Section 38a-433-26 - Policy requirements(a)Mandatory Policy Benefit and Design Requirements. Modified Guaranteed Life Insurance Policies delivered or issued for delivery in this state shall comply with the following minimum requirements.(1) Mortality and expense risks shall be borne by the insurer. The mortality and expense charges shall be subject to the maximum stated in the contract.(2) For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy so long as premiums are duly paid (subject to the provisions of subdivision (b) (4) of this section).(3) The cash value of each Modified Guaranteed Life Insurance Policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits shall be described in the policy. The market value adjustment formula, used in determining nonforfeiture benefits, must be stated in the policy and must be applicable for both upward and downward adjustments. The insurer must submit an actuarial statement indicating the basis for the market value adjustment formula and that the formula provides reasonable equity to both the policyholder and the insurer.(4) The insurer must demonstrate that, if the interest credits at all times from the date of issue equal those guaranteed in the policy, with premiums and benefits determined accordingly under the terms of the policy, then the resulting unadjusted cash values and other nonforfeiture benefits must be at least equal to the minimum values required by Section 38a-78 of the Connecticut General Statutes for a fixed benefit general account policy with such premiums and benefits. Guaranteed interest credits in each year for any period of time for which interest credits are guaranteed shall be reasonably related to the average guaranteed interest credits over that period of time.
(5) At the end of any specified guarantee period, the policyowner may select a new guarantee period. At those times, the policyowner must have the option of selecting a guarantee period of not more than five years, or a guarantee period that runs to the end of the coverage period, if shorter.(b)Mandatory Policy Provisions. Every Modified Guaranteed Life Insurance Policy filed for approval in this state shall contain at least the following: (1) The cover page or pages corresponding to the cover page of each such policy shall contain: (A) A prominent statement that cash values may increase or decrease in accordance with the market value adjustment formula.(B) To the extent permitted by state law, a captioned provision that the policyholder may return the Modified Guaranteed Life Insurance Policy within 10 days of receipt of the policy by the policyholder, and receive a refund equal to the sum of (1) the difference between the premiums paid including any policy fees or other charges and the amounts allocated to any separate accounts under the policy and (2) the value of the amounts allocated to any separate accounts under the policy, on the date the returned policy is received by the insurer or its agent, as determined by the market value adjustment formula. Until such time as state law authorizes the return of payments as calculated in the preceding sentence, the amount of the refund shall be the total of all premium payments for such policy.(C) Such other items as are currently required for fixed benefit life insurance policies and which are not inconsistent with this regulation.(2) If settlement options are provided, at least one such option shall be provided on a fixed basis only;(3) A description of the basis for computing the cash value and the surrender value under the policy shall be included;(4) Premiums or charges for incidental insurance benefits shall be stated separately;(5) Any other policy provision required by this regulation;(6) Such other items as are currently required for fixed benefit life insurance policies and are not inconsistent with this regulation;(7) A provision for nonforfeiture insurance benefits. The insurer may establish a reasonable minimum cash value below which any such nonforfeiture insurance options will not be available.(c)Policy Loan Provisions. Every Modified Guaranteed Life Insurance Policy, delivered or issued for delivery in this state shall contain provisions which are not less favorable to the policyholder than the following: (1) A provision for policy loans after the policy has been in force in 3 full years which provides the following: (A) At least 75% of the policy's cash surrender value may be borrowed;(B) The amount borrowed shall bear interest at a rate not to exceed that permitted by state insurance law;(C) Any indebtedness shall be deducted from the proceeds payable on death;(D) Any indebtedness shall be deducted from the cash surrender value upon surrender or in determining any nonforfeiture benefit;(E) For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within thirty-one days after the date of mailing of such notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay such charges, a report must be sent to the policyholder containing the information specified by subsection (b) of Section 38a-433-31;(F) The policy may specify a reasonable minimum amount which may be borrowed at any time but such minimum shall not apply to any automatic premium loan provision;(G) No policy loan provision is required if the policy is under extended insurance nonforfeiture option;(H) The policy loan provision shall be constructed so that life insurance policyholders who have not exercised such provisions are not disadvantaged by the exercise thereof;(I) Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the amounts for policy loans from the general account.(d)Other Policy Provisions. The following provisions may in substance be included in a Modified Guaranteed Life Insurance Policy or related form delivered or issued for delivery in this state: (1) An exclusion for suicide within two years of the issue date of the policy; provided, however, that to the extent of the increased death benefits only, the policy may provide an exclusion for suicide within two years of any increase in death benefits which results from an application of the owner subsequent to the policy issue date;(2) Incidental insurance benefits may be offered on a fixed or variable basis;(3) Policies issued on a participating basis shall offer to pay dividend amounts in cash. In addition, such policies may offer other dividend options;(4) A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under subdivision (c) of this section, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed;(5) A provision allowing the policyholder to make partial withdrawals;(6) Any other policy provision approved by the Commissioner.Conn. Agencies Regs. § 38a-433-26
Effective September 25, 1992