Title of Rule and Other Identifying Information: Technical correction to WAC 284-23-220.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WAC 284-23-220 was adopted in January of 1980. The current version of the referenced NAIC Buyer's Guide no longer contains cost indexes. After deleting subsection (6)(h), WAC 284-23-220 will be consistent with the current version of the NAIC Buyer's Guide and consumer confusion resulting from an outdated requirement will be eliminated.

     Reasons Supporting Proposal: The proposed amendment will make WAC 284-23-220(6) consistent with the current NAIC Buyer's Guide which does not reference cost indexes and will eliminate consumer confusion when the outdated requirement is eliminated.

     Statutory Authority for Adoption: RCW 48.02.060, 48.44.050, and 48.46.200.

     Statute Being Implemented: None.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Mike Kreidler, Insurance Commissioner, governmental.

     Name of Agency Personnel Responsible for Drafting: Donna Dorris, P.O. Box 40260, Olympia, WA 98504-0260, (360) 725-7040; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7119; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.

October 24, 2007

Mike Kreidler

Insurance Commissioner

OTS-1129.1

AMENDATORY SECTION(Amending Matter No. R 97-04, filed 5/6/98, effective 6/6/98)

WAC 284-23-220   Definitions.   For the purposes of this regulation, the following definitions shall apply:

     (1) "Buyer's Guide" is a document that contains, and is limited to, the current buyer's guide, which has been recommended for use by the National Association of Insurance Commissioners. A company must use the current Buyer's Guide no later than six months after approval by the National Association of Insurance Commissioners.

     (2) Cost comparison indexes:

     (a) "Surrender cost comparison index -- Guaranteed basis" is calculated by applying the following steps:

     (i) Step one: Determine the guaranteed cash surrender value, if any, available at the end of the tenth and twentieth policy years.

     (ii) Step two: Divide the result of step one by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the values in step one over the respective periods stipulated in step one. If the period is ten years, the factor is 13.207 and if the period is twenty years, the factor is 34.719.

     (iii) Step three: Determine the equivalent guaranteed level premium by accumulating each guaranteed annual premium payable for the basic policy or rider at five percent interest compounded annually to the end of the period stipulated in step one and dividing the result by the respective factors stated in step two. (This amount is the guaranteed annual premium payable for a level premium plan.)

     (iv) Step four: Subtract the result of step two from step three.

     (v) Step five: Divide the result of step four by the number of thousands of the equivalent guaranteed level death benefit, using the company's guaranteed rate schedule to determine the amount payable upon death for purposes of subsection (3) of this section, to arrive at the "surrender cost comparison index -- Guaranteed basis."

     (b) "Net payment cost comparison index -- Guaranteed basis" is calculated in the same manner as the comparable "surrender cost comparison index -- Guaranteed basis" except that the cash surrender value is set at zero.

     (3) "Equivalent guaranteed level death benefit" of a policy or term life insurance rider is an amount calculated as follows:

     (a) Step six: Accumulate the amount payable upon death, regardless of the cause of death, at the beginning of each policy year for ten and twenty years at five percent interest compounded annually to the end of the tenth and twentieth policy years respectively.

     (b) Step seven: Divide each accumulation of step six by an interest factor that converts the accumulation into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in step six over the respective periods stipulated in step six. If the period is ten years, the factor is 13.207 and if the period is twenty years, the factor is 34.719.

     (4) "Generic name" is a short title that is descriptive of the premium and benefit patterns of a policy or a rider.

     (5) "Policy data" is a display or schedule of guaranteed numerical values for each policy year or a series of designated policy years of the following information: Premiums; death benefits; cash surrender values and endowment benefits.

     (6) "Policy summary" is a written statement describing the elements of the policy including but not limited to:

     (a) A prominently placed title as follows: Statement of policy cost and benefit information.

     (b) The name and address of the insurance agent, or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary.

     (c) The full name and home office or administrative office address of the company in which the life insurance policy is to be or has been written.

     (d) The generic name of the basic policy and each rider.

     (e) The following amounts, where applicable, for the first five policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including, but not necessarily limited to, the years for which life insurance cost indexes are displayed and at least one age from sixty through sixty-five or maturity whichever is earlier:

     (i) The guaranteed annual premium for the basic policy.

     (ii) The guaranteed annual premium for each optional rider.

     (iii) The guaranteed amount payable upon death, at the beginning of the policy year regardless of the cause of death other than suicide, or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately.

     (iv) The guaranteed total cash surrender values at the end of the year with values shown separately for the basic policy and each rider.

     (v) Any guaranteed endowment amounts payable under the policy which are not included under guaranteed cash surrender values above.

     (f) The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is adjustable, the policy summary shall also indicate that the annual percentage rate will be determined by the company in accordance with the provisions of the policy and the applicable law.

     (g) Cost comparison indexes for ten and twenty years but in no case beyond the premium paying period. Separate indexes are displayed for the basic policy and for each optional term life insurance rider. The indexes need not be included for optional riders which are limited to benefits such as accidental death benefits, disability waiver of premium, preliminary term life insurance coverage of less than 12 months and guaranteed insurability benefits nor basic policies or optional riders covering more than one life.

     (h) ((A statement in close proximity to the life insurance cost indexes as follows: An explanation of the intended use of these indexes is provided in the Buyer's Guide.

     (i))) The date on which the policy summary is prepared.

     The policy summary must consist of a separate document. All information required to be disclosed must be set out in such a manner as to not minimize or render any portion obscure. Any amounts which remain level for two or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year. Amounts in item (e) of this section shall be listed in total, not on a per thousand nor per unit basis. If more than one insured is covered under one policy or rider, guaranteed death benefits shall be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed as zero and shall not be displayed as a blank space.

[Statutory Authority: RCW 48.02.020 and 48.30.010. 98-11-003 (Matter No. R 97-04), § 284-23-220, filed 5/6/98, effective 6/6/98. Statutory Authority: RCW 48.02.060, 48.30.010, and 48.30.090. 79-07-053 (Order R 79-2), § 284-23-220, filed 6/25/79, effective 1/1/80.]

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