Flexible Premium Universal Life (UL) and Variable Premium Universal Life (VUL) Policy Forms Containing Long-Term

STATE OF MARYLAND MARYLAND INSURANCE ADMINISTRATION 525 ST. PAUL PLACE, BALTIMORE, MARYLAND 21202-2272 WRITER’S DIRECT DIAL: 410-468-2201 Facsimile Number: 410-468-2204 e-mail: wtaparanskas@mdinsurance.state.md.us BULLETIN TO: ALL LIFE INSURANCE COMPANIES LICENSED TO DO BUSINESS IN THE STATE OF MARYLAND RE: FLEXIBLE PREMIUM UNIVERSAL LIFE (UL) AND VARIABLE PREMIUM UNIVERSAL LIFE (VUL) POLICY FORMS CONTAINING LONG-TERM SECONDARY GUARANTEES DATE: April 11, 2002 BULLETIN NO. Life and Health 02-09 The purpose of this bulletin is to notify you that the Maryland Insurance Administration (MIA) will permit flexible premium universal life (UL) and variable premium universal life (VUL) policy forms for use in Maryland that contain long-term secondary guarantees without requiring alternative cash values. The issue is presently under consideration by the NAIC Life and Health Actuarial Task Force. The MIA will revisit this issue in the event that the NAIC should take definitive action to the contrary. Secondary guarantees were initially a means to keep a UL or VUL policy in force during early durations when it otherwise would have lapsed due to surrender charges. These guarantees were gradually extended to provide long-term assurance that a UL or VUL contract would not lapse as long as certain minimum premiums were paid. These secondary guarantees keep UL and VUL policies in force, under certain circumstances, even when cash values or account values are exhausted. The MIA has been permitting secondary guarantees with durations of less than 20 years. The MIA will now permit secondary guarantees with durations of 20 years or more, without additional nonforfeiture requirements, provided that consumers are informed of the effects of the secondary guarantees on policy values. Companies seeking approval of UL and VUL policies with secondary guarantees having durations of 20 years or more must certify that a notice containing the information shown on the attachment will be delivered to applicants at time of application. PARRIS N. GLENDENING GOVERNOR KATHLEEN KENNEDY TOWNSEND LIEUTENANT GOVERNOR STEVEN B. LARSEN COMMISSIONER DONNA B. IMHOFF DEPUTY COMMISSIONER WENDY TAPARANSKAS ASSOCIATE COMMISSIONER LIFE & HEALTH Page 2 If you have any questions on this matter, please call (410) 468-2170 and mention this bulletin by bulletin number. ________________________ Wendy J. Taparanskas, Ph.D. Associate Commissioner Life and Health Attachment MARYLAND DISCLOSURE STATEMENT FOR UNIVERSAL LIFE CONTRACTS WITH NO-LAPSE GUARANTEES OF 20 YEARS OR MORE This policy provides cash values that may be less than cash values under a term policy with the same guarantees. In addition, please be aware that you may be paying for this policy’s no-lapse guarantee by higher cost-of-insurance charges, or lower returns on your investment or by some other pricing method even if there is no separately identified premium for the no-lapse guarantee.