Assigned to FIN FOR COMMITTEE
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
FACT SHEET FOR H.B. 2076
life insurance; illustrations
Purpose
Effective January 1, 2026, prescribes requirements for life insurance policy forms and
illustrations.
Background
Life insurance is insurance on human lives. The transacting of life insurance includes: 1)
the granting of endowed benefits; 2) additional benefits in the event of death or dismemberment
by accident or accidental means; 3) additional benefits in the event of disability of the insured; and
4) optional modes of settlement of proceeds of life insurance (A.R.S. ยง 20-254).
The National Association of Insurance Commissioners (NAIC) provides expertise, data
and analysis for insurance commissioners to effectively regulate the industry and protect
consumers. NAIC developed the Life Insurance Illustrations Model Regulation (Model #582).
Model #582 provides rules for life insurance policy illustrations that will protect consumers and
foster consumer education. The regulation provides illustration formats, prescribes standards to be
followed when illustrations are used and specifies the disclosures that are required in connection
with illustrations (NAIC and Model #582).
There is no anticipated fiscal impact to the state General Fund associated with this
legislation.
Provisions
Life Insurance Policy Illustration
1. Defines illustration as a presentation or depiction that includes nonguaranteed elements of a
life insurance policy over a period of years and that is a basic, supplemental or in-force
illustration.
Group and Individual Life Insurance Policy Forms
2. Requires each insurer that markets group and individual life insurance policies to:
a) notify the Director of the Department of Insurance and Financial Institutions (DIFI)
whether a policy form will be marketed with or without a life insurance policy illustration
(illustration);
b) identify policy forms that are marketed on January 1, 2026, and whether an illustration will
be used for those forms; and
c) for all policy forms that are filed after January 1, 2026, make the outlined identification at
the time of filing. FACT SHEET
H.B. 2076
Page 2
3. Allows an insurer to change a life insurance policy form identification by providing notice to
the Director of DIFI.
4. Prohibits, if the insurer identifies a policy form as one to be marketed without an illustration,
any use of an illustration for any policy using that form before the first policy anniversary.
5. Requires a basic illustration to be prepared and delivered in accordance with state law if the
insurer identifies a policy form as one to be marketed with an illustration, except that a basic
illustration does not need to be provided to individual members of a group or individuals
insured under multiple lives coverage issued to a single applicant unless the coverage is
marketed to these individuals.
6. Allows an insurer, for a group life insurance policy or a policy issued to a single applicant on
multiple lives, to furnish an individual or composite illustration representing coverage on the
lives of members of the group or the multiple lives covered.
7. Requires an insurer to include a quote with the enrollment materials to potential enrollees of
nonterm group life insurance policies that are subject to the illustration requirements and
requires the quote to show potential policy values for sample ages and policy years on a
guaranteed and nonguaranteed basis appropriate to the group and the coverage.
8. States that the quote is not considered an illustration but that all information provided must be
consistent with the illustrated scale.
Basic Illustrations
9. Requires an insurer to provide a basic illustration at the delivery of the certificate to enrollees
for nonterm group life insurance who have enrolled in more than the minimum premium
necessary to provide pure death benefit protection and make the basic illustration available to
any enrollee on request.
10. Requires the format of a basic illustration to:
a) be labeled with the date on which the illustration was prepared;
b) have numbered pages, including any explanatory notes or pages, and show the relationship
to the total number of pages in the illustration;
c) clearly identify the assumed dates of payment receipt and benefit payout within a policy
year;
d) show the proposed insured's age as the age plus the number of years the policy is assumed
to have been in force, if the age of the proposed insured is shown as a component of the
tabular detail;
e) identify the assumed payments on which the illustrated benefits and values are based as
premium outlay or contract premium, as applicable;
f) identify illustrated payments as premium outlay for policies that do not require a specific
contract premium;
g) show and clearly label the guaranteed death benefits and values available on surrender, if
any, for the illustrated premium outlay or contract premium;
h) clearly label any elements that are nonguaranteed, which cannot be based on a scale more
favorable to the policyowner than the insurer's illustrated scale at any duration; FACT SHEET
H.B. 2076
Page 3
i) show the guaranteed elements, if any, before any nonguaranteed elements and specifically
refer to the guaranteed elements on any page of an illustration that only shows or describes
the nonguaranteed elements;
j) identify the account or accumulation value of a policy, if shown, by the name the value is
given in the policy and show in close proximity to the corresponding value that is available
on surrender;
k) identify the value that is available on surrender by the name the value is given in the policy
which is the amount available to the policyowner in a lump sum after deducting surrender
charges, policy loans and policy loan interest, as applicable;
l) have any illustrations of nonguaranteed elements be accompanied by a statement indicating
that:
i. the benefits and values are not guaranteed;
ii. the assumptions on which the nonguaranteed elements are based are subject to change
by the insurer; and
iii. the actual results may be more or less favorable;
m) clearly disclose that a charge continues to be required and that, depending on actual results,
the premium payor may need to continue or resume premium outlays if the illustration
shows that the premium payor may have the option to allow policy charges to be paid using
nonguaranteed values; and
n) 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,
reflect those plans and the impact on future policy benefits and values.
11. Allows basic illustrations to show policy benefits and values in graphic or chart form in
addition to tabular form.
12. Requires a basic illustration to contain a narrative summary that includes:
a) a brief description of the policy that includes a statement that the policy is a life insurance
policy;
b) a brief description of the premium outlay or contract premium, as applicable, for the
policy;
c) a brief description on each policy feature, rider or option, guaranteed or nonguaranteed,
and the impact they may have on the policy benefits and values;
d) an identification and brief definition of column headings and key terms that are used in the
illustration; and
e) a prescribed statement.
13. Requires an illustration, for a policy that does not require payment of a specific contract
premium, to show the premium outlay that must be paid to guarantee coverage for the term of
the contract, subject to maximum premiums allowable to qualify as a life insurance policy
under the applicable provisions of the U.S. Internal Revenue Code.
14. Requires a basic illustration, following the narrative summary, to include a numeric summary
of the death benefits and values and the premium outlay and contract premium, as applicable.
15. Requires, for a policy that provides for a contract premium, the guaranteed death benefits and
values to be based on the contract premium. FACT SHEET
H.B. 2076
Page 4
16. Requires the basic illustration numeric summary to be shown for at least policy years 5, 10 and
20 and at age 70, if applicable, with the three bases:
a) policy guarantees;
b) insurer's illustrated scale; and
c) insurer's illustrated scale used but with the nonguaranteed elements reduced as follows:
i. dividends at 50 percent of the dividends that are contained in the illustrative scale used;
ii. nonguaranteed credited interest at rates that are the average of the guaranteed rates and
the rates that are contained in the illustrated scale used; and
iii. all nonguaranteed charges, including term insurance charges, mortality and expenses
charges, at rates that are the average of the guaranteed rates and the rates contained in
illustrated scale used.
17. Requires the numeric summary for multiple life policies to show policy years 5, 10, 20 and 30.
18. Requires the year in which the coverage ceases, if coverage ceases before the policy matures
or when the policy owner reaches 100 years old, to be identified for each of the three bases as
outlined.
19. Outlines prescribed statements that must be included on the same page as the numeric summary
and be signed by the applicant, or if the illustration is provided at the time of delivery, by the
policy holder.
20. Applies the following tabular details to a basic illustration:
a) the basic illustration must include the following for at least each policy year from year 1 to
year 10 and for every fifth policy year thereafter until the insured reaches 100 years old,
policy maturity or final expiration, and except for term insurance beyond the 20th year, for
any year in which the premium outlay and contract premium is subject to change:
i. the premium outlay and mode the applicant plans to pay and the contract premium, as
applicable;
ii. the corresponding guaranteed death benefit, as provided in the policy; and
iii. the corresponding guaranteed value that is available on surrender, as provided in the
policy;
b) for a policy that provides for a contract premium, the guaranteed death benefit and value
that is available on surrender must correspond to the contract premium; and
c) nonguaranteed elements may be shown if the nonguaranteed elements are described in the
contract.
21. Allows, within the tabular details, nonguaranteed elements to be shown if the insurer's current
practice is to pay terminal dividends, for an illustration for a policy for which the insurer
intends to credit terminal dividends.
22. Requires, if any nonguaranteed elements are shown within the tabular details, the
nonguaranteed elements to be shown at the same durations as the corresponding guaranteed
elements, if any.
23. Requires a zero to be displayed in the guaranteed column, if a guaranteed benefit or value is
not available at any duration for which a nonguaranteed benefit or value is shown. FACT SHEET
H.B. 2076
Page 5
Supplemental Illustrations
24. Allows a supplemental illustration to be provided if:
a) the supplemental illustration is appended to, accompanied by or preceded by a basic
illustration that complies with the prescribed basic illustration requirements;
b) the nonguaranteed elements shown are not more favorable to the policyowner than the
corresponding elements based on the scale used in the basic illustration;
c) the supplemental illustration contains the same statement required of a basic illustration
that nonguaranteed elements are not guaranteed; and
d) for a policy that has a contract premium, the contract premium underlying the supplemental
illustration is equal to the contract premium shown in the basic illustration.
25. Requires the premium outlay underlying the supplemental illustration to be equal to the
premium outlay shown in the basic illustration, for policies that do not require a contract
premium.
26. Requires a supplemental illustration to include a notice referring to the basic illustration for
guaranteed elements and other important information.
Life Insurance Policy Illustration Requirements and Prohibitions
27. Requires an illustration that is used in the sale of a life insurance policy to be clearly labeled
life insurance illustration and contain:
a) the name of the insurer that issued the policy;
b) the name and business address of the producer or the insurer's authorized representative, if
any;
c) the name, age and sex of the proposed insured, unless a composite illustration is allowed;
d) the underwriting or rating classification on which the illustration is based;
e) the generic name of the policy, the company product name, if applicable, and the form
number;
f) the initial death benefit; and
g) the dividend option election or application of nonguaranteed elements; if applicable.
28. Prohibits an insurer or its producers or authorized representatives, when using an illustration
in the sale of a life insurance policy, from:
a) representing the policy as anything other than a life insurance policy;
b) using or describing nonguaranteed elements in a manner that is misleading or that has the
capacity or tendency to mislead;
c) stating or implying that the payment or amount of nonguaranteed elements is guaranteed;
d) using an in illustration not in compliance with the prescribed illustration requirements;
e) using an illustration that depicts policy performance that is more favorable to the
policyowner than that produced by the illustrated scale;
f) providing an applicant with an incomplete illustration;
g) representing 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;
h) using the term vanish 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; FACT SHEET
H.B. 2076
Page 6
i) using a lapse-supported illustration, except for policies that can never develop
nonforfeiture values; and
j) using an illustration that is not a self-supporting illustration.
29. Stipulates that, if an interest rate that is used to determine the illustrated nonguaranteed
elements is shown, the interest rate may not be greater than the earned interest rate underlying
the disciplined current scale.
Delivery of Illustrations and Records Retention
30. Stipulates that, if a basic illustration is used by an insurance producer or other authorized
representative in the sale of a life insurance policy and the policy is applied for as illustrated,
a copy of the signed illustration must be submitted to the insurer at the time of policy
application with a copy also provided to the applicant.
31. Stipulates that, if the policy is issued other than as applied for, a revised basic illustration that
conforms to the policy as issued must be sent with the policy.
32. Requires the revised illustration to conform to the prescribed illustration requirements, be
labeled revised illustration and be signed and dated by the applicant or policyowner and
producer or authorized representative by the time the policy is delivered with a copy provided
to the insurer and the policyowner.
33. Stipulates that, if an illustration is not used by an insurance producer or other authorized
representative in the sale of a life insurance policy or if the policy is applied for other than as
illustrated, the producer or the authorized representative must certify to that effect in writing
on a form provided by the insurer.
34. Requires an applicant, on an insurer-prescribed form, to acknowledge that an illustration
conforming to the policy applied for was not provided and to further acknowledge an
understanding that an illustration conforming to the policy as issued will be provided by the
time of policy delivery.
35. Requires the applicant to submit the insurer-prescribed form to the insurer at the time of policy
application.
36. Stipulates that, if a policy is issued, a basic illustration that conforms to that policy as issued
must be sent with the policy and signed in accordance with the prescribed illustration delivery
requirements by the time the policy is delivered with a copy provided to the insurer and the
policyowner.
37. Stipulates that, if the insurer mails the basic or revised illustration to the applicant or
policyowner, the illustration must include instructions for the applicant or policyowner to sign
the duplicate copy of the numeric summary page of the illustration for the policy issued and
return the signed copy to the insurer.
38. Specifies that an insurer's obligation to mail an illustration for a signature is satisfied if the
insurer can demonstrate that it has made a diligent effort to secure a signed copy of the numeric
summary page. FACT SHEET
H.B. 2076
Page 7
39. Stipulates that an insurer's requirement to make a diligent effort is satisfied if the insurer
includes in the mailing a self-addressed, postage prepaid envelope with instructions for
returning the signed numeric summary page.
40. Allows an insurer to send a copy with instructions for signing and returning the signed copy
electronically if the applicant or policyowner consents to transact insurance electronically.
41. Requires an insurer to retain a copy of the basic illustration and revised basic illustration, if
any, signed as applicable, along with any certification that either no illustration was used or
that the policy was for other than as illustrated until three years after the policy is no longer in
force.
42. States that the insurer does not need to retain a copy if a policy is not issued.
Annual Report
43. Requires, if a policy is designated as one that will use illustrations, an insurer to provide each
policyowner with an annual report on the status of the policy as follows:
a) for universal life policies: and
i. the beginning and end date of the current report period;
ii. the policy value at the end of the previous and current report period;
iii. the total amounts credited or debited to the policy value during the current report
period, identifying each by type and including interest, mortality, expense and riders;
iv. the current death benefit at the end of the current report period on each life covered by
the policy;
v. the net cash surrender value of the policy as of the end of the current report period;
vi. the amount of outstanding loans, if any, as of the end of the current report period;
vii. for fixed premium policies, a notice whether the policy's net cash surrender value is
such that it would not maintain insurance in force until the end of the next reporting
period, assuming guaranteed interest, mortality and expense loads and continued
scheduled premium payments; and
viii. for flexible premium policies, a notice whether the policy's net cash surrender value
will not maintain insurance in force until the end of the next reporting period unless
further premium payments are made, assuming guaranteed interest, mortality and
expense loads;
b) for all other policies, where applicable:
i. current death benefit;
ii. annual contract premium;
iii. current cash surrender value;
iv. current dividend;
v. application of current dividend; and
vi. amount of outstanding loan.
44. Requires insurers writing life insurance policies that do not build nonforfeiture values to
provide an annual report with respect to such policies only for those years when the insurer has
made a change to nonguaranteed policy elements. FACT SHEET
H.B. 2076
Page 8
45. Stipulates that, if an insurer makes an adverse change in nonguaranteed elements that could
affect the policy since the last annual report, the annual report must contain notice of that fact
and prominently display the nature of the change.
46. Stipulates that, if an annual report does not include an in-force illustration, the annual report
must contain a prominently displayed important policyowner notice as prescribed.
47. Allows an insurer to vary the sequential order of the methods for obtaining an in-force
illustration.
48. Requires an insurer, on request of a policyowner, to furnish an in-force illustration of current
and future benefits and values based on the insurer's present illustrated scale and requires the
in-force illustration to comply with prescribed statutory requirements.
49. States that a signature or other acknowledgment of receipt of an in-force illustration is not
required.
Illustration Actuaries
50. Requires each insurer's board of directors to appoint one or more illustration actuaries.
51. Requires an illustration actuary to certify that the disciplined current scale that is used in
illustrations conforms with the actuarial standards of practice for compliance with NAIC's
Model #582 adopted by the Actuarial Standards Board and that the illustrated scales used in
insurer authorized illustration meet the prescribed illustration requirements.
52. Requires an illustration actuary to:
a) be a member in good standing of the American Academy of Actuaries;
b) be familiar with the standard of practice regarding life insurance policy illustrations;
c) after notice and a hearing, not have been found by the Director of DIFI to have:
i. violated any provision of, or any obligation imposed by, the statutes governing
insurance or any other law in the course of the individual's dealings as an illustration
actuary;
ii. been found guilty of fraudulent or dishonest practices;
iii. demonstrated incompetence, lack of cooperation or untrustworthiness to act as an
illustration actuary; or
iv. resigned or been removed as an illustration actuary within the previous five years as a
result of acts or omissions indicated in any adverse report on examination or as a result
of a failure to adhere to generally acceptable actuarial standards; and
d) notify the Director of DIFI of any action taken by the insurance director of another state
for unlawful, dishonest, incompetent or similar acts;
e) disclose, as applicable, in the annual certification: and
i. whether a currently payable scale applicable for business issued within the previous
five years and within the scope of the certification was reduced for reasons other than
changes in the experience factors underlying the disciplined current scale since the last
annual certification;
ii. if nonguaranteed elements illustrated for new policies are not consistent with those
illustrated for similar in-force policies; and FACT SHEET
H.B. 2076
Page 9
iii. if nonguaranteed elements illustrated for both new and in-force policies are
inconsistent with the nonguaranteed elements actually being paid, charged or credited
to the same or similar forms; and
f) disclose in the annual certification the method that is used to allocate overhead expenses
for all illustrations as being one of the following:
i. fully allocated expenses;
ii. marginal expenses; or
iii. a generally recognized expense table that is based on fully allocated expenses
representing a significant portion of insurance companies and that is approved by the
Director of DIFI.
53. Stipulates that, if an insurer changes the illustration actuary who is responsible for all or a
portion of the company's policy forms, the insurer must promptly notify the Director of DIFI
of the change and the reason for the change.
54. Requires an illustration actuary to file the annual certification with the insurer's board of
directors and the Director of DIFI for all policy forms for which illustrations are used and
before a new policy form is illustrated.
55. Requires an illustration actuary to promptly notify the board of directors and the Director of
DIFI if an error is found in the previous certification.
56. Stipulates that, if an illustration actuary is unable to certify the scale for any policy form
illustration that the insurer intends to use, the illustration actuary must promptly notify the
insurer's board of directors and the Director of DIFI of the illustration actuary's inability to
certify.
57. Requires an insurer's responsible officer, other than the illustration actuary, to certify annually
both of the following:
a) that the illustration formats meet the prescribed statutory requirements and that the scales
used in insurer-authorized illustrations are those scales that have been certified by the
illustration actuary; and
b) that the company has provided its agents with information about the expense allocation
method used in its illustration as prescribed.
58. Requires the annual certifications to be provided to the Director of DIFI each year by a
Director-determined date.
Miscellaneous
59. Applies the illustrations requirements to all group and individual life insurance policies and
certificates except:
a) variable life insurance;
b) individual and group annuity contracts;
c) credit life insurance; and
d) life insurance policies with no illustrated death benefits on any individual exceeding
$10,000. FACT SHEET
H.B. 2076
Page 10
60. States that, in addition to any other penalties provided by law, an insurer or producer that
violates the prescribed life insurance illustration requirements commits an unfair trade practice.
61. Defines illustrated scale as a scale of nonguaranteed elements currently being illustrated that
is not more favorable to the policyowner than the lesser of either of the disciplined current
scale or currently payable scale.
62. Defines terms.
63. Becomes effective on January 1, 2026.
House Action
COM 1/21/25 DPA 10-0-0-0
3
rd
Read 2/6/25 53-6-1
Prepared by Senate Research
March 6, 2025
MG/KP/ci