Entire Contract Clause
5. Adopt November 21 and December 1 Minutes to Life Marketing Practices to Senior Citizens
Working Group and Amendments to Life Insurance Disclosure Model Regulation and Disclo sure
Commissioner David Lyons (Iowa) commended David Rodgers (Wash.), Jim Swenson (Ore.), Dean Gallagher
(Okla.), Bob Wright (Va.), Roger Strauss (Iowa) and NAIC staff for their participation in
development of the work product of this group. He said there are three forms to be considered by
the committee: the amendments to the Life Insurance Disclosure Model Regulation, a new
disclosure form for consumers entitled "Financial Review of this Policy" and a resolution to
the Executive Committee pertaining to the Rules Governing the Advertising of Life Insurance. He
asked that consideration be given by the parent committee to the continuation of a working group
to address the remaining issues on these life products. The first issue is the actuarial review of
the value of the products which will be·conducted by an NAIC life and health staff actuary. The
second item is a review being conducted by Jim Swenson of the individual industry marketing
practices to enable identificationof those methodologies which would allow for delivery of the
disclosure form to the consumer at the point of sale.
Commissioner Lyons indicated that there is one further technical correction to two sections of the
Life Insurance Disclosure Model Regulation. He assured the committee that working group
members are in agreement with this amendment to Section 6E(2)(0 and Section SI. The language as
proposed by industry would delete inconsistent language in those two sections which require that
this disclosure form alternately be "attached to the policy'' and "delivered to the insured." He
said the suggested amendment provides for "simultaneous delivery'' and provides the prominence and
timeliness required for the disclosure form.As originally drafted, the language "attached to the
policy" connotes that the form is a part of the policy and subject to the Entire Contract Clause.
Commissioner Lyons noted that the company is still responsible for the information contained on the
disclosure form and that this amendment in no way reduces the ability of the insurance
department or the applicant to take action on any misrepresentations of an agent.
Ed Zimmerman (ACLI) said the disclosure form is not a part of the policy, but that does not mean
an insurance department or an applicant would not have a cause of action if there
were misrepresentations by an agent. He reminded the committee that this disclosure form
was intended to be a simple, straight forward form to facilitate consumer understanding. Neil
Rector (Ohio) suggested language for a drafting note.
Upon motion duly made and seconded, the committee adopted language for a draftingnoteto clarify·
that theamended language does not diminishthe insurer's responsibilityfor the actions of an agent
in any misrepresentations on the disclosure form. Upon further motion duly made and seconded, the
Life Insurance Disclosure Model Regulation, as amended, and the Financial Review of This Policy
disclosure form were adopted (Attachments Three and Four respectively).