Policy Approval Criteria for Life Insurance and Annuity Contracts

PURPOSE: This rule is intended to outline the requirements for all life insurance and annuity contracts which are to be sold in Missouri. (1) No life insurance or annuity contract, including applications, riders, endorsements, policies, and certificates, shall be approved for use in this state unless it conforms to the following: (A) Each life insurance or annuity contract, including applications, riders, endorsements, policies and certificates, shall be identified by a form number in the lower left-hand corner of the first page or face page; (B) Each life insurance or annuity contract shall contain accurate information regarding all coverages and benefits for which premiums are being paid. This information shall individually identify each coverage and the respective premium required to maintain each coverage; (C) No application for a life insurance or annuity contract or any coverage pertaining thereto, shall contain a statement such as, “No information acquired by any representative of the company or conveyed to any prospective insured by such representative shall be binding upon the company unless written herein.” The company may specifically disclaim any insurance producer’s authority to waive a complete answer to any question in the application, pass on insurability, make or alter any contract or waive any of the company’s other rights or requirements; (D) Effective June 30, 1990, all individual life insurance or annuity contracts and all mass marketed or individually solicited group life insurance or annuity certificates for which the insured pays the entire premium must contain a provision which states, in substance, that the person to whom the coverage is issued shall have an unconditional right to return the coverage within at least ten (10) days of its delivery for a full refund of all premium paid. This rule shall not apply to— 1. Coverage issued under group contracts as defined in section 376.691, RSMo. Mass marketed life insurance for purposes of this rule means the insurance under any individual, franchise, group or blanket policy of life or health insurance which is offered by means of direct response solicitation through a sponsoring organization or through the mails or other mass communications media and under which the person insured pays all or substantially all of the cost of his/her insurance; 2. Life insurance issued to college students and subject to 20 CSR 400-5.500; 3. Single premium short duration trip or travel-type coverage; or 4. Graded benefit life insurance coverage which is subject to 20 CSR 400-1.040; (E) Each individual life insurance or annuity contract which develops cash or loan values and which provides the insured the right to borrow against this cash or loan values, either by virtue of the existence of a policy loan provision or an automatic premium loan provision, shall state in substance that the contract will lapse at the expiration of a grace period of at least thirty-one (31) days if there is an outstanding policy loan or the policy is being maintained by an automatic premium loan and the accrued cash value is insufficient to pay the necessary interest, or both, premium then due. The contract shall state in substance that the company will notify the owner at least thirty-one (31) days prior to discontinuing the contract in this manner; (F) For the purposes of any waiver of premium benefit provided in conjunction with a life insurance or annuity contract, the contract shall state in substance that the owner shall be considered totally disabled if s/he is unable to perform the material and substantial duties of any occupation for which s/he is suited by means of education, training or experience. Any waiver of premium benefit which requires the insured to be totally disabled for a period of time exceeding thirty (30) days before benefits are payable, also shall provide in substance that all premiums paid by the insured from the date of disability will be waived retrospectively. However, no premium need be waived for a period of disability originating prior to twelve (12) months from the date of notice of disability if proof was not given as soon as reasonably possible. In no instance shall the insured be required to be disabled for a period exceeding one hundred eighty (180) days before s/he is entitled to benefits under a waiver of premium provision; (G) For the purposes of any total disability benefit provided in conjunction with a life insurance or annuity contract, the insured shall be considered totally disabled if s/he is unable to perform the material and substantial duties of his/her regular occupation. After an initial benefit period of twelve (12) months, the insured shall be considered totally disabled if s/he is unable to perform the material and substantial duties of any occupation for which s/he is suited by means of education, training or experience; and (H) Any accidental death or dismemberment benefit provided in or supplemental to a life insurance or annuity contract shall not include any language which requires that accidental bodily injury be effected solely through external, violent, and accidental means. Any benefit for accidental death or dismemberment provided in, or supplemental to, a life insurance or annuity contract shall not exclude payment of these benefits for any covered loss, as provided in the contract, due to unintentionally self-inflicted injuries; unintentional or nonvoluntary inhalation of gas or taking of poisons; pyogenic infections which result from an accidental bodily injury; bacterial infections which result from the accidental ingestion of contaminated substances; or the insured’s being under the influence of drugs, if the drugs were taken as prescribed by a physician. (2) In addition to the requirements of section (1), each life insurance policy shall contain in substance the following provision, if applicable to the form of policy being filed: (A) The policy, including the endorsements and attached application, if any, constitutes the entire contract of insurance. No change in the policy shall be valid until approved by an executive officer of the insurer and unless the approval is attached to the policy. No insurance producer has authority to change this policy or to waive any of its provisions; (B) The policy, with the exception of any accidental death, waiver of premium or total disability benefits, shall be incontestable after it has been in force during the lifetime of the insured, for a period of two (2) years from the earlier of the policy date or the issue date, except in the event of nonpayment of premiums; (C) A grace period of thirty-one (31) days without interest will be allowed for every premium after the first, during which the policy shall continue in force. If the insured dies during the grace period, any premiums then due may be deducted from the proceeds of the policy; (D) If, at the time of application, the age or sex of the insured is misstated, the amount of coverage provided shall be such as the premium paid would have purchased at the correct age and sex according to the company’s published rate at the date of issue of the policy; (E) Unless changed as provided in the policy, the beneficiary shall be as designated in the policy; and (F) The policy, unless surrendered for its cash value, may be reinstated at any time within five (5) years after date of default in payment of premium upon presentation of evidence of insurability satisfactory to the company, payment or reinstatement of any indebtedness at date of default, the payment of all premiums in arrears and the payments of interest in an amount not to exceed the applicable policy loan interest rate(s) during the period of lapse, assessed per annum and compounded annually, on the indebtedness and on each unpaid premium from its due date. (3) If either of the following provisions is contained in a life insurance policy, it shall be no less favorable to the insured than as follows: (A) The insurer, at its own expense, shall have the right and opportunity to have an autopsy performed on the deceased insured, unless otherwise precluded by law; and (B) Any amount payable on the death of the insured will be paid only after receipt of proof of death on forms acceptable to the company. (4) Individual life contracts issued on a term basis which are guaranteed renewable for successive term periods must contain a schedule of rates which are the guaranteed maximum renewal rates for continuing the term coverage at the time of guaranteed renewal. This requirement shall not apply to contracts which contain variable premium provisions. (5) Individual life contracts issued as a family plan which develop cash values for each life insured and which provide that a portion of any policy indebtedness outstanding is to be subtracted from any death proceeds payable shall contain a provision no less favorable to the insured than the following: “The company will subtract from policy proceeds payable on the life of any insured a portion of any policy indebtedness outstanding. The amount subtracted will be determined by prorating the total indebtedness by the ratio which the deceased insured’s cash value bears to the total cash value of all insureds.” (6) Each company, within sixty (60) days of the date of an application for a life insurance or annuity contract, shall notify a prospective insured as to whether or not the application has been accepted or else give the prospective insured the reason for any further delay. AUTHORITY: sections 374.045, 376.670, 376.673, and 376.675, RSMo 2000 and section 376.671, RSMo Supp. 2007.* This rule was previously filed as 4 CSR 190-13.230. Original rule filed May 13, 1983, effective Nov. 11, 1983. Amended: Filed Dec. 1, 1989, effective June 29, 1990. Amended: Filed July 12, 2002, effective Jan. 30, 2003. Amended: Filed May 28, 2008, effective Nov. 30, 2008. *Original authority: 374.045, RSMo 1967, amended 1993, 1995; 376.670, RSMo 1943, amended 1959, 1961, 1965, 1975, 1979, 1982; 376.671, RSMo 1979, amended 2002, 2004; 376.673, RSMo 1967; and 376.675, RSMo 1963, amended 1984.