No. 38090 (Change in Proposed Rule): Rule R590-229. Annuity Disclosure

DAR File No.: 38090
Filed: 01/15/2014 02:29:45 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The changes are a result of comments received during the comment period for the amendment.

Summary of the rule or change:

In Sections R590-229-5 and R590-229-6, the word "fixed" has been removed to eliminate duplication. In Section R590-229-6, wording is added to clarify that a buyer's guide is optional for variable annuity products, which is the way it is already handled in the marketplace. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed amendment that was published in the November 15, 2013, issue of the Utah State Bulletin, on page 139. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

• Section 31A-22-425
• Section 31A-2-201

Anticipated cost or savings to:

the state budget:

These changes will not affect the workload of department personnel or affect the department or state's costs and revenues.

local governments:

These changes will have no impact on local government since they deal solely with the relationship between the department and their licensees, in this case life insurers and producers.

small businesses:

The changes to this rule correct grammar and are for clarification purposes only. They will have no fiscal impact on small businesses, including insurance agencies.

persons other than small businesses, businesses, or local governmental entities:

The changes to this rule correct grammar and are for clarification purposes only. They will have no fiscal impact on insurance companies, agencies or producers, and their consumers or any other related businesses.

Compliance costs for affected persons:

The changes to this rule correct grammar and are for clarification purposes only. They will have no fiscal impact on anyone.

Comments by the department head on the fiscal impact the rule may have on businesses:

The changes to this rule will have no fiscal impact on businesses in or outside of Utah.

Todd E. Kiser, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/03/2014

This rule may become effective on:

03/10/2014

Authorized by:

Todd Kiser, Commissioner

RULE TEXT

R590. Insurance, Administration.

R590-229. Annuity Disclosure.

 

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R590-229-5. Definitions.

In addition to the definitions in Section 31A-1-301, the following definitions shall apply for the purpose of this rule:

(1) "Buyer's Guide" means a document which contains, and is limited to, the language contained in the "Buyer's Guide for [Fixed ]Deferred Annuities," dated 2013, the Buyer's Guide for [Fixed ]Deferred Annuities - Fixed" dated 2013, and the "Buyer's Guide for [Fixed ]Deferred Annuities - Variable" dated 2013.

(2) "Contract owner" means the owner named in the annuity contract or certificate holder in the case of a group annuity contract.

(3) "Determinable elements" means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates with any applicable bonus, benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if all of the underlying elements that go into its calculation are either guaranteed or determinable.

(4) "Disclosure document" means the document described in Subsection 6(2) of this rule.

(5) "Funding agreement" means an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies.

(6) "Generic name" means a short title descriptive of the annuity contract being applied for such as "single premium deferred annuity".

(7) "Guaranteed elements" means premiums, credited interest rates with any applicable bonus, benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these, that are guaranteed and determined at issue. An element is considered guaranteed if all of the underlying elements that go into its calculation are guaranteed.

(8) "Non-guaranteed elements" means the premiums, credited interest rates with any applicable bonus, benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying elements that go into its calculation are non-guaranteed.

(9) "Structured settlement annuity" means a "qualified funding asset" as defined in IRC Section 130(d) or an annuity that would be a qualified funding asset under IRC Section 130(d) but for the fact that it is not owned by an assignee under a qualified assignment.

 

R590-229-6. Appropriate Buyer's Guide.

(1) The "Buyer's Guide for [Fixed ]Deferred Annuities" shall be considered the appropriate Buyer's Guide for an annuity product.

(2) Notwithstanding Subsection (1)[:

(a)] for a [fixed ]non-variable annuity product, the "Buyer's Guide to [Fixed ]Deferred Annuities - Fixed" may be used as the appropriate Buyer's Guide[; and].

[(b)](3) If an insurer elects to provide a Buyer's Guide for a variable annuity product, the insurer may use either the "Buyer's Guide for Deferred Annuities" or the "Buyer's Guide for [Fixed ]Deferred Annuities - Variable ."[may be used as the appropriate Buyer's Guide.]

 

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KEY: insurance, annuity disclosure

Date of Enactment or Last Substantive Amendment: [2013]2014

Notice of Continuation: September 22, 2009

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-22-425