Amended IN Senate March 09, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 927Introduced by Senator Archuleta(Principal coauthor: Assembly Member Levine)February 07, 2022 An act to amend Section 10222 of 10127.9 of, and to add Article 2.5 (commencing with Section 10470) to Chapter 5 of Part 2 of Division 2 of, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGESTSB 927, as amended, Archuleta. Life insurance.Existing law generally regulates classes of insurance, including life insurance. Existing law requires a life insurance policy illustration, which is a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years, to include specified information and conform to specified requirements to ensure an illustration is understandable and does not mislead consumers.Existing law requires a life insurance policy to include specified disclosures, including requiring an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 1990, to include a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation, as specified.This bill would require an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 2023, to also include a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind.This bill would require a producer or insurer to act in the best interest of the consumer, as specified, in recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity. The bill would require a life insurance insurer or agent to make specified disclosures to a prospective policyholder, including if the agent receives commissions or other compensation that is contingent on selling a life insurance policy or annuity or if the insurer or agent who makes a statement about the potential tax advantages of a life insurance policy. The bill would require an illustration or policy to disclose fees and surrender charges in specified forms. The bill would require a prospective policyholder to sign a copy of those disclosures, and would require the insurer to retain copies of the signed disclosures, as specified.Existing law generally regulates classes of insurance, including life insurance. Existing law provides that life insurance insuring independent contractors written under a policy issued to a newspaper, farm paper, magazine, or other periodical that meets specified conditions is a form of blanket life insurance.This bill would make technical, nonsubstantive changes to that provision.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. To protect consumers and to help them make better decisions in purchasing life insurance, this act shall govern all sales of life insurance to residents of this state. It is the intent of the Legislature in enacting this statute to ensure that consumers are not misled, that they are provided with information that is material to their life insurance purchases, and that agents selling cash value life insurance or annuity products make recommendations that are in the best interest of the consumers they serve. The requirements of this act shall be in addition to, and not in place of, the requirements imposed by other applicable law.SEC. 2. Section 10127.9 of the Insurance Code is amended to read:10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.SEC. 3. Article 2.5 (commencing with Section 10470) is added to Chapter 5 of Part 2 of Division 2 of the Insurance Code, to read: Article 2.5. Transparency and Accountability in Life Insurance Transactions10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.SECTION 1.Section 10222 of the Insurance Code is amended to read:10222.(a)Life insurance that conforms to all the following conditions is one form of blanket life insurance:(1)Written under a policy issued to a newspaper, farm paper, magazine, or other periodical publication.(2)Insuring independent contractors, such as newspaper delivery persons, dealers, distributors, wholesalers, or other personnel, engaged in the sale, distribution, collecting for, or other activities pertaining to the marketing and delivery of publications referred to in paragraph (1), including attending coaching school or while participating in a trip organized, supervised, and sponsored as a reward for meritorious service, for amounts of insurance based upon a plan precluding individual selection.(3)For the benefit of persons other than the policyholder.(4)If the premium is remitted by the policyholder.(5)Insuring persons without any requirement for individual enrollment and without individual commitment or undertaking to pay, and with either the policyholder or the insured to pay all the premium or part of the premium as a condition precedent to coverage.(b)This section does not prohibit the cost of the insurance coverage being borne by the individuals insured or by their parents or guardians. If the premium for the insurance is paid by the person insured, the person may, upon request, obtain from the insurer in certificate form a copy of the policy.(c)Coverage shall not be provided to any person who files with the entity to whom the blanket policy is to be issued, for delivery to the insurer, a written statement requesting that the person not be covered. In the case of a minor, the statement may be filed by the minors parent or guardian. If the number of persons filing such statements exceeds 10 percent of the number of persons within categories defined as covered under the policy, it shall not be put into effect, and if in effect shall not be renewed.
Amended IN Senate March 09, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Senate Bill No. 927Introduced by Senator Archuleta(Principal coauthor: Assembly Member Levine)February 07, 2022 An act to amend Section 10222 of 10127.9 of, and to add Article 2.5 (commencing with Section 10470) to Chapter 5 of Part 2 of Division 2 of, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGESTSB 927, as amended, Archuleta. Life insurance.Existing law generally regulates classes of insurance, including life insurance. Existing law requires a life insurance policy illustration, which is a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years, to include specified information and conform to specified requirements to ensure an illustration is understandable and does not mislead consumers.Existing law requires a life insurance policy to include specified disclosures, including requiring an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 1990, to include a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation, as specified.This bill would require an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 2023, to also include a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind.This bill would require a producer or insurer to act in the best interest of the consumer, as specified, in recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity. The bill would require a life insurance insurer or agent to make specified disclosures to a prospective policyholder, including if the agent receives commissions or other compensation that is contingent on selling a life insurance policy or annuity or if the insurer or agent who makes a statement about the potential tax advantages of a life insurance policy. The bill would require an illustration or policy to disclose fees and surrender charges in specified forms. The bill would require a prospective policyholder to sign a copy of those disclosures, and would require the insurer to retain copies of the signed disclosures, as specified.Existing law generally regulates classes of insurance, including life insurance. Existing law provides that life insurance insuring independent contractors written under a policy issued to a newspaper, farm paper, magazine, or other periodical that meets specified conditions is a form of blanket life insurance.This bill would make technical, nonsubstantive changes to that provision.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO
Amended IN Senate March 09, 2022
Amended IN Senate March 09, 2022
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION
Senate Bill
No. 927
Introduced by Senator Archuleta(Principal coauthor: Assembly Member Levine)February 07, 2022
Introduced by Senator Archuleta(Principal coauthor: Assembly Member Levine)
February 07, 2022
An act to amend Section 10222 of 10127.9 of, and to add Article 2.5 (commencing with Section 10470) to Chapter 5 of Part 2 of Division 2 of, the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 927, as amended, Archuleta. Life insurance.
Existing law generally regulates classes of insurance, including life insurance. Existing law requires a life insurance policy illustration, which is a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years, to include specified information and conform to specified requirements to ensure an illustration is understandable and does not mislead consumers.Existing law requires a life insurance policy to include specified disclosures, including requiring an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 1990, to include a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation, as specified.This bill would require an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 2023, to also include a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind.This bill would require a producer or insurer to act in the best interest of the consumer, as specified, in recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity. The bill would require a life insurance insurer or agent to make specified disclosures to a prospective policyholder, including if the agent receives commissions or other compensation that is contingent on selling a life insurance policy or annuity or if the insurer or agent who makes a statement about the potential tax advantages of a life insurance policy. The bill would require an illustration or policy to disclose fees and surrender charges in specified forms. The bill would require a prospective policyholder to sign a copy of those disclosures, and would require the insurer to retain copies of the signed disclosures, as specified.Existing law generally regulates classes of insurance, including life insurance. Existing law provides that life insurance insuring independent contractors written under a policy issued to a newspaper, farm paper, magazine, or other periodical that meets specified conditions is a form of blanket life insurance.This bill would make technical, nonsubstantive changes to that provision.
Existing law generally regulates classes of insurance, including life insurance. Existing law requires a life insurance policy illustration, which is a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years, to include specified information and conform to specified requirements to ensure an illustration is understandable and does not mislead consumers.
Existing law requires a life insurance policy to include specified disclosures, including requiring an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 1990, to include a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation, as specified.
This bill would require an individual life insurance policy or annuity contract that is initially delivered or issued for delivery on and after January 1, 2023, to also include a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind.
This bill would require a producer or insurer to act in the best interest of the consumer, as specified, in recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity. The bill would require a life insurance insurer or agent to make specified disclosures to a prospective policyholder, including if the agent receives commissions or other compensation that is contingent on selling a life insurance policy or annuity or if the insurer or agent who makes a statement about the potential tax advantages of a life insurance policy. The bill would require an illustration or policy to disclose fees and surrender charges in specified forms. The bill would require a prospective policyholder to sign a copy of those disclosures, and would require the insurer to retain copies of the signed disclosures, as specified.
Existing law generally regulates classes of insurance, including life insurance. Existing law provides that life insurance insuring independent contractors written under a policy issued to a newspaper, farm paper, magazine, or other periodical that meets specified conditions is a form of blanket life insurance.
This bill would make technical, nonsubstantive changes to that provision.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. To protect consumers and to help them make better decisions in purchasing life insurance, this act shall govern all sales of life insurance to residents of this state. It is the intent of the Legislature in enacting this statute to ensure that consumers are not misled, that they are provided with information that is material to their life insurance purchases, and that agents selling cash value life insurance or annuity products make recommendations that are in the best interest of the consumers they serve. The requirements of this act shall be in addition to, and not in place of, the requirements imposed by other applicable law.SEC. 2. Section 10127.9 of the Insurance Code is amended to read:10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.SEC. 3. Article 2.5 (commencing with Section 10470) is added to Chapter 5 of Part 2 of Division 2 of the Insurance Code, to read: Article 2.5. Transparency and Accountability in Life Insurance Transactions10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.SECTION 1.Section 10222 of the Insurance Code is amended to read:10222.(a)Life insurance that conforms to all the following conditions is one form of blanket life insurance:(1)Written under a policy issued to a newspaper, farm paper, magazine, or other periodical publication.(2)Insuring independent contractors, such as newspaper delivery persons, dealers, distributors, wholesalers, or other personnel, engaged in the sale, distribution, collecting for, or other activities pertaining to the marketing and delivery of publications referred to in paragraph (1), including attending coaching school or while participating in a trip organized, supervised, and sponsored as a reward for meritorious service, for amounts of insurance based upon a plan precluding individual selection.(3)For the benefit of persons other than the policyholder.(4)If the premium is remitted by the policyholder.(5)Insuring persons without any requirement for individual enrollment and without individual commitment or undertaking to pay, and with either the policyholder or the insured to pay all the premium or part of the premium as a condition precedent to coverage.(b)This section does not prohibit the cost of the insurance coverage being borne by the individuals insured or by their parents or guardians. If the premium for the insurance is paid by the person insured, the person may, upon request, obtain from the insurer in certificate form a copy of the policy.(c)Coverage shall not be provided to any person who files with the entity to whom the blanket policy is to be issued, for delivery to the insurer, a written statement requesting that the person not be covered. In the case of a minor, the statement may be filed by the minors parent or guardian. If the number of persons filing such statements exceeds 10 percent of the number of persons within categories defined as covered under the policy, it shall not be put into effect, and if in effect shall not be renewed.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. To protect consumers and to help them make better decisions in purchasing life insurance, this act shall govern all sales of life insurance to residents of this state. It is the intent of the Legislature in enacting this statute to ensure that consumers are not misled, that they are provided with information that is material to their life insurance purchases, and that agents selling cash value life insurance or annuity products make recommendations that are in the best interest of the consumers they serve. The requirements of this act shall be in addition to, and not in place of, the requirements imposed by other applicable law.
SECTION 1. To protect consumers and to help them make better decisions in purchasing life insurance, this act shall govern all sales of life insurance to residents of this state. It is the intent of the Legislature in enacting this statute to ensure that consumers are not misled, that they are provided with information that is material to their life insurance purchases, and that agents selling cash value life insurance or annuity products make recommendations that are in the best interest of the consumers they serve. The requirements of this act shall be in addition to, and not in place of, the requirements imposed by other applicable law.
SECTION 1. To protect consumers and to help them make better decisions in purchasing life insurance, this act shall govern all sales of life insurance to residents of this state. It is the intent of the Legislature in enacting this statute to ensure that consumers are not misled, that they are provided with information that is material to their life insurance purchases, and that agents selling cash value life insurance or annuity products make recommendations that are in the best interest of the consumers they serve. The requirements of this act shall be in addition to, and not in place of, the requirements imposed by other applicable law.
### SECTION 1.
SEC. 2. Section 10127.9 of the Insurance Code is amended to read:10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.
SEC. 2. Section 10127.9 of the Insurance Code is amended to read:
### SEC. 2.
10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.
10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.
10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.(e)This section shall become operative on July 1, 2015.
10127.9. (a) (1) Every individual life insurance policy and every or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 1990, shall have printed on the front of the policy jacket or on the cover page a notice stating that, after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by mail or other delivery method to the insurer or to the agent through whom it was purchased. An individual life insurance policy or individual annuity contract that is initially delivered or issued for delivery in this state on and after January 1, 2023, shall also have printed on the front of the policy jacket or on the cover page a notice stating that, in deciding whether to cancel the policy, the policy owner is entitled to review and rely on any illustration, policy, or other disclosure or information of any kind. The period of time set forth by the insurer for return of the policy by the owner shall be clearly stated and this period shall be not less than 10 days nor more than 30 days.
(2) The owner may return the policy to the insurer by mail or other delivery method at any time during the period specified in the notice. In the case of individual nonvariable life insurance policies and individual nonvariable annuity contracts, including modified guaranteed contracts, by delivering or mailing the policy pursuant to this section during the cancellation period, the owner shall void the policy from the beginning, and the parties shall be in the same position as if no policy had been issued. All premiums paid and any policy fee paid for the policy shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy. In the case of individual variable annuity contracts and individual variable life insurance policies, return of the policy during the cancellation period shall entitle the owner to a refund of the account value and any policy fee paid for the policy. The account value and policy fee shall be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the owner has canceled the policy.
(b) This section applies to all individual policies issued or delivered in this state on or after January 1, 1990, but does not apply to any policy subject to Section 10127.7. All policies subject to this section which that are in effect on January 1, 1990, shall be construed to be in compliance with this section, and any provision in any policy which that is in conflict with this section shall be of no force or effect.
(c) This section does not apply to individual life insurance policies issued in connection with a credit transaction or issued under a contractual policy-change or conversion privilege provision contained in a policy.
(d) General references to policy or policies in this section refer to both life insurance policies and annuity contracts.
(e)This section shall become operative on July 1, 2015.
SEC. 3. Article 2.5 (commencing with Section 10470) is added to Chapter 5 of Part 2 of Division 2 of the Insurance Code, to read: Article 2.5. Transparency and Accountability in Life Insurance Transactions10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.
SEC. 3. Article 2.5 (commencing with Section 10470) is added to Chapter 5 of Part 2 of Division 2 of the Insurance Code, to read:
### SEC. 3.
Article 2.5. Transparency and Accountability in Life Insurance Transactions10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.
Article 2.5. Transparency and Accountability in Life Insurance Transactions10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.
Article 2.5. Transparency and Accountability in Life Insurance Transactions
Article 2.5. Transparency and Accountability in Life Insurance Transactions
10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.(b) The commissioner shall, as necessary, promulgate regulations to administer this section.
10470. (a) In recommending a sales transaction of a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity to a consumer, the producer, or the insurer if a producer is not involved, shall act in the best interest of the consumer. The best interest of the consumer requires that the producers or insurers recommendation to the consumer reflect the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with these matters would use under the circumstances then prevailing. Only the interests of the consumer shall be considered in making the recommendation. The producer may receive compensation or other incentives authorized by law and regulation if the amount of the compensation or the receipt of an incentive does not influence the recommendation.
(b) The commissioner shall, as necessary, promulgate regulations to administer this section.
10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.
10471. (a) A life insurance agent who receives commissions, or any other monetary or nonmonetary compensation that is contingent on selling a life insurance policy, other than a policy solely providing term life with no cash value, or an annuity, shall make the following disclosure to a prospective policyholder at or before the time the agent first engages in any substantive discussion of a life insurance policy or annuity available for potential purchase:
IMPORTANT INFORMATION REGARDING AGENT COMPENSATION AND POTENTIAL CONFLICTS OF INTEREST: The agent is not paid a salary by the insurance company whose insurance policy or annuity they may be discussing with you. The agent gets paid only if you decide to purchase the policy or annuity. You should also know that, in general, the higher the amount of premium you pay for the policy or annuity, the more compensation the agent will receive. In other words, because the agents compensation depends on whether and what policy or annuity you buy, this could create a conflict between the agents financial interests and your financial interests. If you apply for a policy or annuity, you will be given a written estimate of the amount of compensation your agent will receive if you buy that policy or annuity. But at any time in the process of buying a policy or annuity, you should feel free to ask your agent questions about any monetary or nonmonetary compensation they may receive if you buy a policy or annuity from the agent.
(b) At or before the time a life insurance agent takes an application for a policy or annuity from a prospective policyholder, the agent shall provide the prospective policyholder with a written estimate of the total monetary or nonmonetary compensation the agent may receive if the prospective policyholder purchases the particular life insurance policy or annuity applied for, including payments the agent may receive from the insurer, general agents, distributors, or other parties involved in the transaction.
(c) A prospective policyholder shall sign a copy, which may be electronic, of the disclosures required pursuant to subdivisions (a) and (b), and a signed copy shall be provided to the prospective policyholder. If the particular policy or annuity is issued, the insurer shall retain copies of the signed disclosures until three years after the policy or annuity is no longer in force.
10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:(1) Narrative form, with a description of each fee and its method of calculation.(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.
10472. (a) An illustration, as defined in Section 10509.953, shall disclose all fees applicable to the policy in both of the following forms:
(1) Narrative form, with a description of each fee and its method of calculation.
(2) Numerical form in a policy charges report, which sets forth the amount of each fee that would be paid in the scenario or scenarios depicted in any presentation of nonguaranteed values in an illustration. The policy charges report shall include all of the following:
(A) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.
(B) The charges that would be paid assuming current levels of fees according to the insurers illustrated scale, as defined in Section 10509.953, and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.
(C) The charges that would be paid assuming guaranteed maximum levels of fees and the nonguaranteed crediting rates underlying any nonguaranteed values shown in the illustration.
(D) The charges that would be paid assuming guaranteed maximum levels of fees and an alternate crediting rate that reflects the midpoint between the guaranteed minimum crediting rate and the nonguaranteed crediting rate underlying any nonguaranteed values shown in the illustration.
(b) The illustration shall include the following disclosure immediately above the signature line for the prospective policyholder: Any fee not labeled as guaranteed may be increased by the insurer at any time.
(c) If a prospective policyholder applies for a policy, the prospective policyholder shall sign a copy, which may be electronic, of the policy charges report for any illustration that is of the policy as applied for or of the policy as issued, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed policy charges report as part of the illustration retained pursuant to Section 10509.958.
10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.
10473. (a) If an insurer or agent makes a statement about the potential tax advantages of a life insurance policy, the insurer or agent shall, the first time that statement is made, provide the prospective policyholder with the following disclosure:
Disclosure Regarding the Potential Tax Benefits of Life Insurance: No policy of life insurance can deliver any tax benefits unless the policy is kept in force until the death of the insured, which may be many years in the future. This is an important consideration because consumers, especially those who are not wealthy, generally find it extremely difficult to keep a policy in force for the entire lifetime of the insured due to the cost of insurance charges and other fees that must be paid to keep a policy in force.
(b) The prospective policyholder shall sign a copy, which may be electronic, of the disclosure required pursuant to subdivision (a), and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.
10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.
10474. If a life insurance policy provides for crediting the account value of the policy in a manner that does not prorate that credit to the date of termination of the policy, all of the following shall apply:
(a) An illustration of the policy shall show all surrender charges applicable to the policy and shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result, separate from any surrender charges, in forfeiture of crediting time.
(b) If the policy offers the policyholder any options that affect the frequency of crediting, including a choice between indexed strategies of different durations, any discussion of those options in an illustration of the policy, or in any document by which the policyholder makes an election among indexed strategies of different durations, shall include the word WARNING and an explanation, in a manner that is understandable to an ordinary consumer, that selecting an option with less frequent crediting would result in a larger forfeiture of crediting time upon surrender or other termination. The prospective policyholder shall sign a copy, which may be electronic, of the disclosure, and a signed copy shall be provided to the prospective policyholder. If a policy is issued, the insurer shall retain a copy of the signed disclosure as part of the illustration retained pursuant to Section 10509.958.
(c) A description of surrender charges contained in the policy shall show all surrender charges and any surrender-related loss of potential unearned credits that are not prorated. The description shall explain, in a manner that is understandable to an ordinary consumer, how credits to the account value of the policy are provided and that surrendering the policy between dates on which credits are provided will result in forfeiture of crediting time. The description shall also include the following statement:
THIS POLICY DOES NOT PRORATE ACCOUNT CREDITING TO THE DATE OF SURRENDER. If you are considering surrendering your policy, you may be better off waiting until the next crediting date before you surrender your policy. Our customer service representatives can tell you when the next crediting date will be and give you an estimate of (1) what policy credits would be applied if todays crediting result were to remain unchanged until surrender; and (2) what policy charges would be applied if you wait until the next crediting date to surrender your policy.
10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.
10475. If a life insurance policy or illustration references a guaranteed minimum interest rate or other guaranteed crediting rate that is determined on any basis other than annual, including a cumulative guarantee that runs from issuance until termination of the policy, or any guarantee that is determined retrospectively over more than one year, the description of the nonannual guarantee shall state: THIS GUARANTEE IS NOT AN ANNUAL GUARANTEE. The policy or illustration shall also include a numerical example by which an ordinary consumer would understand how the calculation of the guarantee offered by the policy differs from the calculation of an annual guarantee. An illustration that shows policy values for any indexed strategy using a crediting rate calculated by back casting shall also disclose the percentage of interest or other credits that the guarantee would have provided had it been in effect during the period used to generate a back-casted crediting rate for nonguaranteed values.
(a)Life insurance that conforms to all the following conditions is one form of blanket life insurance:
(1)Written under a policy issued to a newspaper, farm paper, magazine, or other periodical publication.
(2)Insuring independent contractors, such as newspaper delivery persons, dealers, distributors, wholesalers, or other personnel, engaged in the sale, distribution, collecting for, or other activities pertaining to the marketing and delivery of publications referred to in paragraph (1), including attending coaching school or while participating in a trip organized, supervised, and sponsored as a reward for meritorious service, for amounts of insurance based upon a plan precluding individual selection.
(3)For the benefit of persons other than the policyholder.
(4)If the premium is remitted by the policyholder.
(5)Insuring persons without any requirement for individual enrollment and without individual commitment or undertaking to pay, and with either the policyholder or the insured to pay all the premium or part of the premium as a condition precedent to coverage.
(b)This section does not prohibit the cost of the insurance coverage being borne by the individuals insured or by their parents or guardians. If the premium for the insurance is paid by the person insured, the person may, upon request, obtain from the insurer in certificate form a copy of the policy.
(c)Coverage shall not be provided to any person who files with the entity to whom the blanket policy is to be issued, for delivery to the insurer, a written statement requesting that the person not be covered. In the case of a minor, the statement may be filed by the minors parent or guardian. If the number of persons filing such statements exceeds 10 percent of the number of persons within categories defined as covered under the policy, it shall not be put into effect, and if in effect shall not be renewed.