HB 2076
Initials PB Page 1 Senate Engrossed
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature
First Regular Session
House: COM DPA 10-0-0-0 | 3
rd
Read 53-6-1-0
Senate: FIN DPA 6-1-0-0 | 3
rd
Read 28-2-0-0
HB 2076: life insurance; illustrations
Sponsor: Representative Livingston, LD 28
Senate Engrossed
Overview
Establishes statutory provisions relating to life insurance illustrations.
History
The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting
and regulatory support organization governed by state chief insurance regulators. The NAIC
provides expertise, data and analysis for insurance commissioners to effectively regulate the
industry and protect consumers.
The NAIC established the Life Insurance Illustrations Model Regulation (#582) with the
purpose of providing 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. An illustration is a presentation or depiction
provided to prospective or new policy owners that shows how the policy should perform under
specific circumstances set out in the illustration.
Provisions
Life Insurance Illustrations
1. Establishes statutory requirements for an illustration which is a presentation or
depiction that includes nonguaranteed elements of a life insurance policy over a period of
years and that is basic illustration, supplemental illustration or in-force illustration. (Sec.
1)
Applicability
2. Applies life insurance illustrations provisions to all group and individual life insurance
policies and certificates. (Sec. 1)
3. Exempts, from the life insurance illustrations provisions:
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. (Sec. 1)
Illustration Identification
4. Directs insurers to notify the director whether a policy will be marketed with or without
an illustration. (Sec. 1)
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5. Stipulates, for policy forms that are actively marketed on January 1, 2026, an insurer
must identify those forms and whether an illustration will be used. (Sec. 1)
6. Specifies, for policy forms that filed after January 1, 2026, an insurer must identify
whether an illustration will be used at the time of filing. (Sec. 1)
7. Allows an insurer to change an identification by notifying the director. (Sec. 1)
8. Prohibits any use of an illustration before the first policy anniversary for any policy form
that is identified as one to be marketed without an illustration. (Sec. 1)
9. Requires, for a policy form identified as one to be marketed with an illustration, a basic
illustration to be prepared and delivered an accordance with statutory illustration
requirements, with exceptions. (Sec. 1)
10. Allows an insurer, for certain policies, to furnish either an individual or composite
illustration representing coverage on the lives of members of the group, or the multiple
lives covered. (Sec. 1)
11. Outlines requirements for including a quote that shows potential policy values for sample
ages and policy years on a guaranteed and nonguaranteed basis appropriate to the group
and the coverage. (Sec. 1)
12. Instructs an insurer to provide a basic illustration at the delivery of the certificate to
certain enrollees for nonterm group life insurance and make the basic illustration
available to any nonterm group life enrollee on request. (Sec. 1)
Illustration Requirements; Prohibitions
13. Requires an illustration that is used in the sale of a life insurance policy to be clearly
labeled and contain specified information. (Sec. 1)
14. Outlines prohibitions for insurers or producers when using an illustration. (Sec. 1)
15. Prohibits the interest rate from being greater than the earned interest rate underlying
the disciplined current scale if the rate that is used to determine the illustrated
nonguaranteed elements is shown. (Sec. 1)
16. Specifies the format of a basic illustration must conform with outlined requirements,
including be labeled with the preparation date, page numbering, show any guaranteed
death benefits, nonguaranteed and guaranteed elements. (Sec. 1)
17. Requires a basic illustration to contain a narrative summary that includes specified
information, including a brief description of the policy being illustrated, the premium
outlay and each policy feature, rider or option, that is shown in the basic illustration. (Sec.
1)
18. 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.
(sec. 1)
19. Adds the guaranteed death benefits and values must be based on the contract premium.
(Sec. 1)
20. Specifies the numeric summary must be shown for at least policy years 5, 10 and 20 and
at age 70 on three bases. (Sec. 1)
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21. Outlines requirements applicable to the numeric summary, including to the three bases.
(Sec. 1)
22. Outlines specified statements which must be included on the same page as the numeric
summary and be signed by the applicant or policy holder. (Sec. 1)
23. Outlines specified tabular details applicable to a basic illustration. (Sec. 1)
Supplemental Illustrations
24. Stipulates the conditions and requirements for providing a supplemental illustration.
(Sec. 1)
25. Requires the supplemental illustration to include a notice referring to the basic
illustration for guaranteed elements and other important information. (Sec. 1)
Illustrations Delivery
26. Requires a copy of a signed basic illustration that is used by an insurance producer in the
sale of a life insurance policy be submitted to the insurer at the time of policy application
with a copy provided to the applicant. (Sec. 1)
27. Stipulates a revised basic illustration, for a policy that is issued other than as applied for,
must be sent with the policy and a copy provided to the insurer and policyholder. (Sec. 1)
28. Adds the revised illustration must conform to statutory requirements, be labeled as
revised and have appropriate signatures. (Sec. 1)
29. Stipulates a producer must certify in writing if an illustration is not used in the sale of a
life insurance policy or if the policy is applied for other than as illustrated. (Sec. 1)
30. Requires an applicant to acknowledge that a conforming illustration was not provided
and will be provided no later than the time of the policy delivery. (Sec. 1)
31. Instructs the applicant to submit such information to the insurer at the time of policy
application. (Sec. 1)
32. Requires, for policies that are issued, a basic illustration that conforms as issued be sent
with the policy and appropriately signed no later than the time the policy is delivered
with a copy provided to the insurer and the policyholder. (Sec. 1)
33. Requires a basic illustration or revised illustration that is mailed by the insurer to include
instructions for the applicant or policyowner to sign the duplicate copy of the numeric
summary page and return the copy to the insurer. (Sec. 1)
34. Outlines conditions for an insurer to demonstrate satisfactory compliance with the
delivery obligation. (Sec. 1)
35. Allows the insurer to send and receive an electronic signed copy provided the applicant
or policyholder consents to transact insurance electronically. (Sec. 1)
36. Provides retention requirements for the insurer. (Sec. 1)
Annual Report
37. Stipulates the insurer must provide each policyholder with an annual report on the state
of the policy and outlines contents of the report. (Sec. 1)
38. Instructs insurers who write 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. (Sec. 1)
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39. Requires a specified notice be prominently displayed in an annual report that does not
include an in-force illustration. (Sec. 1)
40. Instructs an insurer, on request of a policyholder, to furnish an in-force illustration of
current and future benefits and values. (Sec. 1)
41. Specifies such in-force illustration must comply with statutory requirements and is not
required to have a signature. (Sec. 1)
42. Stipulates the annual report must contain a notice of change if the insurer makes an
adverse change in nonguaranteed elements that could affect the policy since the last
annual report. (Sec. 1)
Illustration Actuaries
43. Instructs the board of directors of each insurer to appoint one or more illustration
actuaries. (Sec. 1)
44. Directs the actuary to certify that the disciplined current scale that is used in illustrations
conforms with the actuarial standard of practice for compliance with NAIC model
regulation and meet the statutory requirements for life insurance illustrations. (Sec. 1)
45. Delineates the actuary requirements and responsibilities. (Sec. 1)
46. Instructs the actuary to file the annual certification with the board of directors of the
insurer and the director as outlined. (Sec. 1)
47. Requires the actuary to notify the board of directors and the director if an error is found
in previous certification. (Sec. 1)
48. Stipulates the actuary must notify the board of directors and the director of the inability
to certify if the actuary is unable to certify the scale for any policy from illustration that
the insurer intends to use. (Sec. 1)
49. Instructs a responsible officer of the insurer to annually certify:
a) that the illustration formats meet 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 illustrations. (Sec. 1)
50. Requires the annual certifications be provided to the director each year by the date
determined by the director. (Sec. 1)
51. Stipulates an insurer who changes the illustration actuary responsible for all or a portion
of the company's policy forms must notify the director of the change and reason for the
change. (Sec. 1)
Penalties
52. Specifies an insurer or producer that violates statutory requirements relating to life
insurance illustrations commits an unfair trade practice. (Sec. 1)
Miscellaneous
53. Defines pertinent terms. (Sec. 1)
54. Contains a delayed effective date of January 1, 2025. (Sec. 2)
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Senate Amendments
1. Adds a stipulation that an insurer, who markets a policy form with an illustration which
is subject to life insurance illustrations requirements, is not required to provide a policy
summary to the applicant or the policyowner as required by administrative rule.
2. Makes clarifying changes.