Section R. 500.845a - Sales illustrationsRule 5a. Any sales illustration shown or furnished in connection with the sale of variable life insurance shall conform to all of the following requirements:
(a) All of the following requirements apply only to the variable portion of contracts with fixed and variable funding options:(i) The hypothetical interest rates used to illustrate accumulated policy values shall be the rates which would actually be credited to the policy after deduction for taxes, management fees, and any other contract charges.(ii) Illustrations of accumulated policy values shall include 1 illustration based solely on the policy contract guarantees. Such illustration shall include, among other guarantees, the effect of the maximum mortality and administrative charges specified in the contract.(iii) Except for illustrations contained in the prospectus, the pattern of premium payments used in an illustration shall be the initial pattern requested by the proposed policyholder at inception or upon changes in fact amount requested by the policyholder.(iv) If the illustrated policy contact provides for a variety of investment options, the illustration may use an asset charge which is reasonably representative of a typical blend of such options or it may use the asset charge of a particular option.(v) The illustration shall disclose the transaction charges which will be levied against the contract because of transactions requested in accordance with rights and privileges specified in the policy contract. Any charge for the exercise of a right or privilege upon which the illustration is based shall be reflected in the illustrated values. The nature of any such charges shall be disclosed in a clear statement accompanying such illustrations.(vi) A clear statement shall be made following the table of illustrated accumulated policy values that use of hypothetical investment results does not in any way represent actual results or suggest that such results will be achieved and shall indicate that the policy values which actually arise will differ from those shown when the actual investment results differ from the hypothetical rates illustrated. Assumptions upon which illustrations are based shall be clearly disclosed.(vii) Any sales illustration to a prospective policyholder shall accurately reflect the policy being presented. Misleading statements or captions or other misrepresentations are prohibited.(viii) The requested sales illustration shall be printed clearly and legibly on hard paper copy. An illustration displayed on a computer screen may be used in addition to, but not as a substitute for, hard paper copy.(b) All of the following requirements apply to variable life insurance contracts offering both fixed and variable funding options:(i) An illustration of the variable funding option shall comply with these rules.(ii) If an illustration of the fixed funding option is shown, accumulated policy values shall be shown on the basis of guaranteed rates. One or more additional rates may also be shown, but such rates shall not exceed current rates.(iii) A summary illustration may be given in which results from comparable illustrated and hypothetical interest rates are combined. Such summary shall cross-reference to the accompanying separate illustrations of the fixed and variable funding options.(c) Nothing in this rule shall prohibit the distribution, to the prospective policyholder, of illustrations in addition to those required by R 500.863 if, except for the requirements of subdivision (a)(iii) of this rule which apply to required illustrations under R 500.863, such additional illustrations comply with the standards set forth in these rules.Mich. Admin. Code R. 500.845a