[§431:10D-405]  Standards for basicillustrations.  (a)  The format of a basic illustration shall conform withthe following requirements:

(1)  The illustration shall be labeled with the dateon which it was prepared;

(2)  Each page, including any explanatory notes orpages, shall be numbered and show its relationship to the total number of pagesin the illustration (e.g., the fourth page of a seven page illustration shallbe labeled "page 4 of 7 pages");

(3)  The assumed dates of payment receipt and benefitpay out within a policy year shall be clearly identified;

(4)  If the age of the proposed insured is shown as acomponent of the tabular detail, the age shown shall be the age of the insuredat the time the policy is issued plus the numbers of years the policy isassumed to have been in force;

(5)  The assumed payments on which the illustratedbenefits and values are based shall be identified as premium outlay or contractpremium, as applicable.  For policies that do not require a specific contractpremium, the illustrated payments shall be identified as premium outlay;

(6)  Guaranteed death benefits and values availableupon surrender, if any, for the illustrated premium outlay or contract premiumshall be shown and clearly labeled guaranteed;

(7)  If the illustration shows any nonguaranteedelements, they shall not be based on a scale more favorable to the policy ownerthan the insurer's illustrated scale at any duration.  These elements shall beclearly labeled nonguaranteed;

(8)  The guaranteed elements, if any, shall be shownbefore corresponding nonguaranteed elements and shall be specifically referredto on any page of an illustration that shows or describes only thenonguaranteed elements (e.g., "see page one for guaranteedelements");

(9)  The account or accumulation value of a policy, ifshown, shall be identified by the name this value is given in the policy beingillustrated and shown in close proximity to the corresponding value availableupon surrender;

(10)  The value available upon surrender shall beidentified by the name this value is given in the policy being illustrated andshall be the amount available to the policy owner in a lump sum after deductionof surrender charges, policy loans, and policy loan interest, as applicable;

(11)  Illustrations may show policy benefits and valuesin graphic or chart form in addition to the tabular form;

(12)  Any illustration of nonguaranteed elements shallbe accompanied by a statement indicating that:

(A)  The benefits and values are notguaranteed;

(B)  The assumptions on which they are basedare subject to change by the insurer; and

(C)  Actual results may be more or lessfavorable;

(13)  If the illustration shows that the premium payermay have the option to allow policy charges to be paid using nonguaranteedvalues, the illustration shall clearly disclose that a charge continues to berequired and that, depending on actual results, the premium payer may need tocontinue or resume premium outlays.  Similar disclosure shall be made forpremium outlay of lesser amounts or shorter durations than the contractpremium.  If a contract premium is due, the premium outlay display shall not beleft blank or show zero unless accompanied by an asterisk or similar mark todraw attention to the fact that the policy is not paid up; and

(14)  If the applicant plans to use dividends or policyvalues, guaranteed or nonguaranteed, to pay all or a portion of the contractpremium or policy charges, or for any other purpose, the illustration mayreflect those plans and the impact on future policy benefits and values.

(b)  A basic illustration shall include anarrative summary which shall include the following:

(1)  A brief description of the policy beingillustrated, including a statement that it is a life insurance policy;

(2)  A brief description of the premium outlay orcontract premium, as applicable, for the policy.  For a policy that does notrequire payment of a specific contract premium, the illustration shall show thepremium outlay that must be paid to guarantee coverage for the term of thecontract, subject to maximum premiums allowable to qualify as a life insurancepolicy under the applicable provisions of the Internal Revenue Code of 1986, asamended;

(3)  A brief description of any policy features,riders, or options, guaranteed or nonguaranteed, shown in the basicillustration and the impact they may have on the benefits and values of thepolicy;

(4)  Identification and a brief definition of columnheadings and key terms used in the illustration; and

(5)  A statement containing in substance thefollowing:

"This illustration assumes that thecurrently illustrated nonguaranteed elements will continue unchanged for allyears shown.  This is not likely to occur, and actual results may be more orless favorable than those shown."

(c)  Following the narrative summary, a basicillustration shall include a numeric summary of the death benefits and valuesand the premium outlay and contract premium, as applicable, provided that:

(1)  For a policy that provides for a contractpremium, the guaranteed death benefits and values shall be based on thecontract premium.  This summary shall be shown for at least policy years five,ten, and twenty and at age seventy, if applicable, on the three bases shownbelow.  For multiple life policies the summary shall show policy years five,ten, twenty, and thirty.  The illustration shall include:

(A)  Policy guarantees;

(B)  The insurer's illustrated scale;

(C)  The insurer's illustrated scale used butwith the nonguaranteed elements reduced as follows:

(i)  Dividends at fifty per cent of thedividends contained in the illustrated scale used;

(ii)  Nonguaranteed credited interest at ratesthat are the average of the guaranteed rates and the rates contained in theillustrated scale used; and

(iii)  All nonguaranteed charges, including butnot limited to, term insurance charges and mortality and expense charges, atrates that are the average of the guaranteed rates, and the rates contained inthe illustrated scale used; and

(2)  If coverage would cease prior to policy maturityor age one hundred, the year in which coverage ceases shall be identified foreach of the three bases.

(d)  The following statements shall be includedon the same page as the numeric summary and signed by the applicant, or thepolicy owner in the case of an illustration provided at time of delivery, asrequired in this part:

(1)  A statement to be signed and dated by theapplicant or policy owner reading as follows:

"I have received a copy of thisillustration and understand that any nonguaranteed elements illustrated aresubject to change and could be either higher or lower.  The agent has told methey are not guaranteed."; and

(2)  A statement to be signed and dated by theinsurance producer or other authorized representative of the insurer reading asfollows:

"I certify that this illustration hasbeen presented to the applicant and that I have explained that anynonguaranteed elements illustrated are subject to change.  I have made nostatements that are inconsistent with the illustration."

(e)  A basic illustration shall include thefollowing details:

(1)  For at least each policy year from one to ten andfor every fifth policy year thereafter ending at age one hundred, policymaturity or final expiration; and except for term insurance beyond thetwentieth year, for any year in which the premium outlay and contract premium,if applicable, is to change:

(A)  The premium outlay and mode the applicantplans to pay and the contract premium, as applicable;

(B)  The corresponding guaranteed deathbenefit, as provided in the policy; and

(C)  The corresponding guaranteed valueavailable upon surrender, as provided in the policy;

(2)  For a policy that provides for a contractpremium, the guaranteed death benefit and value available upon surrender shallcorrespond to the contract premium; and

(3)  Nonguaranteed elements may be shown if describedin the contract.  In the case of an illustration for a policy on which theinsurer intends to credit terminal dividends, they may be shown if theinsurer's current practice is to pay terminal dividends, provided that:

(A)  If any nonguaranteed elements are shownthey must be shown at the same durations as the corresponding guaranteedelements, if any; and

(B)  If no guaranteed benefit or value isavailable at any duration for which a nonguaranteed benefit or value is shown,a zero shall be displayed in the guaranteed column. [L 2000, c 252, pt of §2]