annuity contract, before or at the time of taking an application, the insurance producer shall provide to the applicant a copy of the notice regarding replacements that

(1) conforms with Appendix A of this section;

(2) conforms with Appendix A of this section, but is amended to delete references that are not applicable to the product being sold or replaced; or

(3) is substantially similar to Appendix A of this section and has been approved by the director.

(c) The insurance producer shall read aloud to the applicant the notice provided under (b) of this section before or at the time of application, unless the applicant declines to have the notice read aloud. The applicant and the insurance producer must sign the notice certifying that either the notice was read aloud to the applicant by the insurance producer or that the applicant declined to have the notice read aloud. The insurance producer shall give the applicant a copy of the signed notice. If the notice is presented and signed electronically, the insurer shall mail the applicant a copy of the notice within three working days after the insurer receives the application.

(d) In connection with a replacement, the insurance producer shall give the applicant at the time of application for a new life insurance policy or annuity contract a copy of all sales material used in connection with the replacement. In the case of a direct-response solicitation or electronically presented sales material, the insurance producer or insurer shall provide the life insurance policy holder or annuity contract owner a printed copy of all sales material used in connection with the replacement before or at the time of delivery of the life insurance policy or annuity contract.

(e) In connection with a replacement, except as provided in (f) of this section, an insurance producer shall submit to the replacing insurer with the application for a life insurance policy or annuity contract

(1) a statement identifying any preprinted or electronically presented sales material approved by the replacing insurer and used by the insurance producer; and

(2) copies of any individualized sales material used by the insurance producer, including any illustrations related to the specific life insurance policy or annuity contract purchased.

(f) If a replacing insurer prohibits an insurance producer from using sales material other than the sales material approved by the replacing insurer, the insurance producer shall

(1) submit to the replacing insurer with the application for a life insurance policy or annuity contract a statement that

(A) the insurance producer used only the sales material approved by the replacing insurer; and

(B) copies of all sales material were provided to the applicant as required by (d) of this section; and

(2) retain copies of the statement and sales material required in (1) of this subsection for at least five years after termination or expiration of the life insurance policy or annuity contract.

APPENDIX A

IMPORTANT NOTICE:

REPLACEMENT OF LIFE INSURANCE OR ANNUITY CONTRACT

This document must be signed by the applicant and the insurance producer 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 life insurance policy or annuity contract. If so, a replacement is occurring. Financed purchases are also considered replacements.

A replacement occurs when a new life insurance policy or annuity contract is purchased and, In connection with the sale, you discontinue making premium payments on the existing life insurance policy or annuity contract, or an existing life insurance policy or annuity 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 or annuity contract 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 life insurance policy or annuity contract 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 life insurance policy or annuity contract. You may be able to make changes to your existing life insurance policy or annuity 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 life insurance policy or annuity contract? _______________ YES _______________ NO

2. Are you considering using funds from your existing life insurance policy or annuity contract to pay premiums due on the new life insurance policy or annuity contract? _______________ YES _______________ NO

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

INSURER

NAME CONTRACT

OR POLICY #INSURED OR

ANNUITANT REPLACED (R) OR

FINANCING (F)1.2.3.

Make sure you know the facts. Contact your existing company or its insurance producer for information about the old life insurance policy or annuity 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 insurance producer in the sales presentation. Be sure that you are making an informed decision.

The existing life insurance policy or annuity contract is being replaced because _________.

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

The insurance producer (check one) _______________ did _______________ did not read aloud this notice to the applicant.

Applicant's Signature and Printed Name Date Insurance Producer's Signature and Printed Name Date I do not want this notice read aloud to me. _________ (Applicant must initial only if applicant does 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 life insurance policy or annuity contract and the proposed life insurance policy or annuity contract. One way to do this is to ask the company or insurance producer that sold you your existing life insurance policy or annuity contract to provide you with information concerning your existing life insurance policy or annuity contract. This may include an illustration of how your existing life insurance policy or annuity 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 insurance producer 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 CONTRACT 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? How does the quality and financial stability of the new company compare with your existing company?

3 AAC 26.795

Eff. 7/25/2008, Register 187; am 12/28/2008, Register 188

In 2010 the revisor of statutes, acting under AS 01.05.031, renumbered former AS 21.36.150 as AS 21.36.900. As of Register 196 (January 2011), the regulations attorney made a conforming technical revision under AS 44.62.125(b)(6), to the authority citation that follows 3 AAC 26.795, so that the citation to former AS 21.36.150 now refers to the renumbered statute, AS 21.36.900.

Authority:AS 21.06.090

AS 21.36.020

AS 21.36.030

AS 21.36.040

AS 21.36.050

AS 21.36.900