Mich. Admin. Code R. 500.844 - Standards of suitability

Rule 4.

(1) Every insurer seeking approval to enter into the variable life insurance business in this state shall establish, maintain, and file with the commissioner a written statement specifying the standards of suitability to be used by the insurer. Such standards of suitability shall be binding on the insurer and those to whom the standards of suitability refer and shall specify that no recommendation shall be made to an applicant to purchase a variable life insurance policy and that no variable life insurance policy shall be issued in the absence of reasonable grounds to believe that the purchase of such policy is suitable for such applicant on the basis of information furnished after reasonable inquiry of such applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or to the agent making the recommendation.

(2) "Suitability" means the likelihood that the purchase of variable life insurance is reasonably consistent with all of the following:

(a) The expressed insurance objectives and needs as perceived by the prospective insured.

(b) The reasonable objectives and needs of the prospective insured as determined objectively by a professional agent after a diligent reasonable inquiry into relevant financial, family, and other background information concerning the prospective insured.

(c) The potential that the prospective insured will persist with the policy for such a period of time that the insurer's acquisition costs are amortized over a reasonable period of time.

(3) All pertinent factors, including, but not limited, to all of the following shall be considered when determining suitability:

(a) Age.

(b) Earnings.

(c) Marital status.

(d) Number and age of dependents.

(e) The value of savings and other assets.

(f) And current life insurance program.

Notes

Mich. Admin. Code R. 500.844

1979 AC; 1988 AACS