S.D. Admin. R. 20:06:38:07

Current through Register Vol. 51, page 67, December 16, 2024

Section 20:06:38:07 - Standards for basic illustrations - Format

(1) The illustration must be labeled with the date on which it was prepared;

(2) Each page, including any explanatory notes or pages, must be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration must be labeled, "page 4 of 7 pages");

(3) The assumed dates of payment receipt and benefit payout within a policy year must be clearly identified;

(4) If the age of the proposed insured is shown as a component of the tabular detail, it must be the issue age plus the numbers of years the policy is assumed to have been in force;

(5) The assumed payments on which the illustrated benefits and values are based must be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments must be identified as premium outlay;

(6) Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium must be shown and clearly labeled guaranteed;

(7) If the illustration shows any nonguaranteed elements, they may not be based on a scale more favorable to the policy owner than the insurers illustrated scale at any duration. These elements must be clearly labeled nonguaranteed;

(8) The guaranteed elements, if any, must be shown before corresponding non-guaranteed elements and must be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements");

(9) The account or accumulation value of a policy, if shown, must be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender;

(10) The value available upon surrender must be identified by the name this value is given in the policy being illustrated and must be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans, and policy loan interest, as applicable;

(11) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form;

(12) Any illustration of nonguaranteed elements must be accompanied by a statement indicating the following:

(a) The benefits and values are not guaranteed;

(b) The assumptions on which they are based are subject to change by the insurer; and

(c) Actual results may be more or less favorable;

(13) If the illustration shows that the premium payer has the option to allow policy charges to be paid using nonguaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure must be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display may not be left blank or show zero unless it is accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up;

(14) If the applicant plans to use dividends or policy values, guaranteed or nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

S.D. Admin. R. 20:06:38:07

23 SDR 228, effective 7/1/1997.

General Authority: SDCL 58-33-5.1.

Law Implemented: SDCL 58-33-5.1.