Expanded West Virginia Life Regulations

Insurable interest includes only the following:

-Individuals related closely by blood or by law with a substantial interest engendered by love and affection; -Individuals who have a lawful and substantial economic interest in the insured; -Individuals party to a contract or option for the purchase or sale of an interest in a business partnership or of shares of stock; -A charitable institution.

The insurers and insurance producers must have reasonable basis to believe that:

-The consumer has been reasonably informed of the annuity features; -The consumer would benefit from the annuity features; -The annuity is based on the consumer's suitability information; -Exchange or replacement of annuity - consumer pays a surrender charge but would benefit from produce enhancements and improvements; -Consumer has had another annuity exchange or replacement within the preceding 36 months; -Prior to annuity purchase, the insurer will make reasonable efforts to obtain the consumer's suitability information; -An insurer will not recommend an annuity to a consumer unless there is reasonable basis to believe the annuity is suitable based on the consumer's suitability information; -If no recommendation is made; the recommendation was made based on inaccurate material information provided by the consumer; the consumer refuses to provide relevant suitability information; or the consumer decides to enter into an annuity transaction that is not based on recommendation of the insurer or producer, then the insurer or producer has not obligation to the consumer. -At the time of the sale of the annuity the insurance producer or insurer must - make a record of recommendations made to the consumer; obtain consumer signed statement documenting the customer's refusal to provide suitability information; and obtain, if necessary, consumer signed statement acknowledging that the annuity transaction is not recommended. -An insurer shall establish a supervision system that - monitors and conducts audits; and annually obtain certification from a senior manager with basis to represent that the function is properly performed. -An insurance producer will not dissuade a consumer from - truthfully responding to an insurer's request for confirmation of suitability information; filing a complaint; or cooperating with the investigation of a complaint. -An insurer shall monitor FINRA member broker-dealer using information collected in the normal course of an insurer's business and provide the FINRA member broker-dealer information and reports reasonably appropriate to assist in maintaining its supervision system.

No individual may sell, solicit or negotiate annuities unless he or she is licensed as a producer for life insurance and has completed a one-time training course that meets the following requirements:

-The training course must be equivalent to at least 4 continuing education credits; -Include information on the types and classifications of annuities; -Identify the parties of an annuity; -Cover how fixed, variable, and indexed annuity contract provisions affect consumers; -Discuss the application of income taxation of qualified and non-qualified annuities; -Explain the primary uses of annuities; and -Explain appropriate sales practices, replacement and disclosure requirements.

Insurers, insurance agencies and insurance producers must maintain and make records of collected information from the consumer and any other information used in making recommendations available to the Commissioner for _____ years after the transaction was completed.

10

The maximum rate must be recalculated at least once every ______ months but not more often than once every ______ months.

12; 3

Debtor group life insurance is issued to a creditor, who is the policyholder, to insure its debtors who have installment debt or a lump-sum payable within _____ months of the initial debt. The premium is paid by the policyholder. The policy may be issued only if the plan expects ______ new entrants per year.

18; 100

The plan must contain at least _____ employees, and the amount of insurance is based on ____________________.

2; the plan not by individual selection.

Conversion is only eligible for those whose insurance terminates and has been insured for at least _____ years under a group policy issued at least ______ years prior to the termination date.

3; 5

Records must be made available to the Commissioner upon request for _____ years afterwards.

5

The insurer must also maintain copies of any sales material with replacement policies for up to _______ years.

5

Insurer's may defer granting the loan for up to _____ months after the loan is requested.

6

The insured may borrow from the insurer against the policy at a rate not to exceed _____ per year for fixed rate policies.

8%

Replacement

A transaction where a new life insurance policy or contract is purchased and in which the proposing producer or insurer knows or should know that an existing policy or contract has been or is to be: -Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated; -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; -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; -Reissued with any reduction in cash value; or -Used in a financed purchase.

All implications of cost savings must be submitted and approved by the

Commisioner

FINRA

Financial Industry Regulatory Authority

Insurer

a company required to be licensed under the laws of West Virginia to provide insurance products

Insurance Producer

a person required to be licensed under the laws of West Virginia to sell, solicit, and negotiate insurance.

A producer who initiates an application must submit to the insurer

a statement signed by the applicant and the producer whether the applicant has an existing policy or contract. If the answer is no, the producer's duties are complete. If the answer is yes, the producer must present and read the notice regarding replacements approved by the Commissioner.

Replacement

a transaction in which a new policy or contract is to be purchased.

Testimonials, appraisal, analyses, or endorsements by third parties must be

accurate, recent, and avoid misleading or deceiving prospective insurers.

Recommendation

advice provided by an insurance producer to a consumer resulting in a purchase or exchange.

Employee group life plans must be available to

all employees or all of any class of employees.

The producer must leave a copy of

all sales material used in the solicitation of the policy or contract.

The insured may assign the proceeds or ownership of a group life insurance policy to

any person as a beneficiary or as to the ownership of the policy, including conversion rights.

The insured may assign the proceeds of a policy as

collateral for a loan or for any other purpose of the insured.

An insurer must verify that each producer appointed to sell its annuity products is _________ before the producer is permitted to sell products.

compliant

Employee group life plans may be __________, where employees are required to help fund the plan, or ___________, where the plan is funded entirely by the employer.

contributory; noncontributory

Direct response advertisements may not indicate any __________ because there is no producer or commission involved.

cost-savings

Replacement rules do not apply to

credit life insurance, group life insurance, group life used to fund prearranged funeral contracts, when exercising a contractual change or conversion privilege of an existing contract or policy or where the policy is conditioned on replacement by the same insurer, policies and contracts used to fund employee pensions or benefit plans governed by ERISA, where new coverage is provided at the cost of the insured's employer or an association of which the insured is a member, term life insurance policies with five years of less, immediate annuities purchased from an existing contract, or structured settlements.

Life insurance proceeds are exempt from

creditors

If a terminated employee dies during the 31-day conversion period without having taking steps to convert the certificate,

death benefits will still be paid.

An employee group life insurance is established by an ___________, who is the policyholder.

employer or employee trust

Group life insurance policies must contain a provision that if the group policy terminates or terminates the insurance of any class of insured persons,

every person insured at the date of termination is entitled to an individual policy of life insurance issued by the insurer.

The insurer must require the notice regarding replacement with

every policy and maintain a copy of the replacement notice signed by the applicant and the producer.

No insurance producer may refer to their self as a ___________, ____________, or any other title that may imply they transact in any other business than insurance.

financial planner; investment advisor

The words ________, ________, or any other similar words or phrases may not be used to describe a service or benefit unless they are true.

free; no extra cost

The premium is paid for by

funds from the employer, employees, or both.

The maximum variable interest rate may not exceed the

higher of the Published Monthly Average of Moody's Corporate Bond Yield Average two months prior to the time the rate is determined or the rate used to compute the cash surrender value plus 1% per annum.

Annuity

includes a fixed or variable annuity that is individually solicited.

Guaranteed issue policies may not use __________, ________ or other similar words.

inexpensive; low-cost

The training course may not include

insurer or company product specifics or include sales or marketing information, materials or training.

Advertisements for life insurance must include the words

life insurance

The notice lists all existing

life insurance policies or annuities to be replaced, the name of the insurer, the insured, and the policy or contract number, and whether the policy will be replaced or used to finance the new policy or contract.

Any advertisement containing policy benefits must display any

limitation of benefits, as well as the whether the premium is level and coverage increases or decreases with age or duration.

An advertisement may not contain any statement or representation that

premiums can be withdrawn under the policy.

Endowment contracts benefits may not be referred to as _____ or ______ on premiums paid.

profit; return

Insurers must develop and maintain a system to insure compliance with

replacement requirement, inform producers of the requirements, provide producers with a written statement regarding the acceptability of replacement, provide a system to identify and review each replacement transaction for appropriateness and compliance with the requirements.

At the request of the Commissioner, the insurer must produce records of each producer's

replacements, lapses in policies, and number of transaction that are unreported replacements.

All life policies contain a ___________ that gives the owner the right to select the death benefit settlement option and states that the proceeds will be paid directly to the beneficiary.

spendthrift clause

The insurer is responsible for complying with suitability with annuity transactions; however if a violation occurs,

the Commissioner may order an insurer, insurance producer and insurance agency producer to take reasonably appropriate corrective action for any harmed consumer or the Commissioner may order appropriate penalties and sanctions.

If the person or organization making the testimonial, appraisal, analysis, or endorsement has a financial interest or proprietary relationship with the insurer,

the advertisement must prominently disclose such.

The notice must be signed by

the applicant and the producer.

Any individual of competent legal capacity may procure an insurance contract upon his own life for the benefit of any person; however no individual may procure a life insurance contract upon the life of another individual unless

the benefits are payable to the individual insured, his personal representative, or a person having an insurable interest in the insured individual at the time the contract was made.

Policies with a waiting period for death benefits must accurately describe and clearly call attention to

the minimum amount of time for the death benefit to be payable.

Advertisements may not emphasize investment or tax-savings of a life insurance policy to a degree that would mislead a purchaser to believe

the policy is an investment or anything other than life insurance.

Advertisements may not contain statistical information relating to any insurer unless

the source of the statistics is identified.

Labor union group life insurance is issued to _____________, who is the policyholder. All eligible members of the plan must be members of _______. The premium is paid by _____________________. The plan must have at least _______ members at the date of issue, and the amount of insurance is based on the plan not by individual selection.

the union; the union; the union, its members, or both; 25

Trustee groups may be established by ___________ employers in the same industry or by _________ labor unions. The individual eligible for the plan must be _________________________. The premium is paid by the group, its members, or both. The policy must cover at least _____ people, and at least ______ persons from each employer/union unit.

two or more; one or more; employees of the employer or members of the union; 100; 5

The term ________ or __________ may not be used when referring to nonguaranteed elements to pay a portion of future premiums.

vanish; vanishing premium

No advertisement may represent or imply premiums

will not be required for each year of the policy to maintain the illustrated death benefits.