Section 230-RICR-20-25-4.9 - Twisting and Churning PracticesA. Any replacement of a life insurance policy that involves fraud, deception or misrepresentation is prohibited regardless of whether the transaction falls within the provisions of R.I. Gen. Laws § 27-29-4.7. In addition, the following applies to transactions in which R.I. Gen. Laws § 27-29-4.7 is applicable: 1. Replacements of policies that constitute twisting or churning are in violation of R.I. Gen. Laws § 27-29-4.7.2. Insurers to which the Part applies must adopt written procedures consistent with R.I. Gen. Laws § 27-29-4.7 no later than July 1, 2013.3. The fact that written procedures have not been finalized or adopted does not alter the requirement that replacement sales must not constitute twisting or churning.B. The following are clarifications of the intent of terms used in R.I. Gen. Laws § 27-29-4.71. The reference to "paid-up policy" in R.I. Gen. Laws § 27-29-4.7(a)(2)(iv) means an immediately paid up life insurance policy not a life insurance policy that might become paid up some time in the future after additional premium payments have been made.2. The provision of R.I. Gen. Laws § 27-29-4.7(b) regarding the timing of the disclosure requires that disclosure be made prior to or contemporaneous with the time the applicant signs the application.3. The requirement in R.I. Gen. Laws § 27-29-4.7(b) of disclosure of the date on which the policy value will be insufficient to pay the premium of the replacing or additional policies means a reasonable estimate of such date when the existing life insurance policy value, if transferred into the replacing or additional policy, will be insufficient to pay the premium to continue coverage of the replacing or additional life insurance policy. This disclosure should include the assumptions made in order to make the estimate along with a description of how variables will affect the estimated date. With respect to annuity transactions, the requirement to disclose the date on which policy values of the existing policy or contract will be insufficient to pay the premiums of the replacing or additional coverage shall only apply to transactions involving an annuity with a schedule of required payments.C. This Part and the provisions of R.I. Gen. Laws § 27-29-4.7(a)(2)(iii) and (iv), (b) and (c) do not apply to: 1. Conversions of group or individual term policies; or2. Group permanent life, group variable life, group fixed annuities and group variable annuities wherein the group master policyholder retains ownership of the contract; or3. Any of the following for a purpose other than as a funding source for the purchase of additional insurance contracts: a. Reduced paid-up or extended term insurance options in group life, group variable life, individual life or variable life policies;b. Early annuity options of group fixed, group variable, individual fixed or individual variable annuity products; orc. A living benefit settlement option of a group permanent life, group variable life, individual life or individual variable life insurance policy.230 R.I. Code R. 230-RICR-20-25-4.9