Rhode Island General Laws 27-62-5. General rules and prohibitions
(a) An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this chapter, be clearly labeled “life insurance illustration” and contain the following basic information:
(1) Name of insurer;
(2) Name and business address of producer or insurer’s authorized representative, if any;
(3) Name, age, and sex of proposed insured, except where a composite illustration is permitted under this chapter;
(4) Underwriting or rating classification upon which the illustration is based;
(5) Generic name of policy, the company product name, if different, and form number;
(6) Initial death benefit; and
(7) Dividend option election or application of non-guaranteed elements, if applicable.
Terms Used In Rhode Island General Laws 27-62-5
- Disciplined current scale: means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. See Rhode Island General Laws 27-62-3
- Illustrated scale: means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:
(i) The disciplined current scale; or
(ii) The currently payable scale. See Rhode Island General Laws 27-62-3
- Illustration: means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three (3) types defined in subsections (8)(i) — (8)(iii):
(i) "Basic illustration" means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements. See Rhode Island General Laws 27-62-3
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Non-guaranteed elements: means the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed or not determined at issue. See Rhode Island General Laws 27-62-3
- Policy owner: means the owner named in the policy or the certificate holder in the case of a group policy. See Rhode Island General Laws 27-62-3
(b) When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not:
(1) Represent the policy as anything other than a life insurance policy;
(2) Use or describe non-guaranteed 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 non-guaranteed 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 will not be 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 non-guaranteed elements to pay a portion of future premiums;
(9) Except for policies that can never develop nonforfeiture values, use an illustration that is “lapse-supported”; or
(10) Use an illustration that is not “self-supporting.”
(c) If an interest rate used to determine the illustrated non-guaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale.
History of Section.
P.L. 1998, ch. 56, § 1.