California Insurance Code 10509.955 – (a) An illustration used in the sale of a life insurance policy …
(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 include, but not be limited to, the following information:
(1) Name of insurer.
Terms Used In California Insurance Code 10509.955
- Disciplined current scale: means a scale of nonguaranteed 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 California Insurance Code 10509.953
- Illustrated scale: means a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of either of the following:
California Insurance Code 10509.953
- Illustration: means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined below:
California Insurance Code 10509.953
- 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
- Life insurance: means insurance upon the lives of persons or appertaining thereto. See California Insurance Code 10509.953
- Policy owner: means the owner named in the policy or the certificate holder in the case of a group policy. See California Insurance Code 10509.953
(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 the policy, the company product name, if different, and form number.
(6) Initial death benefit.
(7) 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 shall not do any of the following:
(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 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 “vanishing” 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) Except for policies that can never develop nonforfeiture values, use an illustration that is “lapse-supported.”
(10) Use an illustration that is not “self-supporting.”
(c) If an interest rate used to determine the illustrated nonguaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale.
(Added by Stats. 1996, Ch. 1106, Sec. 1. Effective January 1, 1997. Section operative July 1, 1997, pursuant to Section 10509.965.)