OAR 836-080-0001: Statutory Authority; Purpose; Applicability

(1) OAR 836-080-0001 to 836-080-0043 are adopted pursuant to the general rulemaking authority of the Director of the Department of Consumer and Business Services in ORS 731.244 and the specific authority in 746.085(1), for the purpose of implementing 746.085 and 746.240. (2) The purpose of OAR 836-080-0001 to 836-080-0043 is to protect the insurance-buying public in insurance transactions involving the replacement of life insurance or annuities by: (a) Regulating the activities of insurers and insurance producers with respect to the replacement of existing life insurance and annuities. (b) Protecting the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions. OAR 836-080-0001 to 836-080-0043 are intended to: (A) Assure that a purchaser receives information with which a decision can be made in the purchaser's own best interest; (B) Reduce the opportunity for misrepresentation and incomplete disclosure; and (C) Establish penalties for failure to comply with requirements of OAR 836-080-0001 to 836-080-0043. (3) In OAR 836-080-0001 to 836-080-0043 and the appendices thereto, for purposes of consistency with the Life Insurance and Annuities Replacement Model Regulation of the National Association of Insurance Commissioners dated July 2000, an annuity is referred to as a contract and a life insurance policy is referred to as a policy, and they are subject to 836-080-0001 to 836-080-0043 on the basis of that terminology. (4) Unless otherwise specifically included, OAR 836-080-0001 to 836-080-0043 do not apply to transactions involving: (a) Credit life insurance; (b) Group life insurance or group annuities, when there is no direct solicitation of individuals by an insurance producer. Direct solicitation does not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation are subject to the provisions of OAR 836-080-0039; (c) An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the Director; or when a term conversion privilege is exercised among corporate affiliates; (d) Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same insurer; (e)(A) Policies or contracts used to fund any of the following: (i) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA); (ii) A plan described by Section 401(a), 401(k) or 403(b) of the Internal Revenue Code, when the plan, for purposes of ERISA, is established or maintained by an employer; (iii) A governmental or church plan defined in Section 414 of the Internal Revenue Code, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the Internal Revenue Code; or (iv) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor. (B) Notwithstanding paragraph (A) of this subsection, OAR 836-080-0001 to 836-080-0043 apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and when the insurer has been notified that plan participants may choose from among two or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subsection, direct solicitation does not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee; (f) When new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured's employer or by an association of which the insured is a member; (g) Existing life insurance that is a non-convertible term life insurance policy that will expire in five years or less and cannot be renewed; (h) Immediate annuities that are purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempted from the requirements of OAR 836-080-0001 to 836-080-0043; or (i) Structured settlements. (5) Registered contracts are exempt from the requirements of OAR 836-080-0029(1)(b) and 836-080-0034(2) with respect to the provision of illustrations or policy summaries, but premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.