Utah Admin. Code R590-93-2 - Purpose and Scope

(1) The purpose of this rule is to:

(a) regulate the activities of insurers and producers regarding the replacement of existing life insurance and annuities;

(b) protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct for replacement or financed purchase transactions;

(c) ensure that each purchaser receives information to make a decision in their best interest; and

(d) reduce the opportunity for misrepresentation and incomplete disclosure.

(2) This rule applies to each insurer and producer transacting life insurance and annuity business in this state.

(3) Unless otherwise specifically included, this rule does not apply to a transaction involving:

(a) credit life insurance;

(b) group life insurance or a group annuity if there is no direct solicitation of an individual by a producer;

(c) group life insurance or a group annuity used to fund a prearranged funeral contract;

(d) an application to exercise a contractual change or a conversion privilege for an existing policy or contract when:

(i) the existing policy or contract is being replaced by the same insurer according to a program filed with the commissioner; or

(ii) when a term conversion privilege is exercised among corporate affiliates;

(e) proposed life insurance to replace life insurance under a binding or conditional receipt issued by the same insurer;

(f) except as outlined in Subsection (4), a policy or contract used to fund:

(i) an employee pension or welfare benefit plan covered by the Employee Retirement and Income Security Act, 29 U.S.C. 1001 (ERISA);

(ii) a plan described by Sections 401(a), 401(k), or 403(b) of the Internal Revenue Code, 26 U.S.C. Sec. 25, if the plan, for purposes of ERISA, is established or maintained by an employer;

(iii) a governmental or church plan defined in Section 414 of the Internal Revenue Code, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under Section 457 of the Internal Revenue Code; or

(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(g) new coverage provided under a policy or contract and where the cost is borne wholly by the insured's employer or by an association of which the insured is a member;

(h) existing life insurance that is a non-convertible term life insurance policy that will expire in five years or less and cannot be renewed;

(i) an immediate annuity that is purchased with proceeds from an existing annuity contract; or

(j) a structured settlement.

(4) Notwithstanding Subsection (3)(f), this rule applies to a policy or contract used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, if:

(i) the insurer has been notified that a plan participant may choose from two or more insurers; and

(ii) there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy.

(5) A registered contract is exempt from the requirements of Subsections R590-93-5(1)(b) and R590-93-6(2) regarding the provision of an illustration or policy summary; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular are required instead.

Notes

Utah Admin. Code R590-93-2

Amended by Utah State Bulletin Number 2022-16, effective 8/8/2022