<html> <head> <title>Rule 20:06:08:0F Important Notice Regarding Replacements for Direct Response Insurers.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:08:0F"> <META NAME="Description" Content="Administrative Rules 20:06:08:0F Important Notice Regarding Replacements for Direct Response Insurers."> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Generator content="Microsoft Word 14 (filtered)"> <style> <!-- /* Font Definitions */ @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin:0in; margin-bottom:.0001pt; font-size:12.0pt; font-family:"Times New Roman","serif";} @page WordSection1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in;} div.WordSection1 {page:WordSection1;} --> </style> </head> <body lang=EN-US> <div class=WordSection1> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>DEPARTMENT OF LABOR AND REGULATION</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>DIVISION OF INSURANCE</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>IMPORTANT NOTICE REGARDING REPLACEMENTS FOR DIRECT RESPONSE INSURERS</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Chapter 20:06:08</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>APPENDIX F</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>SEE: &#167; 20:06:08:63</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Source: 39 SDR 55, effective October 4, 2012</span></font></p> <font size=3 face="Times New Roman"><span style='font-size:12.0pt;font-family: "Times New Roman","serif"'><br clear=all style='page-break-before:always'> </span></font> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>APPENDIX F</span></font></p> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>IMPORTANT NOTICE REGARDING REPLACEMENTS FOR DIRECT RESPONSE INSURERS</span></font></p> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>REPLACEMENT OF LIFE INSURANCE OR ANNUITIES</span></font></p> <p class=MsoNormal align=center style='text-align:center;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, otherwise terminated, or used in a financed purchase.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy, to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>We want you to understand the effects of replacements and ask that you answer the following questions and consider the questions on the back of this form.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>1.&nbsp;&nbsp;Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>_________________ YES _________________ NO</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>2.&nbsp;&nbsp;Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract? _________________ YES _________________ NO</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Please list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured, and the policy or contract number if available) and whether each policy or contract will be replaced or used as a source of financing:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>I certify that the responses herein are, to the best of my knowledge, accurate:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase make sense:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>PREMIUMS: Are they affordable?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Could they change?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>You're older  are premiums higher for the proposed new policy?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>How long will you have to pay premiums on the new policy? On the old policy?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Acquisition costs for the old policy may have been paid, you will incur costs for the new one.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>What surrender charges do the policies have?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>What expense and sales charges will you pay on the new policy?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Does the new policy provide more insurance coverage?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>INSURABILITY: If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>You may need a medical exam for a new policy.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Claims on most new policies for up to the first two years can be denied based on inaccurate statements.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Suicide limitations may begin anew on the new coverage.</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>How are premiums for both policies being paid?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>How will the premiums on your existing policy be affected?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Will a loan be deducted from death benefits?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>What values from the old policy are being used to pay premiums?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Will you pay surrender charges on your old contract?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>What are the interest rate guarantees for the new contract?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Have you compared the contract charges or other policy expenses?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>&nbsp;</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>What are the tax consequences of buying the new policy?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Is this a tax free exchange? (See your tax advisor.)</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Is there a benefit from favorable &quot;grandfathered&quot; treatment of the old policy under the federal tax code?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>Will the existing insurer be willing to modify the old policy?</span></font></p> <p class=MsoNormal style='text-align:justify;line-height:12.0pt'><font size=3 face="Times New Roman"><span style='font-size:12.0pt'>How does the quality and financial stability of the new company compare with your existing company?</span></font></p> <font size=3 face="Times New Roman"><span style='font-size:12.0pt;font-family: "Times New Roman","serif"'><br clear=all style='page-break-before:always'> </span></font> <p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size: 12.0pt'>&nbsp;</span></font></p> </div> </body> </html>