1.1 	A bill for an act
1.2 	relating to insurance; regulating continuation coverage for life insurance; 
1.3 	regulating life policies with accelerated benefits; authorizing the use of certain 
1.4 	mortality tables to calculate reserves for certain life policies; regulating life 
1.5 	insurance policy illustrations and interest rate disclosures; requiring auto insurers 
1.6 	to notify the commissioner of decision to withdraw from the market; regulating 
1.7 	certain notices of cancellation and certain policy renewals; providing for 
1.8 	inflation protection in long-term care partnership policies; providing minimum 
1.9 	comprehensive health insurance plan benefits; modifying a definition; amending 
1.10 	Minnesota Statutes 2006, sections 60A.351; 61A.072; 61A.092, subdivision 
1.11 	6; 61A.25, subdivision 4; 62E.12; 62S.23, subdivision 1; 65B.17, by adding a 
1.12 	subdivision; 72A.52, subdivision 1; 72B.02, subdivision 7; proposing coding 
1.13 	for new law in Minnesota Statutes, chapter 61A; repealing Minnesota Statutes 
1.14 	2006, section 45.025, subdivisions 1, 2, 3, 4, 5, 6, 8, 9, 10; Minnesota Rules, 
1.15 	parts 2790.1750; 2790.1751.
1.16 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.17 	Section 1. Minnesota Statutes 2006, section 60A.351, is amended to read:
1.18 	60A.351 RENEWAL OF INSURANCE POLICY WITH ALTERED RATES.
1.19 	If an insurance company licensed to do business in this state offers or purports to 
1.20 	offer to renew any commercial liability and/or property insurance policy at less favorable 
1.21 	terms as to the dollar amount of coverage or deductibles, higher rates, and/or higher rating 
1.22 	plan, the new terms, the new rates and/or rating plan may take effect on the renewal date 
1.23 	of the policy if the insurer has sent to the policyholder notice of the new terms, new rates 
1.24 	and/or rating plan at least 6030 days prior to the expiration date. If the insurer has not so 
1.25 	notified the policyholder, the policyholder may elect to cancel the renewal policy within 
1.26 	the 60-day period after receipt of the notice. Earned premium for the period of coverage, 
1.27 	if any, shall be calculated pro rata upon the prior rate. This section does not apply to 
2.1 	ocean marine insurance, accident and health insurance, reinsurance, and coverage under 
2.2 	the federal Terrorism Risk Insurance Act.
2.3 	This section does not apply if the change relates to guide "a" rates or excess rates 
2.4 	also known as "consent to rates" or if there has been any change in the risk insured.

2.5 	Sec. 2. Minnesota Statutes 2006, section 61A.072, is amended to read:
2.6 	61A.072 POLICIES WITH ACCELERATED BENEFITS.
2.7 		Subdivision 1.Disclosure. A life insurance contract or supplemental contract that 
2.8 	contains a provision to permit the accelerated payment of benefits as authorized under 
2.9 	section 60A.06, subdivision 1, clause (4), must contain the following disclosure: "This is a 
2.10 	life insurance policy which pays accelerated death benefits at your option under conditions 
2.11 	specified in the policy. This policy is not a long-term care policy meeting the requirements 
2.12 	of sections 62A.46 to 62A.56 or chapter 62S." 
2.13 		Subd. 4.Long-term care expenses. If the right to receive accelerated benefits 
2.14 	is contingent upon the insured receiving long-term care services, the contract or 
2.15 	supplemental contract shall include the following provisions:
2.16 	(1) the minimum accelerated benefit shall be $1,200 per month if the insured is 
2.17 	receiving nursing facility services and $750 per month if the insured is receiving home 
2.18 	services with a minimum lifetime benefit limit of $50,000;
2.19 	(2) coverage is effective immediately and benefits shall commence with the receipt 
2.20 	of services as defined in section 62A.46, subdivision 3, 4, or 5, or 62S.01, subdivision 
2.21 	25, but may include a waiting period of not more than 90 days, provided that no more 
2.22 	than one waiting period may be required per benefit period as defined in section 62A.46, 
2.23 	subdivision 11; 
2.24 	(3) premium shall be waived during any period in which benefits are being paid to 
2.25 	the insured during confinement to a nursing home facility;
2.26 	(4) coverage may not be canceled or renewal refused except on the grounds of 
2.27 	nonpayment of premium;
2.28 	(5) coverage must include preexisting conditions during the first six months of 
2.29 	coverage if the insured was not diagnosed or treated for the particular condition during the 
2.30 	90 days immediately preceding the effective date of coverage;
2.31 	(6) coverage must include mental or nervous disorders which have a demonstrable 
2.32 	organic cause such as Alzheimer's and related dementias;
2.33 	(7) no prior hospitalization requirement shall be allowed unless a similar requirement 
2.34 	is allowed by section 62A.48, subdivision 1, or 62S.06; and 
3.1 	(8) the contract shall include a cancellation provision that meets the requirements of 
3.2 	section 62A.50, subdivision 2, or 62S.07. 
3.3 		Subd. 5.Exclusion. Subdivision 4 does not apply to contracts or supplemental 
3.4 	contracts granting the right to receive accelerated benefits if (1) one of the options for 
3.5 	payment provides for lump-sum payment; (2) no conditions or restrictions are imposed on 
3.6 	the use of the funds by the insured; and (3) the offeree or insured is given written notice 
3.7 	at the time the contract or supplemental contract is offered or sold that (i) Minnesota 
3.8 	law sets minimum requirements for life insurance contracts where the right to receive 
3.9 	accelerated benefits is contingent upon the insured receiving long-term care services, 
3.10 	and (ii) the contract or supplemental contract being offered or sold does not meet those 
3.11 	minimum requirements.
3.12 		Subd. 6.Accelerated benefits Definitions. (a) "Accelerated benefits" covered 
3.13 	under this section are benefits payable under the life insurance contract:
3.14 	(1) to a policyholder or certificate holder, during the lifetime of the insured, in the 
3.15 	anticipation of death or upon the occurrence of a specified life-threatening or catastrophic 
3.16 	condition as defined by the policy or rider;
3.17 	(2) that reduce the death benefit otherwise payable under the life insurance contract; 
3.18 	and
3.19 	(3) that are payable upon the occurrence of a single qualifying event that results in 
3.20 	the payment of a benefit amount fixed at the time of acceleration.
3.21 	(b) "Qualifying event" means one or more of the following:
3.22 	(1) a medical condition that would result in a drastically limited life span as specified 
3.23 	in the contract;
3.24 	(2) a medical condition that has required or requires extraordinary medical 
3.25 	intervention, such as, but not limited to, major organ transplant or continuous artificial life 
3.26 	support without which the insured would die;
3.27 	(3) a condition that usually requires continuous confinement in an eligible institution 
3.28 	as defined in the contract if the insured is expected to remain there for the rest of the 
3.29 	insured's life;
3.30 	(4) a long-term care illness or physical condition that results in cognitive impairment 
3.31 	or the inability to perform the activities of daily life or the substantial and material 
3.32 	duties of any occupation medical condition that would, in the absence of extensive or 
3.33 	extraordinary medical treatment, result in a drastically limited life span. Such conditions 
3.34 	may include, but are not limited to, one or more of the following:
3.35 	(i) coronary artery disease resulting in an acute infarction or requiring surgery;
3.36 	(ii) permanent neurological deficit resulting from cerebral vascular accident;
4.1 	(iii) end stage renal failure;
4.2 	(iv) Acquired Immune Deficiency Syndrome; or
4.3 	(v) other medical conditions that the commissioner shall approve for any particular 
4.4 	filing; or
4.5 	(5) other qualifying events that the commissioner approves for a particular filing.
4.6 		Subd. 2.Type of product. Accelerated benefit riders and life insurance policies 
4.7 	with accelerated benefit provisions are primarily mortality risks rather than morbidity 
4.8 	risks. They are life insurance benefits subject to this chapter.
4.9 		Subd. 3.Assignee or beneficiary. Before paying the accelerated benefit, the insurer 
4.10 	is required to obtain from an assignee or irrevocable beneficiary a signed acknowledgment 
4.11 	of concurrence for payout. If the insurer making the accelerated benefit is itself the 
4.12 	assignee under the policy, no acknowledgment is required.
4.13 		Subd. 4.Criteria for payment. (a) Contract payment options shall include the 
4.14 	option to take the benefit as a lump sum. The benefit shall not be made available as an 
4.15 	annuity contingent upon the life of the insured.
4.16 	(b) No restrictions are permitted on the use of the proceeds.
4.17 	(c) If any death benefit remains after payment of an accelerated benefit, the 
4.18 	accidental death benefit provision, if any, in the policy or rider shall not be affected by the 
4.19 	payment of the accelerated benefit.
4.20 		Subd. 5.Disclosures. (a) The terminology "accelerated benefit" shall be included 
4.21 	in the descriptive title. Products regulated under this section shall not be described or 
4.22 	marketed as long-term care insurance or as providing long-term care benefits.
4.23 	(b) A disclosure statement is required at the time of application for the policy or 
4.24 	rider and at the time the accelerated benefit payment request is submitted that receipt of 
4.25 	these accelerated benefits may be taxable and that assistance should be sought from a 
4.26 	personal tax advisor. The disclosure statement shall be prominently displayed on the first 
4.27 	page of the policy or rider and any other related documents.
4.28 	(c)(1) A written disclosure including, but not necessarily limited to, a brief 
4.29 	description of the accelerated benefit and definitions of the conditions or occurrences 
4.30 	triggering payment of the benefits shall be given to the applicant. The description shall 
4.31 	include an explanation of any effect of the payment of a benefit on the policy's cash value, 
4.32 	accumulation account, death benefit, premium, policy loans, and policy liens.
4.33 	(i) In the case of agent solicited insurance, the agent shall provide the disclosure 
4.34 	form to the applicant prior to or concurrently with the application. Acknowledgment of 
4.35 	the disclosure shall be signed by the applicant and writing agent.
5.1 	(ii) In the case of a solicitation by direct response methods, the insurer shall provide 
5.2 	the disclosure form to the applicant at the time the policy is delivered, with a notice that 
5.3 	a full premium refund shall be received if the policy is returned to the company within 
5.4 	the free look period.
5.5 	(iii) In the case of group insurance policies, the disclosure form shall be contained 
5.6 	as part of the certificate of coverage or any related document furnished by the insurer 
5.7 	for the certificate holder.
5.8 	(2) If there is a premium or cost of insurance charge, the insurer shall give the 
5.9 	applicant a generic illustration numerically demonstrating any effect of the payment of a 
5.10 	benefit on the policy's cash value, accumulation account, death benefit, premium, policy 
5.11 	loans, and policy liens.
5.12 	(i) In the case of agent-solicited insurance, the agent shall provide the illustration to 
5.13 	the applicant prior to or concurrently with the application.
5.14 	(ii) In the case of a solicitation by direct response methods, the insurer shall provide 
5.15 	the illustration to the applicant at the time the policy is delivered.
5.16 	(iii) In the case of group insurance policies, the disclosure form shall be contained 
5.17 	as part of the certificate of coverage or any related document furnished by the insurer 
5.18 	for the certificate holder.
5.19 	(3) Disclosure of premium charge.
5.20 	(i) An insurer with financing options other than as described in subdivision 9, 
5.21 	paragraph (a), clauses (2) and (3), shall disclose to the policy owner any premium or cost 
5.22 	of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort 
5.23 	to assure that the certificate holder is aware of any additional premium or cost of insurance 
5.24 	charge if the certificate holder is required to pay a charge.
5.25 	(ii) An insurer shall furnish an actuarial demonstration to the state insurance 
5.26 	department when filing the product disclosing the method of arriving at its cost for the 
5.27 	accelerated benefit.
5.28 	(4) The insurer shall disclose to the policy owner any administrative expense charge. 
5.29 	The insurer shall make a reasonable effort to assure that the certificate holder is aware of 
5.30 	any administrative expense charge if the certificate holder is required to pay the charge.
5.31 	(d) When a policy owner or certificate holder requests an acceleration, the insurer 
5.32 	shall send a statement to the policy owner or certificate holder and irrevocable beneficiary 
5.33 	showing any effect that the payment of the accelerated benefit will have on the policy's 
5.34 	cash value, accumulation account, death benefit, premium, policy loans, and policy liens. 
5.35 	The statement shall disclose that receipt of accelerated benefit payments may adversely 
5.36 	affect the recipient's eligibility for Medicaid or other government benefits or entitlements. 
6.1 	In addition, receipt of an accelerated benefit payment may be taxable and assistance 
6.2 	should be sought from a personal tax advisor. When a previous disclosure statement 
6.3 	becomes invalid as a result of an acceleration of the death benefit, the insurer shall send 
6.4 	a revised disclosure statement to the policy owner or certificate holder and irrevocable 
6.5 	beneficiary. When the insurer agrees to accelerate death benefits, the insurer shall issue an 
6.6 	amended schedule page to the policy holder or notify the certificate holder under a group 
6.7 	policy to reflect any new reduced in-force face amount of the contract.
6.8 		Subd. 6.Effective date of accelerated benefits. The accelerated benefit provision 
6.9 	shall be effective for accidents on the effective date of the policy or rider. The accelerated 
6.10 	benefit provision shall be effective for illness no more than 30 days following the effective 
6.11 	date of the policy or rider.
6.12 		Subd. 7.Waiver of premiums. The insurer may offer a waiver of premium for the 
6.13 	accelerated benefit provision in the absence of a regular waiver of premium provision 
6.14 	being in effect. At the time the benefit is claimed, the insurer shall explain any continuing 
6.15 	premium requirement to keep the policy in force.
6.16 		Subd. 8.Discrimination. An insurer shall not unfairly discriminate among insureds 
6.17 	with differing qualifying events covered under the policy or among insureds with similar 
6.18 	qualifying events covered under the policy. An insurer shall not apply further conditions 
6.19 	on the payment of the accelerated benefits other than those conditions specified in the 
6.20 	policy or rider.
6.21 		Subd. 9.Actuarial standards. (a) The issuer may use the following financing 
6.22 	options:
6.23 	(1) requiring a premium charge or cost of insurance charge for the accelerated 
6.24 	benefit. This charge shall be based on sound actuarial principles. In the case of group 
6.25 	insurance, the additional cost may also be reflected in the experience rating.
6.26 	(2) paying a present value of the face amount. The calculation shall be based on any 
6.27 	applicable actuarial discount appropriate to the policy design. The interest rate or interest 
6.28 	rate methodology used in the calculation shall be based on sound actuarial principles and 
6.29 	disclosed in the contract or actuarial memorandum. The maximum interest rate used shall 
6.30 	be no greater than the greater of:
6.31 	(i) current yield on 90-day treasury bills; or
6.32 	(ii) current maximum statutory adjustable policy loan interest rate.
6.33 	(3) The insurer may accrue an interest charge on the amount of the accelerated 
6.34 	benefits. The interest rate or interest rate methodology used in the calculation shall be 
6.35 	based on sound actuarial principles and disclosed in the contract or actuarial memorandum. 
6.36 	The maximum interest rate shall be no greater than the greater of:
7.1 	(i) current yield on 90-day treasury bills; or
7.2 	(ii) current maximum statutory adjustable policy loan interest rate.
7.3 	The interest rate accrued on the portion of the lien that is equal in amount to the cash 
7.4 	value of the contract at the time of the benefit acceleration shall be no more than the 
7.5 	policy loan interest rate stated in the contract.
7.6 	(b)(1) Except as provided in clause (2), when an accelerated benefit is payable, there 
7.7 	shall be no more than a pro rata reduction in the cash value based on the percentage of 
7.8 	death benefits accelerated to produce the accelerated benefit payment.
7.9 	(2) Alternatively, the payment of accelerated benefits, any administrative expense 
7.10 	charges, any future premiums, and any accrued interest can be considered a lien against 
7.11 	the death benefit of the policy or rider and the access to the cash value may be restricted to 
7.12 	any excess of the cash value over the sum of any other outstanding loans and the lien. 
7.13 	Future access to additional policy loans could also be limited to any excess of the cash 
7.14 	value over the sum of the lien and any other outstanding policy loans.
7.15 	(c) When payment of an accelerated benefit results in a pro rata reduction in the cash 
7.16 	value, the payment may not be applied toward repaying an amount greater than a pro rata 
7.17 	portion of any outstanding policy loans.
7.18 		Subd. 10.Actuarial disclosure and reserves. (a) A qualified actuary should 
7.19 	describe the accelerated benefits, the risks, the expected costs, and the calculation of 
7.20 	statutory reserved in an actuarial memorandum accompanying each state filing. The 
7.21 	insurer shall maintain in its files descriptions of the bases and procedures used to calculate 
7.22 	benefits payable under these provisions. These descriptions shall be made available for 
7.23 	examination by the commissioner upon request.
7.24 	(b)(1) When benefits are provided through the acceleration of benefits under group 
7.25 	or individual life policies or riders to such policies, policy reserves shall be determined 
7.26 	in accordance with the Standard Valuation Law. All valuation assumptions used in 
7.27 	constructing the reserves shall be determined as appropriate for statutory valuation 
7.28 	purposes by a member in good standing of the American Academy of Actuaries. Mortality 
7.29 	tables and interest currently recognized for life insurance reserves by the National 
7.30 	Association of Insurance Commissioners (NAIC) may be used as well as appropriate 
7.31 	assumptions for the other provisions incorporated in the policy form. The actuary shall 
7.32 	follow both actuarial standards and certification for good and sufficient reserves. Reserves 
7.33 	in the aggregate should be sufficient to cover:
7.34 	(i) policies upon which no claim has yet arisen; and
7.35 	(ii) policies upon which an accelerated claim has arisen.
8.1 	(2) For policies and certificates that provide actuarially equivalent benefits, no 
8.2 	additional reserves need to be established.
8.3 	(3) Policy liens and policy loans, including accrued interest, represent assets of the 
8.4 	company for statutory reporting purposes. For a policy on which the policy lien exceeds 
8.5 	the policy's statutory reserve liability, the excess shall be held as a nonadmitted asset.
8.6 		Subd. 11.Filing requirement. The filing and prior approval of forms containing an 
8.7 	accelerated benefit is required.

8.8 	Sec. 3. Minnesota Statutes 2006, section 61A.092, subdivision 6, is amended to read:
8.9 		Subd. 6.Application. This section applies to a policy, certificate of insurance, 
8.10 	or similar evidence of coverage issued to a Minnesota resident or issued to provide 
8.11 	coverage to a Minnesota resident. This section does not apply to: (1) a certificate of 
8.12 	insurance or similar evidence of coverage that meets the conditions of section 61A.093, 
8.13 	subdivision 2; or (2) a group life insurance policy that contains a provision permitting the 
8.14 	certificate holder, upon termination or layoff from employment, to retain the coverage 
8.15 	provided under the employer's group policy or another group policy offered by the insurer 
8.16 	by paying premiums directly to the insurer, provided that the employer shall give the 
8.17 	employee notice of the employee's and each related certificate holder's right to continue 
8.18 	the insurance by paying premiums directly to the insurer. The insurer may reserve the 
8.19 	right to increase premium rates after the first 18 months of continued coverage provided 
8.20 	for under clause (2). A related certificate holder is an insured spouse or dependent child of 
8.21 	the employee. Upon termination of this group policy or at the option of the insured who 
8.22 	has continued coverage under clause (2), each covered employee, spouse, and dependent 
8.23 	child is entitled to have issued to them a life conversion policy as prescribed in section 
8.24 	61A.09, subdivision 1, paragraph (h). 

8.25 	Sec. 4. Minnesota Statutes 2006, section 61A.25, subdivision 4, is amended to read:
8.26 		Subd. 4.Reserve valuation of life insurance and endowment benefits; modified 
8.27 	premiums. (a) Except as otherwise provided in paragraph (b) and subdivisions 4a and 7, 
8.28 	reserves according to the commissioners reserve valuation method, for the life insurance 
8.29 	and endowment benefits of policies providing for a uniform amount of insurance and 
8.30 	requiring the payment of uniform premiums shall be the excess, if any, of the present value 
8.31 	at the date of valuation of future guaranteed benefits provided for by the policies over 
8.32 	the then present value of any future modified net premiums therefor. The modified net 
8.33 	premiums for a policy shall be the uniform percentage of the respective contract premiums 
8.34 	for the benefits that the present value, at the date of issue of the policy, of all the modified 
9.1 	net premiums shall be equal to the sum of the then present value of the benefits provided 
9.2 	for by the policy and the excess of clause (1) over clause (2) as follows:
9.3 	(1) a net level annual premium equal to the present value, at the date of issue, of the 
9.4 	benefits provided for after the first policy year, divided by the present value at the date of 
9.5 	issue of an annuity of one per annum payable on the first and each subsequent anniversary 
9.6 	of the policy on which a premium falls due; but the net level annual premium shall not 
9.7 	exceed the net level annual premium on the 19 year premium whole life plan for insurance 
9.8 	of the same amount at an age one year higher than the age at issue of the policy;
9.9 	(2) a net one year term premium for the benefits provided for in the first policy year.
9.10 	(b) For a life insurance policy issued on or after January 1, 1985, for which the 
9.11 	contract premium in the first policy year exceeds that of the second year and for which 
9.12 	no comparable additional benefit is provided in the first year for the excess and which 
9.13 	provides an endowment benefit or a cash surrender value or a combination thereof in an 
9.14 	amount greater than the excess premium, the reserve according to the commissioners 
9.15 	reserve valuation method as of a policy anniversary occurring on or before the assumed 
9.16 	ending date defined herein as the first policy anniversary on which the sum of any 
9.17 	endowment benefit and any cash surrender value then available is greater than the excess 
9.18 	premium shall, except as otherwise provided in subdivision 7, be the greater of the reserve 
9.19 	as of the policy anniversary calculated as described in paragraph (a) and the reserve as 
9.20 	of the policy anniversary calculated as described in that paragraph, but with the value 
9.21 	defined in clause (1) of that paragraph being reduced by 15 percent of the amount of the 
9.22 	excess first year premium; all present values of benefits and premiums being determined 
9.23 	without reference to premiums or benefits provided for by the policy after the assumed 
9.24 	ending date; the policy being assumed to mature on that date as an endowment; and the 
9.25 	cash surrender value provided on that date being considered as an endowment benefit. 
9.26 	In making the above comparison the mortality and interest bases stated in subdivisions 
9.27 	3 and 3b shall be used.
9.28 	(c) Reserves according to the commissioners reserve valuation method for (1) life 
9.29 	insurance policies providing for a varying amount of insurance or requiring the payment 
9.30 	of varying premiums, (2) group annuity and pure endowment contracts purchased under 
9.31 	a retirement plan or plan of deferred compensation, established or maintained by an 
9.32 	employer, including but not limited to a partnership or sole proprietorship, or by an 
9.33 	employee organization, or by both, other than a plan providing individual retirement 
9.34 	accounts or individual retirement annuities under Section 408 of the Internal Revenue 
9.35 	Code, as amended, (3) disability and accidental death benefits in all policies and contracts, 
9.36 	and (4) all other benefits, except life insurance and endowment benefits in life insurance 
10.1 	policies and benefits provided by all other annuity and pure endowment contracts, shall be 
10.2 	calculated by a method consistent with the principles of paragraphs (a) and (b), except 
10.3 	that any extra premiums charged because of impairments or special hazards shall be 
10.4 	disregarded in the determination of modified net premiums.
10.5 	(d) For a universal life insurance policy that guarantees coverage to remain in 
10.6 	force as long as the accumulation of premiums paid satisfies a secondary guarantee 
10.7 	requirement, reserves according to the commissioners reserve valuation method may be 
10.8 	calculated using a lapse assumption only in accordance with and in the circumstances 
10.9 	described in the National Association of Insurance Commissioners' accounting practices 
10.10 	and procedures manual for policies issued on or after January 1, 2007, and on or before 
10.11 	December 31, 2010.

10.12 	Sec. 5. [61A.257] PREFERRED MORTALITY TABLES FOR USE IN 
10.13 	DETERMINING MINIMUM RESERVE LIABILITIES.
10.14 		Subdivision 1.Definitions. (a) For the purposes of this section only, the following 
10.15 	terms have the meanings given them.
10.16 	(b) "2001 CSO Mortality Table" means that mortality table, consisting of separate 
10.17 	rates of mortality for male and female lives, developed by the American Academy of 
10.18 	Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the 
10.19 	Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and 
10.20 	adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in 
10.21 	the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO 
10.22 	Preferred Class Structure Mortality Table defined in paragraph (c). Unless the context 
10.23 	indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of 
10.24 	that table and the select and ultimate form of that table and includes both the smoker and 
10.25 	nonsmoker mortality tables and the composite mortality tables. It also includes both the 
10.26 	age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables 
10.27 	in the 2001 CSO Mortality Table include the following:
10.28 	(1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates 
10.29 	of mortality for female lives from the 2001 CSO Mortality Table;
10.30 	(2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the 
10.31 	rates of mortality for male lives from the 2001 CSO Mortality Table;
10.32 	(3) "composite mortality tables" means mortality tables with rates of mortality that 
10.33 	do not distinguish between smokers and nonsmokers; and
10.34 	(4) "smoker and nonsmoker mortality tables" means mortality tables with separate 
10.35 	rates of mortality for smokers and nonsmokers.
11.1 	(c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables 
11.2 	with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, 
11.3 	Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smoker splits 
11.4 	of the 2001 CSO Nonsmoker and Smoker Tables as adopted by the NAIC at the September 
11.5 	2006 national meeting and published in the NAIC Proceedings (3rd Quarter 2006). Unless 
11.6 	the context indicates otherwise, the "2001 CSO Preferred Class Structure Mortality Table" 
11.7 	includes both the ultimate form of that table and the select and ultimate form of that 
11.8 	table, the smoker and nonsmoker mortality tables, both the male and female mortality 
11.9 	tables and the gender composite mortality tables, and both the age-nearest-birthday and 
11.10 	age-last-birthday bases of the mortality table.
11.11 	(d) "Statistical agent" means an entity with proven systems for protecting the 
11.12 	confidentiality of individual insured and insurer information; demonstrated resources 
11.13 	for and history of ongoing electronic communications and data transfer ensuring data 
11.14 	integrity with insurers, which are its members or subscribers; and a history of and means 
11.15 	for aggregation of data and accurate promulgation of the experience modifications in a 
11.16 	timely manner.
11.17 		Subd. 2.2001 CSO Preferred Class Structure Table. At the election of the 
11.18 	insurer, for each calendar year of issue, for any one or more specified plans of insurance 
11.19 	and subject to satisfying the conditions stated in this section, the 2001 CSO Preferred 
11.20 	Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or 
11.21 	Nonsmoker Mortality Table as the minimum valuation standard under section 61A.25 for 
11.22 	policies issued on or after January 1, 2007. No such election must be made until the 
11.23 	insurer demonstrates at least 20 percent of the business to be valued on this table is in one 
11.24 	or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure 
11.25 	Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements 
11.26 	of this section, will be treated as part of the 2001 CSO Mortality Table only for purposes 
11.27 	of reserve valuation pursuant to section 61A.25 and Minnesota Rules, chapter 2748.
11.28 		Subd. 3.Conditions. (a) For each plan of insurance with separate rates for preferred 
11.29 	and standard nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, 
11.30 	Preferred Nonsmoker, and Residual Standard Nonsmoker Tables to substitute for the 
11.31 	Nonsmoker Mortality Table found in the 2001 CSO Mortality Table to determine minimum 
11.32 	reserves. At the time of election and annually thereafter, except for business valued under 
11.33 	the Residual Standard Nonsmoker Table, the appointed actuary shall certify that:
11.34 	(1) the present value of death benefits over the next ten years after the valuation date, 
11.35 	using the anticipated mortality experience without recognition of mortality improvement 
11.36 	beyond the valuation date for each class, is less than the present value of death benefits 
12.1 	using the valuation basic table corresponding to the valuation table being used for that 
12.2 	class; and
12.3 	(2) the present value of death benefits over the future life of the contracts, using 
12.4 	anticipated mortality experience without recognition of mortality improvement beyond 
12.5 	the valuation date for each class, is less than the present value of death benefits using the 
12.6 	valuation basic table corresponding to the valuation table being used for that class.
12.7 	(b) For each plan of insurance with separate rates for preferred and standard smoker 
12.8 	lives, an insurer may use the Preferred Smoker and Residual Standard Smoker Tables to 
12.9 	substitute for the Smoker Mortality Table found in the 2001 CSO Mortality Table to 
12.10 	determine minimum reserves. At the time of election and annually thereafter, for business 
12.11 	valued under the Preferred Smoker Table, the appointed actuary shall certify that:
12.12 	(1) the present value of death benefits over the next ten years after the valuation date, 
12.13 	using the anticipated mortality experience without recognition of mortality improvement 
12.14 	beyond the valuation date for each class, is less than the present value of death benefits 
12.15 	using the Preferred Smoker Valuation Basic Table corresponding to the valuation table 
12.16 	being used for that class; and
12.17 	(2) the present value of death benefits over the future life of the contracts, using 
12.18 	anticipated mortality experience without recognition of mortality improvement beyond 
12.19 	the valuation date for each class, is less than the present value of death benefits using the 
12.20 	Preferred Smoker Valuation Basic Table.
12.21 	(c) Unless exempted by the commissioner, every authorized insurer using the 2001 
12.22 	CSO Preferred Class Structure Table shall annually file with the commissioner, the 
12.23 	NAIC, or a statistical agent designated by the NAIC and acceptable to the commissioner, 
12.24 	statistical reports showing mortality and such other information as the commissioner may 
12.25 	deem necessary or expedient for the administration of the provisions of this section. The 
12.26 	form of the reports shall be established by the commissioner or the commissioner may 
12.27 	require the use of a form established by the NAIC or by a statistical agent designated by 
12.28 	the NAIC and acceptable to the commissioner.

12.29 	Sec. 6. [61A.70] APPLICABILITY AND SCOPE.
12.30 	Sections 61A.70 to 61A.745 apply to all group and individual life insurance policies 
12.31 	and certificates except:
12.32 	(1) variable life insurance;
12.33 	(2) individual and group annuity contracts;
12.34 	(3) credit life insurance; or
13.1 	(4) life insurance policies with no illustrated death benefits on any individual 
13.2 	exceeding $10,000.

13.3 	Sec. 7. [61A.705] DEFINITIONS.
13.4 	For the purposes of sections 61A.70 to 61A.745:
13.5 	(a) "Actuarial Standards Board" means the board established by the American 
13.6 	Academy of Actuaries to develop and promulgate standards of actuarial practice.
13.7 	(b) "Contract premium" means the gross premium that is required to be paid under 
13.8 	a fixed premium policy, including the premium for a rider for which benefits are shown 
13.9 	in the illustration.
13.10 	(c) "Currently payable scale" means a scale of nonguaranteed elements in effect for 
13.11 	a policy form as of the preparation date of the illustration or declared to become effective 
13.12 	within the next 95 days.
13.13 	(d) "Disciplined current scale" means a scale of nonguaranteed elements constituting 
13.14 	a limit on illustrations currently being illustrated by an insurer that is reasonably based 
13.15 	on actual recent historical experience, as certified annually by an illustration actuary 
13.16 	designated by the insurer. Further guidance in determining the disciplined current scale 
13.17 	as contained in standards established by the Actuarial Standards Board may be relied 
13.18 	upon if the standards:
13.19 	(1) are consistent with all provisions of sections 61A.70 to 61A.745;
13.20 	(2) limit a disciplined current scale to reflect only actions that have already been 
13.21 	taken or events that have already occurred;
13.22 	(3) do not permit a disciplined current scale to include any projected trends of 
13.23 	improvements in experience or any assumed improvements in experience beyond the 
13.24 	illustration date; and
13.25 	(4) do not permit assumed expenses to be less than minimum assumed expenses.
13.26 	(e) "Generic name" means a short title descriptive of the policy being illustrated such 
13.27 	as "whole life," "term life," or "flexible premium adjustable life."
13.28 	(f) "Guaranteed elements" and "nonguaranteed elements" are defined as follows:
13.29 	(1) "guaranteed elements" means the premiums, benefits, values, credits, or charges 
13.30 	under a policy of life insurance that are guaranteed and determined at issue; and
13.31 	(2) "nonguaranteed elements" means the premiums, benefits, values, credits, or 
13.32 	charges under a policy of life insurance that are not guaranteed or not determined at issue.
13.33 	(g) "Illustrated scale" means a scale of nonguaranteed elements currently being 
13.34 	illustrated that is not more favorable to the policy owner than the lesser of:
13.35 	(1) the disciplined current scale; or
14.1 	(2) the currently payable scale.
14.2 	(h) "Illustration" means a presentation or depiction that includes nonguaranteed 
14.3 	elements of a policy of life insurance over a period of years and that is one of the three 
14.4 	types defined in clauses (1) to (3):
14.5 	(1) "basic illustration" means a ledger or proposal used in the sale of a life insurance 
14.6 	policy that shows both guaranteed and nonguaranteed elements;
14.7 	(2) "supplemental illustration" means an illustration furnished in addition to a basic 
14.8 	illustration that meets the applicable requirements of sections 61A.70 to 61A.745, and that 
14.9 	may be presented in a format differing from the basic illustration, but may only depict a 
14.10 	scale of nonguaranteed elements that is permitted in a basic function; and
14.11 	(3) "in-force illustration" means an illustration furnished at any time after the policy 
14.12 	that it depicts has been in force for one year or more.
14.13 	(i) "Illustration actuary" means an actuary meeting the requirements of section 12 
14.14 	who certifies to illustrations based on the standard of practice adopted by the Actuarial 
14.15 	Standards Board.
14.16 	(j) "Lapse-supported illustration" means an illustration of a policy form failing 
14.17 	the test of self-supporting as defined in sections 61A.70 to 61A.745, under a modified 
14.18 	persistency rate assumption using persistency rates underlying the disciplined current 
14.19 	scale for the first five years and 100 percent policy persistency thereafter.
14.20 	(k)(1) "Minimum assumed expenses" means the minimum expenses that may be 
14.21 	used in the calculation of the disciplined current scale for a policy form. The insurer 
14.22 	may choose to designate each year the method of determining assumed expenses for all 
14.23 	policy forms from the following:
14.24 	(i) fully allocated expenses;
14.25 	(ii) marginal expenses; and
14.26 	(iii) a generally recognized expense table based on fully allocated expenses 
14.27 	representing a significant portion of insurance companies and approved by the National 
14.28 	Association of Insurance Commissioners or by the commissioner.
14.29 	(2) Marginal expenses may be used only if greater than a generally recognized 
14.30 	expense table. If no generally recognized expense table is approved, fully allocated 
14.31 	expenses must be used.
14.32 	(l) "Nonterm group life" means a group policy or individual policies of life insurance 
14.33 	issued to members of an employer group or other permitted group where:
14.34 	(1) every plan of coverage was selected by the employer or other group 
14.35 	representative;
15.1 	(2) some portion of the premium is paid by the group or through payroll deduction; 
15.2 	and
15.3 	(3) group underwriting or simplified underwriting is used.
15.4 	(m) "Policy owner" means the owner named in the policy or the certificate holder in 
15.5 	the case of a group policy.
15.6 	(n) "Premium outlay" means the amount of premium assumed to be paid by the 
15.7 	policy owner or other premium payer out-of-pocket.
15.8 	(o) "Self-supporting illustration" means an illustration of a policy form for which it 
15.9 	can be demonstrated that, when using experience assumptions underlying the disciplined 
15.10 	current scale, for all illustrated points in time on or after the 15th policy anniversary or the 
15.11 	20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if 
15.12 	sooner), the accumulated value of all policy cash flows equals or exceeds the total policy 
15.13 	owner value available. For this purpose, policy owner value will include cash surrender 
15.14 	values and any other illustrated benefit amounts available at the policy owner's election.

15.15 	Sec. 8. [61A.71] POLICIES TO BE ILLUSTRATED.
15.16 	(a) Each insurer marketing policies to which sections 61A.70 to 61A.745 are 
15.17 	applicable shall notify the commissioner whether a policy form is to be marketed with 
15.18 	or without an illustration. For all policy forms being actively marketed on the effective 
15.19 	date of sections 61A.70 to 61A.745, the insurer shall identify in writing those forms and 
15.20 	whether or not an illustration will be used with them. For policy forms filed after the 
15.21 	effective date of sections 61A.70 to 61A.745, the identification must be made at the time 
15.22 	of filing. Any previous identification may be changed by notice to the commissioner.
15.23 	(b) If the insurer identifies a policy form as one to be marketed without an 
15.24 	illustration, any use of an illustration for any policy using that form prior to the first 
15.25 	policy anniversary is prohibited.
15.26 	(c) If a policy form is identified by the insurer as one to be marketed with an 
15.27 	illustration, a basic illustration prepared and delivered in accordance with sections 
15.28 	61A.70 to 61A.745 is required, except that a basic illustration need not be provided to 
15.29 	individual members of a group or to individuals insured under multiple lives coverage 
15.30 	issued to a single applicant unless the coverage is marketed to these individuals. The 
15.31 	illustration furnished an applicant for a group life insurance policy or policies issued to a 
15.32 	single applicant on multiple lives may be either an individual or composite illustration 
15.33 	representative of the coverage on the lives of member of the group or the multiple lives 
15.34 	covered.
16.1 	(d) Potential enrollees of nonterm group life subject to this regulation shall be 
16.2 	furnished a quotation with the enrollment materials. The quotation must show potential 
16.3 	policy values for sample ages and policy years on a guaranteed and nonguaranteed basis 
16.4 	appropriate to the group and the coverage. This quotation must not be considered an 
16.5 	illustration for purposes of sections 61A.70 to 61A.745, but all information provided shall 
16.6 	be consistent with the illustrated scale. A basic illustration must be provided at delivery of 
16.7 	the certificate to enrollees for nonterm group life who enroll for more than the minimum 
16.8 	premium necessary to provide pure death benefit protection. In addition, the insurer shall 
16.9 	make a basic illustration available to any nonterm group life enrollee who requests it.

16.10 	Sec. 9. [61A.715] GENERAL RULES AND PROHIBITIONS.
16.11 	(a) An illustration used in the sale of a life insurance policy must satisfy the 
16.12 	applicable requirements of sections 61A.70 to 61A.745, be clearly labeled "life insurance 
16.13 	illustration," and contain the following basic information:
16.14 	(1) name of insurer;
16.15 	(2) name and business address of producer or insurer's authorized representative, if 
16.16 	any;
16.17 	(3) name, age, and sex of proposed insured, except where a composite illustration is 
16.18 	permitted under sections 61A.70 to 61A.745;
16.19 	(4) underwriting or rating classification upon which the illustration is based;
16.20 	(5) generic name of policy, the company product name, if different, and form 
16.21 	number;
16.22 	(6) initial death benefit; and
16.23 	(7) dividend option election or application of nonguaranteed elements, if applicable.
16.24 	(b) When using an illustration in the sale of a life insurance policy, an insurer or 
16.25 	its producers or other authorized representatives shall not:
16.26 	(1) represent the policy as anything other than a life insurance policy;
16.27 	(2) use or describe nonguaranteed elements in a manner that is misleading or has the 
16.28 	capacity or tendency to mislead;
16.29 	(3) state or imply that the payment or amount of nonguaranteed elements is 
16.30 	guaranteed;
16.31 	(4) use an illustration that does not comply with the requirements of sections 61A.70 
16.32 	to 61A.745;
16.33 	(5) use an illustration that at any policy duration depicts policy performance more 
16.34 	favorable to the policy owner than that produced by the illustrated scale of the insurer 
16.35 	whose policy is being illustrated;
17.1 	(6) provide an applicant with an incomplete illustration;
17.2 	(7) represent in any way that premium payments will not be required for each year 
17.3 	of the policy in order to maintain the illustrated death benefits, unless that is the fact;
17.4 	(8) use the term "vanish" or "vanishing premium," or a similar term that implies the 
17.5 	policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a 
17.6 	portion of future premiums;
17.7 	(9) except for policies that can never develop nonforfeiture values, use an illustration 
17.8 	that is "lapse-supported"; or
17.9 	(10) use an illustration that is not "self-supporting."
17.10 	(c) If an interest rate used to determine the illustrated nonguaranteed elements is 
17.11 	shown, it must not be greater than the earned interest rate underlying the disciplined 
17.12 	current scale.

17.13 	Sec. 10. [61A.72] STANDARDS FOR BASIC ILLUSTRATIONS.
17.14 		Subdivision 1.Format.  A basic illustration must conform with the following 
17.15 	requirements:
17.16 	(1) the illustration must be labeled with the date on which it was prepared;
17.17 	(2) each page, including any explanatory notes or pages, must be numbered and 
17.18 	show its relationship to the total number of pages in the illustration (e.g., the fourth page 
17.19 	of a seven-page illustration must be labeled "page 4 of 7 pages");
17.20 	(3) the assumed dates of payment receipt and benefit payout within a policy year 
17.21 	must be clearly identified;
17.22 	(4) if the age of the proposed insured is shown as a component of the tabular detail, 
17.23 	it must be issue age plus the number of years the policy is assumed to have been in force;
17.24 	(5) the assumed payments on which the illustrated benefits and values are based 
17.25 	must be identified as premium outlay or contract premium, as applicable. For policies that 
17.26 	do not require a specific contract premium, the illustrated payments must be identified 
17.27 	as premium outlay;
17.28 	(6) guaranteed death benefits and values available upon surrender, if any, for the 
17.29 	illustrated premium outlay or contract premium must be shown and clearly labeled 
17.30 	guaranteed;
17.31 	(7) if the illustration shows any nonguaranteed elements, they cannot be based on a 
17.32 	scale more favorable to the policy owner than the insurer's illustrated scale at any duration. 
17.33 	These elements must be clearly labeled nonguaranteed;
17.34 	(8) the guaranteed elements, if any, must be shown before corresponding 
17.35 	nonguaranteed elements and must be specifically referred to on any page of an illustration 
18.1 	that shows or describes only the nonguaranteed elements (e.g., "see page one for 
18.2 	guaranteed elements");
18.3 	(9) the account or accumulation value of a policy, if shown, must be identified by the 
18.4 	name this value is given in the policy being illustrated and shown in close proximity to the 
18.5 	corresponding value available upon surrender;
18.6 	(10) the value available upon surrender must be identified by the name this value 
18.7 	is given in the policy being illustrated and must be the amount available to the policy 
18.8 	owner in a lump sum after deduction of surrender charges, policy loans, and policy loan 
18.9 	interest, as applicable;
18.10 	(11) illustrations may show policy benefits and values in graphic or chart form 
18.11 	in addition to the tabular form;
18.12 	(12) any illustration of nonguaranteed elements shall be accompanied by a statement 
18.13 	indicating that:
18.14 	(i) the benefits and values are not guaranteed;
18.15 	(ii) the assumptions on which they are based are subject to change by the insurer; and
18.16 	(iii) actual results may be more or less favorable;
18.17 	(13) if the illustration shows that the premium payer may have the option to allow 
18.18 	policy charges to be paid using nonguaranteed values, the illustration must clearly disclose 
18.19 	that a charge continues to be required and that, depending on actual results, the premium 
18.20 	payer may need to continue or resume premium outlays. Similar disclosure must be made 
18.21 	for premium outlay of lesser amounts or shorter durations than the contract premium. If a 
18.22 	contract premium is due, the premium outlay display must not be left blank or show zero 
18.23 	unless accompanied by an asterisk or similar mark to draw attention to the fact that the 
18.24 	policy is not paid up; and
18.25 	(14) if the applicant plans to use dividends or policy values, guaranteed or 
18.26 	nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for 
18.27 	any other purpose, the illustration may reflect those plans and the impact on future policy 
18.28 	benefits and values.
18.29 		Subd. 2.Narrative summary.  A basic illustration must include the following:
18.30 	(1) a brief description of the policy being illustrated, including a statement that it 
18.31 	is a life insurance policy;
18.32 	(2) a brief description of the premium outlay or contract premium, as applicable, 
18.33 	for the policy. For a policy that does not require payment of a specific contract premium, 
18.34 	the illustration shall show the premium outlay that must be paid to guarantee coverage 
18.35 	for the term of the contract, subject to maximum premiums allowable to qualify as a life 
18.36 	insurance policy under the applicable provisions of the Internal Revenue Code;
19.1 	(3) a brief description of any policy features, riders, or options, guaranteed or 
19.2 	nonguaranteed, shown in the basic illustration and the impact they may have on the 
19.3 	benefits and values of the policy;
19.4 	(4) identification and a brief definition of column headings and key terms used in 
19.5 	the illustration; and
19.6 	(5) a statement containing in substance the following: "This illustration assumes 
19.7 	that the currently illustrated nonguaranteed elements will continue unchanged for all 
19.8 	years shown. This is not likely to occur, and actual results may be more or less favorable 
19.9 	than those shown."
19.10 		Subd. 3.Numeric summary. (a) Following the narrative summary, a basic 
19.11 	illustration must include a numeric summary of the death benefits and values and the 
19.12 	premium outlay and contract premium, as applicable. For a policy that provides for a 
19.13 	contract premium, the guaranteed death benefits and values must be based on the contract 
19.14 	premium. This summary must be shown for at least policy years five, ten, and 20 and at 
19.15 	age 70, if applicable, on the three bases shown in clauses (1) to (3). For multiple life 
19.16 	policies the summary must show policy years five, ten, 20, and 30:
19.17 	(1) policy guarantees;
19.18 	(2) insurer's illustrated scale; and
19.19 	(3) insurer's illustrated scale used but with the nonguaranteed elements reduced 
19.20 	as follows:
19.21 	(i) dividends at 50 percent of the dividends contained in the illustrated scale used;
19.22 	(ii) nonguaranteed credited interest at rates that are the average of the guaranteed 
19.23 	rates and the rates contained in the illustrated scale used; and
19.24 	(iii) all nonguaranteed charges, including but not limited to term insurance charges, 
19.25 	mortality, and expense charges at rates that are the average of the guaranteed rates and the 
19.26 	rates contained in the illustrated scale used.
19.27 	(b) In addition, if coverage would cease prior to policy maturity or age 100, the year 
19.28 	in which coverage ceases must be identified for each of the three bases.
19.29 		Subd. 4.Statements.  (a) Statements substantially similar to paragraphs (b) and (c) 
19.30 	must be included on the same page as the numeric summary and signed by the applicant or 
19.31 	the policy owner in the case of an illustration provided at time of delivery, as required 
19.32 	in sections 61A.70 to 61A.745.
19.33 	(b) A statement to be signed and dated by the applicant or policy owner reading as 
19.34 	follows: "I have received a copy of this illustration and understand that any nonguaranteed 
19.35 	elements illustrated are subject to change and could be either higher or lower. The agent 
19.36 	has told me they are not guaranteed."
20.1 	(c) A statement to be signed and dated by the insurance producer or other authorized 
20.2 	representative of the insurer reading as follows: "I certify that this illustration has been 
20.3 	presented to the applicant and that I have explained that any nonguaranteed elements 
20.4 	illustrated are subject to change. I have made no statements that are inconsistent with 
20.5 	the illustration."
20.6 		Subd. 5.Tabular detail.  (a) A basic illustration must include the following for at 
20.7 	least each policy year from one to ten and for every fifth policy year thereafter ending at 
20.8 	age 100, policy maturity or final expiration; and except for term insurance beyond the 20th 
20.9 	year, for any year in which the premium outlay and contract premium, if applicable, is 
20.10 	subject to change:
20.11 	(1) the premium outlay and mode the applicant plans to pay and the contract 
20.12 	premium, as applicable;
20.13 	(2) the corresponding guaranteed death benefit, as provided in the policy; and
20.14 	(3) the corresponding guaranteed value available upon surrender, as provided 
20.15 	in the policy.
20.16 	(b) For a policy that provides for a contract premium, the guaranteed death benefit 
20.17 	and value available upon surrender must correspond to the contract premium.
20.18 	(c) Nonguaranteed elements may be shown if described in the contract. In the case 
20.19 	of an illustration for a policy on which the insurer intends to credit terminal dividends, 
20.20 	they may be shown if the insurer's current practice is to pay terminal dividends. If any 
20.21 	nonguaranteed elements are shown they must be down at the same durations as the 
20.22 	corresponding guaranteed elements, if any. If no guaranteed benefit or value is available 
20.23 	at any duration for which a nonguaranteed benefit or value is shown, a zero must be 
20.24 	displayed in the guaranteed column.

20.25 	Sec. 11. [61A.725] STANDARDS FOR SUPPLEMENTAL ILLUSTRATIONS.
20.26 	(a) A supplemental illustration may be provided so long as:
20.27 	(1) it is appended to, accompanied by, or preceded by a basic illustration that 
20.28 	complies with sections 61A.70 to 61A.745;
20.29 	(2) the nonguaranteed elements shown are not more favorable to the policy owner 
20.30 	than the corresponding elements based on the scale used in the basic illustration.
20.31 	(3) it contains the same statement required of a basic illustration that nonguaranteed 
20.32 	elements are not guaranteed; and
20.33 	(4) for a policy that has a contract premium, the contract premium underlying the 
20.34 	supplemental illustration is equal to the contract premium shown in the basic illustration. 
20.35 	For policies that do not require a contract premium, the premium outlay underlying 
21.1 	the supplemental illustration must be equal to the premium outlay shown in the basic 
21.2 	illustration.
21.3 	(b) The supplemental illustration must include a notice referring to the basic 
21.4 	illustration for guaranteed elements and other important information.

21.5 	Sec. 12. [61A.73] DELIVERY OF ILLUSTRATION AND RECORD 
21.6 	RETENTION.
21.7 	(a)(1) If a basic illustration is used by an insurance producer or other authorized 
21.8 	representative of the insurer in the sale of a life insurance policy and the policy is applied 
21.9 	for as illustrated, a copy of that illustration, signed in accordance with sections 61A.70 to 
21.10 	61A.745, must be submitted to the insurer at the time of policy application. A copy also 
21.11 	must be provided to the applicant.
21.12 	(2) If the policy is issued other than as applied for, a revised basic illustration 
21.13 	conforming to the policy as issued must be sent with the policy. The revised illustration 
21.14 	must conform to the requirements of sections 61A.70 to 61A.745, must be labeled 
21.15 	"Revised Illustration," and must be signed and dated by the applicant or policy owner and 
21.16 	producer or other authorized representative of the insurer no later than the time the policy 
21.17 	is delivered. A copy must be provided to the insurer and the policy owner.
21.18 	(b)(1) If no illustration is used by an insurance producer or other authorized 
21.19 	representative in the sale of a life insurance policy or if the policy is applied for other 
21.20 	than as illustrated, the producer or representative shall certify to that effect in writing 
21.21 	on a form provided by the insurer. On the same form the applicant shall acknowledge 
21.22 	that no illustration conforming to the policy applied for was provided and shall further 
21.23 	acknowledge an understanding that an illustration conforming to the policy as issued will 
21.24 	be provided no later than at the time of policy delivery. This form shall be submitted to the 
21.25 	insurer at the time of policy application.
21.26 	(2) If the policy is issued, a basic illustration conforming to the policy as issued must 
21.27 	be sent with the policy and signed no later than the time the policy is delivered. A copy 
21.28 	must be provided to the insurer and the policy owner.
21.29 	(c) If the basic illustration or revised illustration is sent to the applicant or policy 
21.30 	owner by mail from the insurer, it must include instructions for the applicant or policy 
21.31 	owner to sign the duplicate copy of the numeric summary page of the illustration for the 
21.32 	policy issued and return the signed copy to the insurer. The insurer's obligation under this 
21.33 	paragraph must be satisfied if it can demonstrate that it has made a diligent effort to secure 
21.34 	a signed copy of the numeric summary page. The requirement to make a diligent effort 
22.1 	must be deemed satisfied if the insurer includes in the mailing a self-addressed postage 
22.2 	prepaid envelope with instructions for the return of the signed numeric summary page.
22.3 	(d) A copy of the basic illustration and a revised basic illustration, if any, signed as 
22.4 	applicable, along with any certification that either no illustration was used or that the policy 
22.5 	was applied for other than as illustrated, must be retained by the insurer until three years 
22.6 	after the policy is no longer in force. A copy need not be retained if no policy is issued.

22.7 	Sec. 13. [61A.735] ANNUAL REPORT; NOTICE TO POLICY OWNERS.
22.8 	(a) In the case of a policy designated as one for which illustrations will be used, the 
22.9 	insurer shall provide each policy owner with an annual report on the status of the policy 
22.10 	that must contain at least the information in this section.
22.11 	(b) For universal life policies, the report must include the following:
22.12 	(1) the beginning and end date of the current report period;
22.13 	(2) the policy value at the end of the previous report period and at the end of the 
22.14 	current report period;
22.15 	(3) the total amounts that have been credited or debited to the policy value during 
22.16 	the current report period, identifying each by type (e.g., interest, mortality, expense, and 
22.17 	riders);
22.18 	(4) the current death benefit at the end of the current report period on each life 
22.19 	covered by the policy;
22.20 	(5) the net cash surrender value of the policy as of the end of the current report period;
22.21 	(6) the amount of outstanding loans, if any, as of the end of the current report period;
22.22 	(7) for fixed premium policies, assuming guaranteed interest, mortality, and expense 
22.23 	loads and continued scheduled premium payments, the policy's net cash surrender value 
22.24 	is such that it would not maintain insurance in force until the end of the next reporting 
22.25 	period, a notice to this effect must be included in the report; or
22.26 	(8) for flexible premium policies, assuming guaranteed interest, mortality, and 
22.27 	expense loads, the policy's net cash surrender value will not maintain insurance in force 
22.28 	until the end of the next reporting period unless further premium payments are made, a 
22.29 	notice to this effect must be included in the report.
22.30 	(b) For all other policies, the report must include where applicable:
22.31 	(1) current death benefit;
22.32 	(2) annual contract premium;
22.33 	(3) current cash surrender value;
22.34 	(4) current dividend;
22.35 	(5) application of current dividend; and
23.1 	(6) amount of outstanding loan.
23.2 	(c) Insurers writing life insurance policies that do not build nonforfeiture values shall 
23.3 	only be required to provide an annual report with respect to these policies for those years 
23.4 	when a change has been made to nonguaranteed policy elements by the insurer.
23.5 	(d) If the annual report does not include an in-force illustration, it must contain the 
23.6 	following notice displayed prominently: "IMPORTANT POLICY OWNER NOTICE: 
23.7 	You should consider requesting more detailed information about your policy to understand 
23.8 	how it may perform in the future. You should not consider replacement of your policy 
23.9 	or make changes in your coverage without requesting a current illustration. You may 
23.10 	annually request, without charge, such an illustration by calling [insurer's phone number], 
23.11 	writing to [insurer's name] at [insurer's address] or contacting your agent. If you do not 
23.12 	receive a current illustration of your policy within 30 days from your request, you should 
23.13 	contact your state insurance department." The insurer may vary the sequential order of the 
23.14 	methods for obtaining an in-force illustration.
23.15 	(e) Upon request of the policy owner, the insurer shall furnish an in-force illustration 
23.16 	of current and future benefits and values based on the insurer's present illustrated scale. 
23.17 	This illustration must comply with the requirements of sections 61A.715, paragraphs (a) 
23.18 	and (b), and 61A.72, subdivisions 1 and 5. No signature or other acknowledgment of 
23.19 	receipt of this illustration must be required.
23.20 	(f) If an adverse change in nonguaranteed elements that could affect the policy has 
23.21 	been made by the insurer since the last annual report, the annual report must contain a 
23.22 	notice of that fact and the nature of the change prominently displayed.

23.23 	Sec. 14. [61A.74] ANNUAL CERTIFICATIONS.
23.24 	(a) The board of directors of each insurer shall appoint one or more illustration 
23.25 	actuaries.
23.26 	(b) The illustration actuary shall certify that the disciplined current scale used in 
23.27 	illustrations is in conformity with the Actuarial Standard of Practice for Compliance with 
23.28 	the NAIC Model Regulation on Life Insurance Illustrations promulgated by the Actuarial 
23.29 	Standards Board, and that the illustrated scales used in insurer-authorized illustrations 
23.30 	meet the requirements of sections 61A.70 to 61A.745.
23.31 	(c) The illustration actuary shall:
23.32 	(1) be a member in good standing of the American Academy of Actuaries;
23.33 	(2) be familiar with the standard of practice regarding life insurance policy 
23.34 	illustrations;
24.1 	(3) not have been found by the commissioner, following appropriate notice and 
24.2 	hearing to have:
24.3 	(i) violated any provision of, or any obligation imposed by, the insurance law or 
24.4 	other law in the course of the actuary's dealings as an illustration actuary;
24.5 	(ii) been found guilty of fraudulent or dishonest practices;
24.6 	(iii) demonstrated the actuary's incompetence, lack of cooperation, or 
24.7 	untrustworthiness to act as an illustration actuary; or
24.8 	(iv) resigned or been removed as an illustration actuary within the past five years as 
24.9 	a result of acts or omissions indicated in any adverse report on examination or as a result 
24.10 	of a failure to adhere to generally acceptable actuarial standards;
24.11 	(4) not fail to notify the commissioner of any action taken by a commissioner of 
24.12 	another state similar to that under clause (3);
24.13 	(5) disclose in the annual certification whether, since the last certification, a currently 
24.14 	payable scale applicable for business issued within the previous five years and within 
24.15 	the scope of the certification has been reduced for reasons other than changes in the 
24.16 	experience factors underlying the disciplined current scale. If nonguaranteed elements 
24.17 	illustrated for new policies are not consistent with those illustrated for similar in-force 
24.18 	policies, this must be disclosed in the annual certification. If nonguaranteed elements 
24.19 	illustrated for both new and in-force policies are not consistent with the nonguaranteed 
24.20 	elements actually being paid, charged, or credited to the same or similar forms, this must 
24.21 	be disclosed in the annual certification; and
24.22 	(6) disclose in the annual certification the method used to allocate overhead expenses 
24.23 	for all illustrations:
24.24 	(i) fully allocated expenses;
24.25 	(ii) marginal expenses; or
24.26 	(iii) a generally recognized expense table based on fully allocated expenses 
24.27 	representing a significant portion of insurance companies and approved by the National 
24.28 	Association of Insurance Commissioners or by the commissioner.
24.29 	(d)(1) The illustration actuary shall file a certification with the board and with the 
24.30 	commissioner:
24.31 	(i) annually for all policy forms for which illustrations are used; and
24.32 	(ii) before a new policy form is illustrated.
24.33 	(2) If an error in a previous certification is discovered, the illustration actuary shall 
24.34 	notify the board of directors of the insurer and the commissioner promptly.
25.1 	(e) If an illustration actuary is unable to certify the scale for any policy form 
25.2 	illustration the insurer intends to use, the actuary shall notify the board of directors of the 
25.3 	insurer and the commissioner promptly of the actuary's inability to certify.
25.4 	(f) A responsible officer of the insurer, other than the illustration actuary, shall 
25.5 	certify annually:
25.6 	(1) that the illustration formats meet the requirements of sections 61A.70 to 61A.745 
25.7 	and that the scales used in insurer-authorized illustrations are those scales certified by the 
25.8 	illustration actuary; and
25.9 	(2) that the company has provided its agents with information about the expense 
25.10 	allocation method used by the company in its illustrations and disclosed as required in 
25.11 	paragraph (c), clause (6).
25.12 	(g) The annual certifications must be provided to the commissioner each year by a 
25.13 	date determined by the insurer.
25.14 	(h) If an insurer changes the illustration actuary responsible for all or a portion of the 
25.15 	company's policy forms, the insurer shall notify the commissioner of that fact promptly 
25.16 	and disclose the reason for the change.

25.17 	Sec. 15. [61A.745] PENALTIES.
25.18 	In addition to any other penalties provided by the laws of this state, an insurer or 
25.19 	producer that violates a requirement of sections 61A.70 to 61A.745 is guilty of a violation 
25.20 	of section 72A.20.

25.21 	Sec. 16. Minnesota Statutes 2006, section 62E.12, is amended to read:
25.22 	62E.12 MINIMUM BENEFITS OF COMPREHENSIVE HEALTH 
25.23 	INSURANCE PLAN.
25.24 	(a) The association through its comprehensive health insurance plan shall offer 
25.25 	policies which provide the benefits of a number one qualified plan and a number two 
25.26 	qualified plan, except that the maximum lifetime benefit on these plans shall be $2,800,000
25.27 	$5,000,000; and an extended basic Medicare supplement plan and a basic Medicare 
25.28 	supplement plan as described in sections 62A.3099 to 62A.44. The association may 
25.29 	also offer a plan that is identical to a number one and number two qualified plan except 
25.30 	that it has a $2,000 annual deductible and a $2,800,000 $5,000,000 maximum lifetime 
25.31 	benefit. The association, subject to the approval of the commissioner, may also offer 
25.32 	plans that are identical to the number one or number two qualified plan, except that they 
25.33 	have annual deductibles of $5,000 and $10,000, respectively; have limitations on total 
25.34 	annual out-of-pocket expenses equal to those annual deductibles and therefore cover 100 
26.1 	percent of the allowable cost of covered services in excess of those annual deductibles; 
26.2 	and have a $2,800,000 $5,000,000 maximum lifetime benefit. The association, subject to 
26.3 	approval of the commissioner, may also offer plans that meet all other requirements of 
26.4 	state law except those that are inconsistent with high deductible health plans as defined 
26.5 	in sections 220 and 223 of the Internal Revenue Code and supporting regulations. As of 
26.6 	January 1, 2006, the association shall no longer be required to offer an extended basic 
26.7 	Medicare supplement plan.
26.8 	(b) The requirement that a policy issued by the association must be a qualified plan 
26.9 	is satisfied if the association contracts with a preferred provider network and the level of 
26.10 	benefits for services provided within the network satisfies the requirements of a qualified 
26.11 	plan. If the association uses a preferred provider network, payments to nonparticipating 
26.12 	providers must meet the minimum requirements of section 72A.20, subdivision 15.
26.13 	(c) The association shall offer health maintenance organization contracts in those 
26.14 	areas of the state where a health maintenance organization has agreed to make the 
26.15 	coverage available and has been selected as a writing carrier.
26.16 	(d) Notwithstanding the provisions of section 62E.06 and unless those charges are 
26.17 	billed by a provider that is part of the association's preferred provider network, the state 
26.18 	plan shall exclude coverage of services of a private duty nurse other than on an inpatient 
26.19 	basis and any charges for treatment in a hospital located outside of the state of Minnesota 
26.20 	in which the covered person is receiving treatment for a mental or nervous disorder, unless 
26.21 	similar treatment for the mental or nervous disorder is medically necessary, unavailable in 
26.22 	Minnesota and provided upon referral by a licensed Minnesota medical practitioner.

26.23 	Sec. 17. Minnesota Statutes 2006, section 62S.23, subdivision 1, is amended to read:
26.24 		Subdivision 1.Inflation protection feature. (a) No insurer may offer a long-term 
26.25 	care insurance policy unless the insurer also offers to the policyholder, in addition to any 
26.26 	other inflation protection, the option to purchase a policy that provides for benefit levels to 
26.27 	increase with benefit maximums or reasonable durations which are meaningful to account 
26.28 	for reasonably anticipated increases in the costs of long-term care services covered by 
26.29 	the policy. In addition to other options that may be offered, insurers must offer to each 
26.30 	policyholder, at the time of purchase, the option to purchase a policy with an inflation 
26.31 	protection feature no less favorable than one of the following:
26.32 	(1) increases benefit levels annually in a manner so that the increases are 
26.33 	compounded annually at a rate not less than five percent;
26.34 	(2) guarantees the insured individual the right to periodically increase benefit levels 
26.35 	without providing evidence of insurability or health status so long as the option for the 
27.1 	previous period has not been declined. The amount of the additional benefit shall be no 
27.2 	less than the difference between the existing policy benefit and that benefit compounded 
27.3 	annually at a rate of at least five percent for the period beginning with the purchase of the 
27.4 	existing benefit and extending until the year in which the offer is made; or
27.5 	(3) covers a specified percentage of actual or reasonable charges and does not 
27.6 	include a maximum specified indemnity amount or limit.
27.7 	(b) A long-term care partnership policy must provide the inflation protection 
27.8 	described in this subdivision. If the policy is sold to an individual who:
27.9 	(1) has not attained age 61 as of the date of purchase, the policy must provide 
27.10 	compound annual inflation protection;
27.11 	(2) has attained age 61, but has not attained age 76 as of such date, the policy must 
27.12 	provide some level of inflation protection; and
27.13 	(3) has attained the age of 76 as of such date, the policy may, but is not required to, 
27.14 	provide some level of inflation protection.

27.15 	Sec. 18. Minnesota Statutes 2006, section 65B.17, is amended by adding a subdivision 
27.16 	to read:
27.17 		Subd. 2a.Authorization to nonrenew. An insurer withdrawing from the market by 
27.18 	nonrenewing a line of business must notify the commissioner in writing at least 90 days 
27.19 	before termination of any policy is effective. The notice must contain the effective date of 
27.20 	the withdrawal plan, the number of policies affected, the reason for the withdrawal, and 
27.21 	the availability of coverage in the market.

27.22 	Sec. 19. Minnesota Statutes 2006, section 72A.52, subdivision 1, is amended to read:
27.23 		Subdivision 1.Contents. In addition to all other legal requirements a policy or 
27.24 	contract of insurance described in section 72A.51 shall show the name and address of the 
27.25 	insurer and the seller of the policy or contract and shall state, clearly and conspicuously 
27.26 	in boldface type of a minimum size of ten points, a right to cancel notice in which shall 
27.27 	include the following form or its equivalent: "RIGHT TO CANCEL. You may cancel this 
27.28 	policy by delivering or mailing a written notice or sending a telegram to (insert name and 
27.29 	mailing address of the insurer or the seller of the policy or contract) and by returning 
27.30 	the policy or contract before midnight of the tenth day after the date you receive the 
27.31 	policy. Notice given by mail and return of the policy or contract by mail are effective on 
27.32 	being postmarked, properly addressed and postage prepaid. The insurer must return all 
27.33 	payments made for this policy within ten days after it receives notice of cancellation 
27.34 	and the returned policy."
28.1 	(1) a minimum of ten days beginning on the date the policy is received by the owner; 
28.2 	(2) a minimum of 30 days beginning on the date the policy is received by the owner 
28.3 	if the policy is a replacement policy; 
28.4 	(3) a requirement for the return of the policy to the company or an agent of the 
28.5 	company;
28.6 	(4) a statement that the policy is considered void from the beginning and the parties 
28.7 	shall be in the same position as if no policy had been issued; and
28.8 	(5) a refund of all premiums paid, including any fees or charges, if the policy is 
28.9 	returned. 
28.10 	For variable annuity contracts issued pursuant to sections 61A.13 to 61A.21, this 
28.11 	notice shall be suitably modified so as to notify the purchaser that the purchaser is entitled 
28.12 	to a refund of the amount calculated in accordance with the provisions of section 72A.51, 
28.13 	subdivision 3. 

28.14 	Sec. 20. Minnesota Statutes 2006, section 72B.02, subdivision 7, is amended to read:
28.15 		Subd. 7.Staff adjuster. "Staff adjuster" means an adjuster who is a salaried 
28.16 	employee of an insurance company or an affiliate of an insurance company and who is 
28.17 	engaged in adjusting insured losses solely for that company or other companies under 
28.18 	common control or ownership.

28.19 	Sec. 21.  REPEALER.
 28.20 	(a) Minnesota Statutes 2006, section 45.025, subdivisions 1, 2, 3, 4, 5, 6, 8, 9, and 
28.21 	10, are repealed.
28.22 	(b) Minnesota Rules, parts 2790.1750; and 2790.1751, are repealed.

28.23 	Sec. 22. EFFECTIVE DATE; APPLICATION.
 28.24 	Sections 5 to 14 and section 18 are effective January 1, 2008, and apply to policies 
28.25 	issued on or after that date.