Section R590-98-5 - Requirements(1) Before an insurer exercises the right to defer payment of any policy value, the insurer shall file with the commissioner a written request that shall include:(a) an explanation of the reason for the deferment;(b) the steps to be taken by the insurer to alleviate the situation;(c) the way the deferment is being imposed fairly and equitably on all policyholders;(d) the notice to policyholders as to why the insurer is deferring payment; and(e) the anticipated date the policy values are expected to be available.(2)(a) If the policy does not specify a policy value between policy anniversaries, the policy value shall be:(i) the value shown in the policy nonforfeiture value table as of the end of the policy year; or (ii) computed by the interpolation of values between policy years.(b) If the method in Subsection (2)(a)(i) is used:(i) the insurer may deduct from the policy value any premium required to pay the policy to the next succeeding anniversary date; and(ii) a premium may not be deducted that advances the paid-to date past the next succeeding anniversary date.(3) A surrender or service charge assessed by an insurer may not be deducted from the policy value unless specifically provided for in the policy.(4) With the consent of the policyholder, an insurer may process a policy loan in lieu of cash surrender to conserve business, but only if the following criteria are followed:(a) the computation of policy values and premium deductions, if any, shall be calculated on the same basis as enumerated in Subsection (2);(b) the policyholder shall receive:(i) the reason the insurer is sending the proceeds of a policy loan as opposed to the cash surrender value;(ii) an explanation of the effect the loan will have on the policyholder's interest charge, premium, and death benefit; and(iii) the procedures for the repayment of the loan; and(c) if a policy loan check is issued in lieu of a cash surrender value: (i) the loan shall be processed within 20 days of receiving the request to surrender;(ii) the check for the policy loan value shall be immediately negotiable;(iii) a stamped, self-addressed envelope and a cash surrender form shall accompany the loan value check, together with appropriate instructions on how the policyholder may obtain the full policy surrender value; and(iv) a request for the balance of the cash surrender value shall be processed within 10 days of receiving the request.Utah Admin. Code R590-98-5
Amended by Utah State Bulletin Number 2021-22, effective 11/8/2021