Variable Contract Model Law

What this document is

Variable Contract Model Law is a naic model law published by National Association of Insurance Commissioners (NAIC). It is one of the documents that insurance license exam questions are written from, including life & health practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• NAIC Model NAIC 260: Section 1.F (Transfers Into Separate Accounts)

  “in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless the transfer, whether into or from a separate account, is made by a...”

• NAIC Model NAIC 260: Section 4 (Power of Commissioner)

  “the commissioner shall have sole authority to regulate the issuance and sale of variable contracts, and to issue such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this Act.”

• NAIC Variable Contract Model Law § 2 (Contract Statement Required)

  “Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, shall state that the dollar amount will so vary and shall contain on its first page a statement to the effect that the...”

• NAIC Variable Contract Model Law § 3.A, License Required

  “A company shall not deliver or issue for delivery within this state variable contracts unless it is licensed or organized to do a life insurance or annuity business in this state, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of the...”

• NAIC Variable Contract Model Law § 5, Applicability: reserve liability for variable contracts

  “The reserve liability for variable contracts shall be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.”

• NAIC Variable Contract Model Law § 1.E (separate account assets not chargeable with other business liabilities)

  “If and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to the account shall not be chargeable with liabilities arising out of any other business the company may conduct.”

• NAIC Variable Contract Model Law § 1.E (ownership of amounts allocated; no trustee status)

  “Amounts allocated to a separate account in the exercise of the power granted by this Act shall be owned by the company, and the company shall not be, nor hold itself out to be, a trustee with respect to these amounts.”

• Variable Contract Model Law, Section 1 (Domestic Companies), introductory paragraph

  “A domestic life insurance company may establish one or more separate accounts, and may allocate amounts to it (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life insurance or annuities (and incidental benefits), payable in...”

• Variable Contract Model Law, Section 1.G (Domestic Companies), voting and other rights

  “To the extent the company deems it necessary to comply with any applicable federal or state laws, the company, with respect to a separate account, including without limitation any separate account that is a management investment company or a unit investment trust, may provide for persons having an...”

• Variable Contract Model Law, Section 5 (Applicability), individual variable life insurance contracts

  “Any individual variable life insurance contract, delivered or issued for delivery in this state shall contain grace, reinstatement and nonforfeiture provisions appropriate to such a contract.”

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