FILING INFORMATION NOTICE 2023-1
DATE: January 18, 2023
FROM: Karen Z. Schutter, Executive Director
RE: Filing Process for Product Filings to Demonstrate Compliance with Suicide Exclusion Provision Amendments
Statutory References: Articles IV(3) and (6), X(2), and XVI(2) of the Interstate Insurance Product Regulation Compact as adopted by Compacting States.
Operating Procedure References: Section 103 of the Operating Procedure for the Filing and Approval of Product Filings (“Product Filing Rule”).
Uniform Standards: See Appendices A and B.
Purpose: Filing Information Notices explain steps or clarifications in the process for filing and review of product filings under the applicable Uniform Standards.
BACKGROUND:
On December 15, 2022, the Interstate Insurance Product Regulation Commission (“Commission”) adopted certain amendments to individual and group life insurance Uniform Standards pertaining to the length of the maximum suicide exclusion period. The amendments maintain a maximum suicide exclusion period of up to two years and include an exception requiring a shorter maximum suicide exclusion period where required by state law.
The amendments to the Uniform Standards are shown in Appendix A, and the specific Uniform Standards that were amended are identified in Appendix B. These materials were part of the relevant Transmittal Memo on the amendments, which was dated August 12, 2022, and updated for clarity on November 16, 2022. The Transmittal Memo is part of the Standards History for each of the amended Uniform Standards and contains more background information.
The addition of the requirement for an exception for a shorter maximum suicide exclusion period where required by state law reflects a substantive change in demonstrating compliance with the Uniform Standards. Therefore, the Commission determined the amendments will be effective for compliance purposes for new products and for new issues of previously approved Compact products as of the applicable effective date.
In adopting these Uniform Standards amendments, the Commission set an effective date of April 3, 2023, for new product filing submissions. In recognition of the complexity involved in updating previously approved products to demonstrate compliance with the amendments for new issues, the Commission set an effective date of October 3, 2023, for new issues of previously approved Compact products. As of October 3, new issues of all Compact approved products in the current Compacting States must comply with the amendments.
This Notice outlines the process for demonstrating compliance with the amended Uniform Standards for the suicide exclusion provision.
APPLICABILITY: The procedures outlined in this Notice apply to Compact products only.
APPENDICES: Appendix A outlines the Uniform Standards amendments adopted by the Commission on December 15, 2022. Appendix B lists the specific Uniform Standards that were amended.
FILING PROCEDURES:
1. Acceptance of Product Filing Submissions Prior to the Effective Dates for New and Previously Approved Compact Products
a. A new product filing reflecting the Uniform Standards amendments may be submitted prior to the applicable effective date of April 3, 2023.
b. An update of a previously approved Compact product may be submitted prior to the applicable effective date of October 3, 2023.
c. The Commission may approve a new product filing, or update of a previously approved Compact product, prior to the applicable effective date, because a shorter suicide exclusion period than the current maximum two-year period complies with the Uniform Standards.
2. Addressing Suicide Exclusion Amendments in a New Product Filing
a. A new product filing may demonstrate compliance with the Uniform Standards amendments in Appendix A using any of the following methods.
i. Include the language of the Uniform Standards amendments in the product form provisions in a single policy form.
ii. File separate, uniquely numbered policies, one policy including a suicide exclusion period of two years, and a second policy including any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery.
A. Please note each policy submitted for review is a product for purposes of Compact Product Filing Fees. In addition, state and Compact Product Filing Fees are due for all states included in a filing.
iii. Bracket the suicide exclusion period as a variable value within the product form provisions and submit a Statement of Variability (“SOV”) stating the time period to be used will be a maximum of two years or a specifically identified shorter period, such as one year, where required by applicable law in the state where the policy is delivered or issued for delivery.
A. This method is an exception to the individual life insurance policy Variability of Information limitation that variable items may appear only in the specifications page.
iv. Bracket the suicide exclusion period as a variable value on the specifications page and submit a SOV stating the time period to be used will be a maximum of two years or a specifically identified shorter period, such as one year, where required by applicable law in the state where the policy is delivered or issued for delivery.
b. The filer shall adhere to the same method for demonstrating compliance with the Uniform Standards amendments for the suicide exclusion period of the initial coverage and the reinstatement, policy exchange and policy increase provisions of the product, if any. The filer should be aware that the Uniform Standards amendments may require a shorter maximum exclusion period outside of the initial coverage, depending on the policy type and benefits.
c. A filer wishing to use a method not described in this Notice to demonstrate compliance with the Uniform Standards amendments for a new product filing should contact the Compact Office using the Pre-Filing Communication service for further analysis of the proposed method.
3. Addressing Suicide Exclusion Period Amendments for New Issues of a Previously Approved Compact Product
a. A product filing previously approved by the Insurance Compact may be updated for new issues in accordance with the parameters for submitting revisions to previously approved filings set forth in Filing Information Notice 2017-1. To summarize the parameters set forth in Filing Information Notice 2017-1:
i. A filing that with the disposition of “Closed-Approved” entered within ninety (90) calendar days of the update being submitted, provided the forms have not been marketed or issued, may be reopened by providing revised material in accordance with Section 3.b below.
ii. A filing with the disposition of “Closed-Approved” entered more than ninety (90) calendar days before the update is submitted may be revised by the submission of a new filing using the Supporting Documentation Update Filing Type in accordance with Section II.C of Filing Information Notice 2017-1.
iii. The Supporting Documentation Update filing type cannot be used for the filing of a new form to demonstrate compliance with the suicide exclusion period amendments. No form may be submitted for review in a Supporting Documentation Update filing.
b. A previously approved Compact filing may demonstrate compliance with the Uniform Standards amendments for new issues using any of the following methods.
i. File a uniquely numbered endorsement form to change or add an exception to the suicide exclusion period of the initial coverage, as well as the reinstatement, policy exchange and policy increase provisions of the product, if any.
A. As stated in Section 3.a.iii above, the Supporting Documentation Update filing type cannot be used when a form of any type is submitted for review. Instead, the filer should use the applicable filing type for the form(s) being submitted, such as Riders and Endorsements.
B. A form filed to change or add an exception to the suicide exclusion period of a previously approved individual life insurance product is subject to the applicable policy Uniform Standards as well as the Additional Standards for All Benefit Features.
ii. Create a new bracketed item for the suicide exclusion period to make it a variable value within the product form provisions and submit a SOV stating the time period to be used will be a maximum of two years or a shorter numerical period, such as one year, where required by applicable law in the state where the policy is delivered or issued for delivery.
A. This method is an exception to the individual life insurance policy Variability of Information limitation that variable items may appear only in the specifications page.
B. An addendum to the previously approved SOV may be submitted for the sole purpose of demonstrating compliance with the suicide exclusion period amendments. If any other update of any kind is being submitted with the suicide exclusion period update, a revised, complete SOV must be filed in accordance with Section II.C.2.b of Filing Information Notice 2017-1.
iii. Create a new bracketed item for the suicide exclusion period to make it a variable value on the Specifications Page and submit a SOV stating the time period to be used will be a maximum of two years or a shorter numerical period, such as one year, where required by applicable law in the state where the policy is delivered or issued for delivery.
A. An addendum to the previously approved SOV may be submitted for the sole purpose of demonstrating compliance with the suicide exclusion period amendments. If any other update of any kind is being submitted with the suicide exclusion period update, a revised, complete SOV must be filed in accordance with Section II.C.2.b of Filing Information Notice 2017-1.
c. The filer shall adhere to the same method for demonstrating compliance with the Uniform Standards amendments for the suicide exclusion period of the initial coverage and the reinstatement, policy exchange and policy increase provisions of the product, if any. The filer should be aware that the Uniform Standards amendments may require a shorter maximum exclusion period outside of the initial coverage, depending on the policy type and benefits.
d. A filer wishing to use a method not described in this Notice to demonstrate compliance with the Uniform Standards amendments for new issues of a previously approved product should contact the Compact Office using the Pre-Filing Communication service for further analysis of the proposed method.
4. Inclusion of Compacting States in a Filing to Demonstrate Compliance with Suicide Exclusion Provision Amendments
a. A new product filing made under Section 2 above may include one or more Compacting States. For example, a filer wishing may submit a separate, uniquely numbered policy for use only in states with a shorter maximum suicide exclusion period and include in the policy filing only those states where the exception applies.
b. A filing made to update a previously approved Compact product for new issues under Section 3 above may include any one or more Compacting States included in the previously approved product filing(s). For example, a filer may submit an endorsement to demonstrate compliance with the suicide exclusion provision amendments and include in the endorsement filing only those states where the exception applies.
i. If the sole purpose of an update to a previously approved Compact product is to demonstrate compliance with the suicide exclusion period amendments, the update filing subject to this Notice is not required to match the Compacting States included in the previously approved Compact product being updated.
c. If a state with a shorter maximum exclusion period than two years is added to a previously approved Compact product before October 3, 2023, new issues of the product in that state will be treated as a new product filing under Section 2 of this Notice.
APPLICABLE IIPRC FORMS: None
EFFECTIVE DATE: Immediately
CONTACT INFORMATION:
Questions regarding this Notice should be directed to:
Interstate Insurance product Regulation Commission
444 North Capitol Street, NW
Hall of the States, Suite 701
Washington, DC 20001-1509
Telephone: (202) 471-3962
Facsimile: (816) 460-7476
E-mail: comments@insurancecompact.org
AMENDMENTS TO THE RELEVANT PROVISIONS IN THE UNIFORM STANDARDS
For Term Life, Whole Life and Endowment Insurance Policy Standards
§3. POLICY PROVISIONS
T. REINSTATEMENT
(6) With respect to any reinstated policy, the following applies:
(a) With respect to statements made in an application for reinstatement, the policy is incontestable after it has been in force during the insured’s lifetime for two years beginning with the day of reinstatement. The contestable period is based only on statements in the reinstatement application unless the original contestable period has not yet expired. The reinstated policy may include an exception to the incontestability provision for fraud in the procurement of the reinstated policy when permitted by applicable law in the state where the policy is delivered or issued for delivery.
(b) The suicide exclusion shall not exceed two years from the day of reinstatement, or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery.
(c) If a policy contains a reinstatement provision or other policy provision that references the subject matter of Paragraph (6)(a) and/or (6)(b), the policy references shall be consistent with (6)(a) and/or (6)(b).
W. SUICIDE
(1) The policy may provide for a suicide exclusion, which may include the phrase “sane or insane.”
(2) The suicide exclusion shall include the conditions of the provision.
(3) The suicide exclusion period shall not exceed two years from the date of issue of the policy or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery.
(4) At a minimum, a refund of all premiums paid, less dividends paid and any indebtedness, shall be paid by the company in the event of death by suicide during the suicide exclusion period.
AMENDMENTS TO THE RELEVANT PROVISIONS IN THE UNIFORM STANDARDS
For Non-Variable Adjustable and Variable Adjustable Life Insurance Policy Standards
§3. POLICY PROVISIONS
Y. REINSTATEMENT
(8) With respect to any reinstated policy, the following applies:
(a) With respect to statements made in an application for reinstatement, the policy is incontestable after it has been in force during the insured’s lifetime for two years beginning with the day of reinstatement. The contestable period is based only on statements in the reinstatement application, unless the original contestable period has not yet expired. The reinstated policy may include an exception to the incontestability provision for fraud in the procurement of the reinstated policy when permitted by applicable law in the state where the policy is delivered or issued for delivery.
(b) The suicide exclusion shall not exceed two years from the day of reinstatement or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery.
(c) If a policy contains a reinstatement provision or other policy provision that references the subject matter of Paragraph (8)(a) and/or (8)(b), the policy references shall be consistent with (8)(a) and/or (8)(b).
CC. SUICIDE
(1) The policy may provide for a suicide exclusion, which may include the phrase “sane or insane.”
(2) The suicide exclusion shall include the conditions of the provision.
(3) The suicide exclusion period for the initial coverage shall not exceed two years from the date of issue of the policy or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery. The policy may allow a separate suicide period, no greater than two years from the date of any increase, or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery, for any increase in specified amount that was requested by the owner and subject to evidence of insurability. The suicide limitation shall be limited to the amount of the increase.
(4) At a minimum, a refund of all premiums paid, less dividends paid, any indebtedness and any partial withdrawals, shall be paid by the company in the event of death by suicide during the initial suicide exclusion period. For increases in specified amount, the settlement for suicide shall be at least as favorable as the return of the monthly deductions, including all expenses, for the increase.
AMENDMENTS TO THE RELEVANT PROVISIONS IN THE UNIFORM STANDARDS
For Additional Standards for Private Placement Plans for Individual Variable Adjustable Life Insurance Policies
§3. POLICY PROVISIONS
I. POLICY EXCHANGE
(2) With respect to the new policy, the following applies:
(a) A policy exchange shall not trigger a new contestable period, unless the net amount at risk is increased. If the net amount at risk is increased, contestability may apply to the increased amount for up to two years beginning with the date of issue of the new policy. The new policy may include an exception to the incontestability provision for fraud in the procurement of the new policy when permitted by applicable law in the state where the policy is delivered or issued for delivery.
(b) A policy exchange shall not trigger a new suicide exclusion period, unless the net amount at risk is increased. If the net amount at risk is increased, a suicide exclusion may apply to the increased amount for up to two years, or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery, beginning with the date of issue of the new policy.
(c) If a policy contains a reinstatement provision or other policy provision that references the subject matter of Paragraph (2)(a) and/or (2)(b) of this section, the policy references shall be consistent with such Paragraphs.
§4 POLICY AND CERTIFICATE PROVISIONS
W. SUICIDE
(1) The policy may include a suicide provision. If a suicide provision is included, the provisions describing the effect of suicide may be included in the policy but shall be included in the certificate. The provision shall describe the effect of a suicide on the payment of life insurance benefits under the policy.
(a) The provision may include the phrase “sane or insane”;
(b) The provision shall state that the suicide exclusion period shall not apply to life insurance on a Covered Person that has remained in effect for a continuous period of two or more years, or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery during the Covered Person’s lifetime under the policyholder’s Employee benefits plan including this policy and any predecessor policy;
(c) The provision shall state that the insurance company’s liability will be limited to a return to the Beneficiary of all Premiums paid by the Employee and a return to the policyholder of all Premiums paid by the policyholder; and
(d) The provision shall state that if a Covered Person commits suicide within two years, or any shorter period as may be required by applicable law in the state where the policy is delivered or issued for delivery, from the date an increase in life insurance (other than a scheduled or automatic increase) took effect, the insurance company will pay to the Beneficiary the amount of insurance that was in effect before the increase. Any premium paid by the Employee for the increase will be returned to the Beneficiary, and any premium paid by the policyholder will be returned to the policyholder.
APPENDIX B
UNIFORM STANDARDS FOR THE PROPOSED AMENDMENT RELATED TO THE LENGTH OF THE SUICIDE EXCLUSION PERIOD
INDIVIDUAL TERM LIFE PRODUCT LINE
Individual Term Life Insurance Policy Standards
Individual Single Premium Term Life Insurance Policy Standards
Individual Joint Last to Die Survivorship Term Life Insurance Policy Standards
Individual Single Premium Joint Last to Die Survivorship Term Life Insurance Policy Standards
INDIVIDUAL WHOLE LIFE PRODUCT LINE
Individual Whole Life Insurance Policy Standards
Individual Single Premium Whole Life Insurance Policy Standards
Individual Joint Last to Die Survivorship Whole Life Insurance Policy Standards
Individual Single Premium Joint Last to Die Survivorship Whole Life Insurance Policy Standards
Individual Current Assumption Whole Life Insurance Policy Standards
INDIVIDUAL ENDOWMENT INSURANCE PRODUCT LINE
Individual Endowment Insurance Policy Standards
Individual Single Premium Endowment Insurance Policy Standards
Individual Joint Last to Die Survivorship Endowment Insurance Policy Standards
Individual Single Premium Joint Last to Die Survivorship Endowment Insurance Policy Standards
INDIVIDUAL NON-VARIABLE ADJUSTABLE LIFE INSURANCE PRODUCT LINE
Individual Flexible Premium Adjustable Life Insurance Policy Standards (Universal Life)
Individual Joint Last to Die Survivorship Flexible Premium Adjustable Life Insurance Policy Standards
Individual Modified Single Premium Adjustable Life Insurance Policy Standards
INDIVIDUAL VARIABLE ADJUSTABLE LIFE INSURANCE PRODUCT LINE
Individual Modified Single Premium Variable Life Insurance Policy Standards
Individual Modified Single Premium Joint First to Die Variable Life Insurance Policy Standards
Individual Flexible Premium Variable Adjustable Life Insurance Policy Standards
Individual Joint Last to Die Survivorship Flexible Premium Variable Adjustable Life Insurance Policy Standards
Additional Standards for Private Placement Plans for Individual Variable Adjustable Life Insurance Policies
GROUP TERM LIFE PRODUCT LINE
Group Term Life Insurance Policy and Certificate Standards for Employer Groups