Mich. Admin. Code R. 500.601 - Definitions
Rule 601. As used in these rules:
(a) "Conservation" means any attempt by the
existing insurer or its agent to continue existing life insurance in force when
the existing insurer has received the information statement as required by
R 500.604 from a replacing insurer. A
conservation effort does not include routine administrative procedures such as
late payment reminders, late payment offers, or reinstatement offers.
(b) "Life insurance" does not mean fixed or
variable annuity contracts.
(c)
"Replacement of life insurance" means any transaction in which life insurance
is to be purchased and in which, as part of the transaction, with respect to
existing life insurance, any of the following has occurred or will occur:
(i) Lapse, forfeiture, surrender, or
termination.
(ii) Conversion to
reduced paid-up insurance, continuation as extended term insurance, or a
reduction in value by the use of nonforfeiture benefits or other policy
values.
(iii) Amendment to effect a
reduction in either benefits or in the term for which coverage would otherwise
remain in force or for which benefits would be paid.
(iv) Reissuance with any reduction in cash
value.
(v) Pledging as collateral
or subjecting to borrowing, whether in a single loan or under a schedule of
borrowing over a period of time for amounts in the aggregate exceedng 25% of
tne loan value set forth in the policy.
(d) "Sales proposal" means an individualized,
written sales aid of any kind, excluding the information statement, which is
used by an insurer or agent in comparing existing life insurance to proposed
life insurance in order to recommend the replacement or conservation of
existing life insurance. Sales aids of a generally descriptive nature which are
maintained in the insurer's advertising compliance file shall not be considered
a sales proposal within the meaning of this definition.
Notes
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