20-2602. Requirements applicable to insurers issuing variable life insurance

A. An insurer shall not deliver or issue for delivery in this state a variable life insurance policy unless all of the following apply:

1. The insurer is licensed to transact life insurance business in this state.

2. The director gives written approval to the insurer for the issuance of variable life insurance policies in this state. The director shall grant the written approval only after finding that:

(a) The plan of operation for the issuance of variable life insurance policies is not unsound.

(b) The general character, reputation and experience of the management and those persons or firms that the insurer proposes to supply consulting, investment, administrative or custodial services to the insurer will reasonably result in the competent operation of the variable life insurance business of the insurer in this state.

(c) The financial condition of the insurer and its method of operation in connection with the issuance of variable life policies is not likely to harm the public or its policyholders in this state. The director shall consider at least the following:

(i) The insurer's history of operation and financial condition.

(ii) The qualifications, fitness, character, responsibility, reputation and experience of the officers, directors and other management personnel of the insurer and of those persons or firms that the insurer proposes to supply consulting, investment, administrative or custodial services to the insurer.

(iii) The applicable law under which the insurer is authorized in its state of domicile to issue variable life insurance policies. The state of entry of an alien insurer is deemed to be its state of domicile.

(iv) If the insurer is a subsidiary of or is affiliated by common management or ownership with another company, the insurer's relationship to the other company and the degree to which the requesting insurer and the other company meet these standards.

B. Before delivering or issuing for delivery in this state a variable life insurance policy, an insurer shall file the following information with the director:

1. Copies and a general description of the variable life insurance policies the insurer intends to issue.

2. A general description of the insurer's methods of operation of the variable life insurance business, including the methods of policy distribution and the names of those persons or firms that the insurer proposes to supply consulting, investment, administrative, custodial or distribution services to the insurer.

3. With respect to a separate account that the insurer maintains for any variable life insurance policy, a statement of the investment policy that the issuer intends to follow for the investment of the assets that are held in the separate account and a statement of the procedures for changing the investment policy. The statement of investment policy shall include a description of the investment objectives that are intended for the separate account.

4. A description of any contemplated investment advisory services that satisfies section 20-2606, subsection L.

5. A copy of the statutes and rules of the insurer's state of domicile under which the insurer is authorized to issue variable life insurance policies, unless the insurer is domiciled in this state.

6. A completed national association of insurance commissioners' uniform biographical data form for the officers and directors of the insurer.

7. A statement that is completed by the insurer's actuary and that describes the mortality and expense risks that the insurer will bear under the policy.

8. A statement that describes the method of computation of cash values and other nonforfeiture benefits if not described in the policy.

C. Each insurer that seeks to enter into the variable life insurance business in this state shall establish and maintain a written statement and shall specify in the statement the standards of suitability the insurer will use. The standards of suitability shall specify the following:

1. That an insurer shall not make a recommendation to an applicant to purchase a variable life insurance policy.

2. That a variable life insurance policy shall not be issued if after the insurance producer making the recommendation or the insurer considers the applicant's insurance and investment objectives, financial situation and needs and any other information known to the insurer or the insurance producer, the insurer or insurance producer determines that the purchase of the policy is unsuitable for the applicant.

D. An insurer authorized to transact variable life insurance business in this state shall not use any sales material, advertising material, descriptive literature or other material of any kind in connection with its variable life insurance business in this state that is false, misleading, deceptive or inaccurate. Variable life insurance sales material, advertising material and descriptive literature are subject to section 20-1110, subsection E.

E. A material contract that is entered into between an insurer and a supplier of consulting, investment, administrative, sales, marketing, custodial or other services with respect to variable life insurance operations shall be in writing and shall state that on the director's request the supplier of the services shall furnish to the director any information or reports in connection with the services that would allow the director to determine if the variable life insurance operations of the insurer are being conducted in a manner that is consistent with this article.