02- 031 C.M.R. ch. 919, § 5 - Duties of Replacing Insurers
A. Where a
replacement is involved in the transaction, the replacing insurer shall:
(1) Verify that the required forms are
received and are in compliance with this rule;
(2) Notify any other existing insurer that
may be affected by the proposed replacement within five (5) business days of
receipt of a completed application indicating replacement or when the
replacement is identified if not indicated on the application, and mail a copy
of the available illustration or policy summary for the proposed policy or
available disclosure document for the proposed contract within five (5)
business days of a request from an existing insurer;
(3) Be able to produce copies of the
notification regarding replacement required in Section 3B, indexed by producer ,
for at least five (5) years or until the next regular examination by the
insurance department of a company's state of domicile, whichever is later;
and
(4) Provide to the policy or
contract owner notice of the right to return the policy or contract within
thirty (30) days of the delivery of the contract and receive an unconditional
full refund of all premiums or considerations paid on it, including any policy
fees or charges or, in the case of a variable or market value adjustment policy
or contract, a payment of the cash surrender value provided under the policy or
contract plus the fees and other charges deducted from the gross premiums or
considerations or imposed under such policy or contract; such notice may be
included in Appendix A or C.
B. In transactions where the replacing
insurer and the existing insurer are the same or subsidiaries or affiliates
under common ownership or control, the replacing insurer shall allow credit for
the period of time that has elapsed under the replaced policy's or contract's
incontestability and suicide period up to the face amount of the existing
policy or contract. With regard to financed purchases the credit may be limited
to the amount the face amount of the existing policy is reduced by the use of
existing policy values to fund the new policy or contract.
C. If an insurer prohibits the use of sales
material other than that approved by the company, as an alternative to the
requirements made of an insurer pursuant to Section 3E, the insurer must:
(1) Require with each application a statement
signed by the producer that:
(a) Represents
that the producer used only company-approved sales material; and
(b) States that copies of all sales material
were left with the applicant in accordance with Section 3D; and
(2) Within ten (10) days of the
issuance of the policy or contract:
(a)
Notify the applicant by sending a letter or by verbal communication with the
applicant by a person whose duties are separate from the marketing area of the
insurer, that the producer has represented that copies of all sales material
have been left with the applicant in accordance with Section 3D;
(b) Provide the applicant with a toll free
number to contact company personnel involved in the compliance function if such
is not the case; and
(c) Stress the
importance of retaining copies of the sales material for future reference;
and
(3) Be able to
produce a copy of the letter or other verification in the policy file for at
least five (5) years after the termination or expiration of the policy or
contract.
Notes
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