Md. Code Regs. 31.09.09.06

Current through Register Vol. 51, No. 22, November 1, 2024

Section 31.09.09.06 - General Rules and Prohibitions

A. An illustration used in the sale of a life insurance policy shall:

(1) Satisfy the applicable requirements of this chapter;

(2) Be clearly labeled "life insurance illustration"; and

(3) Contain the following basic information:

(a) Name of insurer,

(b) Name and business address of the producer or insurer's authorized representative, if any,

(c) Name, age, and sex of the proposed insured, except where a composite illustration is permitted under this chapter,

(d) Underwriting or rating classification upon which the illustration is based,

(e) Generic name of the policy, the company product name, if different, and the form number,

(f) Initial death benefit, and

(g) Dividend option election or application of nonguaranteed elements, if applicable.

B. When using an illustration in the sale of a life insurance policy, an insurer or its producers, or other authorized representatives may not:

(1) Represent the policy as anything other than a life insurance policy;

(2) Use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(3) State or imply that the payment or amount of nonguaranteed elements is guaranteed;

(4) Use an illustration that does not comply with the requirements of this chapter;

(5) Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(6) Provide an applicant with an incomplete illustration;

(7) Represent in any way that premium payments are not required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

(8) Use the term "vanish" or "vanishing premium", or a similar term that implies the policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a portion of future premiums;

(9) Use an illustration that is lapse supported, except for policies than can never develop nonforfeiture values; or

(10) Use an illustration that is not self-supporting.

C. If an interest rate used to determine the illustrated nonguaranteed elements is shown, it may not be greater than the earned interest rate underlying the disciplined current scale.

D. 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; and

(3) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the Commissioner.

E. 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.

Md. Code Regs. 31.09.09.06