Section 917.10  Statutory Authority (Repealed)

 

(Source:  Repealed at 8 Ill. Reg. 11365, effective August 1, 1984)

 

Section 917.20  Purpose

 

The purpose of this Part is:

 

a)         To regulate the activities of insurers and insurance producers  with respect to the replacement of existing life insurance or annuities;

 

b)         To protect the interests of life insurance and annuity policyowners by establishing minimum standards of conduct to be observed in the replacement or proposed replacement of existing life insurance by:

 

1)         Assuring that the policyowner receives information with which a decision can be made in his or her own best interest;

 

2)         Reducing the opportunity for misrepresentation and incomplete disclosures.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.30  Definition of Replacement

 

Replacement means any transaction except those exempted by Section 917.50 in which new life insurance or annuity will be purchased, and it is known or should be known to the proposing insurance producer, or to the proposing insurer if there is no insurance producer, that by reason of such transaction, existing life insurance or annuity has been or is to be:

 

a)         Lapsed, forfeited, surrendered, or otherwise terminated;

 

b)         Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

 

c)         Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in-force, or for which benefits would be paid;

 

d)         Reissued with any reduction in cash value; or

 

e)         Pledged as collateral or subjected to borrowing, whether in a single loan or under a schedule of borrowing over a period of time for amounts in the aggregate exceeding 25% of the loan value set forth in the policy.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.40  Other Definitions

 

Buyer's Guide means a document which contains, and is limited to, the language contained in Exhibit A of 50 Ill. Adm. Code 930.

 

Direct-Response Sales means any sale of life insurance or annuity where the insurer does not utilize an insurance producer in the sale or delivery of the policy.

 

Existing Insurer means the insurance company whose policy is or will be changed or terminated in such a manner as described within the definition of "replacement."

 

Existing Life Insurance means any life insurance or annuity in-force, including insurance under a binding or conditional receipt or an  insurance policy that is within an unconditional refund period, but excluding life insurance obtained through the exercise of a dividend option.

 

Insurance Producer, for the purposes of this Part, shall have the same meaning as "insurance producer" as defined in Section 500-10 of the Illinois Insurance Code [215 ILCS 5/500-10].

 

Policy Summary means a written statement describing the elements of the policy as defined in 50 Ill. Adm. Code 930.40(g).

 

Registered Contract means any contract issued by a life insurance company which is registered with the Federal Securities and Exchange Commission.

 

Replacing Insurer means the insurance company that issues a new policy which is a replacement of existing life insurance or annuity.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.50  Exemptions

 

Unless otherwise specifically included, this Part shall not apply to:

 

a)         Credit life insurance;

 

b)         Group life insurance and group annuities;

 

c)         Life insurance policies issued in connection with a pension, profit-sharing or other benefit plan qualifying for the tax deductibility of premiums;

 

d)         Registered contracts except that the appropriate prospectus or offering circular shall be given to the applicant;

 

e)         Existing life insurance that is a non-convertible term life insurance policy which will expire in 5  years or less and cannot be renewed;

 

f)         Transactions where the replacing insurer and the existing insurer are the same or are subsidiaries under common ownership or control, provided, however, insurance producers  proposing replacement shall comply with the requirements of Section 917.60(a); or

 

g)         The total cash surrender value of all existing policies which would be affected by the replacement is less than $500 and the sum of their face amounts is less than $5,000.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.60  Duties of Insurance Producers

 

a)         Each insurance producer shall submit to the replacing insurer with or as part of each application for life insurance or annuity:

 

1)         A statement signed by the applicant, as to whether or not such insurance will replace existing life insurance or annuity; and

 

2)         A signed statement as to whether the insurance producer knows replacement is, or may be, involved in the transaction.

 

b)         Where a replacement is involved, the insurance producer shall:

 

1)         Present to the applicant, not later than at the time of taking the application, a Notice Regarding Replacement of Life Insurance or Annuity in the form as described in Exhibit A of this Part ; with or as part of such notice, the insurance producer shall list the contract number or numbers which are to be replaced.  The insurance producer’s  signature must be affixed to the notice .  A copy of the notice  presented to the applicant, together with the Notice Regarding Proposed Replacement of Life Insurance or Annuity, as described in Exhibit B of this Part , signed by the insurance producer, shall be submitted to the replacing insurer with the application;

 

2)         Submit to the replacing insurer with the application:  a copy of the Notice Regarding Replacement of Life Insurance or Annuity, as described in Exhibit A, signed by the insurance producer .

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.70  Duties of Replacing Insurers

 

Each insurer shall:

 

a)         Require with or as part of each completed application for life insurance or annuity a statement signed by the insurance producer and the applicant as to whether or not such insurance will replace existing life insurance or annuity;

 

b)         Where a replacement is involved, each replacing insurer shall require from the insurance producer, with the application for life insurance or annuity, a copy of the notices  required in Section 917.60(b);

 

c)         In the case of a replacement, the insurers shall comply with Section 224(2) of the Illinois Insurance Code [215 ILCS 5/224(2)], and furnish to the applicant a copy of the Buyer's Guide pursuant to 50 Ill. Adm. Code 930.50 and forward, to the existing insurer, within 3 working days after receipt of the application, the Notice Regarding Proposed Replacement of Life Insurance or Annuity which is Exhibit B of this Part; and

 

d)         Each replacing insurer shall maintain, at its home office for at least 3  years following the date of insurance producer's  signature or date of mailing copies of the notices  as required in Section 917.60(b) for all instances where an insurance producer is involved.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.80  Duties of Insurers With Respect to Direct-Response Sales

 

Each insurer shall:

 

a)         Require with or as part of each completed application for life insurance a statement signed by the applicant as to whether such insurance will replace existing life insurance;

 

b)         Where no replacement is proposed by an insurer in the solicitation of a direct-response sale and a replacement is involved include a Notice Regarding Replacement of Life Insurance in a form as described in Exhibit A, at the time the policy is mailed to the applicant;

 

c)         Where a replacement is proposed by an insurer in the solicitation of a direct-response sale and a replacement is involved:

 

1)         Request from the applicant with or as part of the application a list of all existing life insurance to be replaced.  Such existing life insurance shall be requested to be identified by name of insurer;

 

2)         If the applicant furnishes the names of the existing insurers, then the replacing direct-response insurer shall mail the applicant a Notice Regarding Replacement of Life Insurance in a form substantially as described in Exhibit A within 3 working days after receipt of the application and shall comply with the provisions of Section  224(2) of the Insurance Code, and forward to the existing insurer, within 3 working days after receipt of the application the Notice Regarding Proposed Replacement of Life Insurance or Annuity which is Exhibit B of this Part;

 

3)         If the applicant does not furnish the names of the existing insurers, then the replacing direct-response insurer shall, at the time the policy is mailed to the applicant, include a Notice Regarding Replacement of Life Insurance in a form as described in Exhibit A.

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

 

Section 917.90  Duties of the Existing Insurer (Repealed)

 

(Source:  Repealed at 8 Ill. Reg. 11365, effective August 1, 1984)

 

Section 917.100  Penalties (Repealed)

 

(Source:  Repealed at 8 Ill. Reg. 11365, effective August 1, 1984)

 

Section 917.110  Severability

 

If any provision of this Rule shall be held invalid, the remainder of the rule shall not be affected thereby.

Section 917.EXHIBIT A   Notice Regarding Replacement of Life Insurance or Annuity

 

REPLACING YOUR LIFE INSURANCE OR ANNUITY?

 

Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one?  If you are, your decision could be a good one – or a mistake.  You will not know for sure unless you make a careful comparison of your existing benefits and the proposed benefits.

 

Make sure you understand the facts.  You should ask the insurance producer or company that sold you your existing policy to give you information about it.

 

Hear both sides before you decide.  This way you can be sure you are making a decision that is in your best interest.

 

We are required by law to notify your existing company that you may be replacing their policy.

 

 

List below the identification
of policies which are involved
in the replacement transaction
Contract Number		Insurance Producer's Signature
Contract Number		Date
Contract Number
Contract Number

 

(Source:  Amended at 26 Ill. Reg. 16504, effective October 28, 2002)

Section 917.EXHIBIT B   Notice Regarding Proposed Replacement of Life Insurance or Annuity

 

(Name of Existing Insurer)

(Address)

(City, State, Zip Code )

 

(Salutation)

 

You are herewith given notice that we are in receipt of application(s) for life insurance or annuity(ies) for an individual presently insured with your company.

 

Identification

 

Name of Insured
Address
Contract Number
"            "
"            "
"            "

 

This notice is given pursuant to 50 Ill. Adm. Code 917.70(c)

 

(Insurance Producer's Signature)		(Closure)

 

Section 917.EXHIBIT C   TO BE USED WHERE PROPOSD POLICY IS A DIRECT-RESPONSE PRODUCT (Repealed)

 

(Source:  Repealed at 8 Ill. Reg. 11365, effective August 1, 1984)

Section 917.EXHIBIT D   COMPARATIVE INFORMATION FORM (Repealed)

 

(Source:  Repealed at 8 Ill. Reg. 11365, effective August 1, 1984)