17B:28-5. Form of contract

17B:28-5. (a) No contract on a variable basis shall be delivered or issued for delivery in this State by any insurer until a copy of the form (and, in the case of a contract on a group basis, the form of any certificate evidencing variable benefits issued pursuant thereto) and any form of application for such contract shall have been filed with the commissioner in accordance with the provisions of section 16 of P.L.1995, c.73 (C.17B:25-18.2). The commissioner shall disapprove or withdraw approval of any contract form, application or certificate if:

(i) The form contains provisions which are unjust, unfair, inequitable, ambiguous, misleading, likely to result in misrepresentation or contrary to law, or

(ii) Sales of contracts in such form are being solicited by any means of advertising, communication or dissemination of information which involves misleading or inadequate description of the provisions of the contract.

He shall notify the insurer, specifying particulars, of his disapproval. It shall be unlawful for such insurer thereafter to issue any contract or certificate thereunder or use any application in the form so disapproved unless it is resubmitted and approved in accordance with the provisions of subsections b., c., and d. of section 16 of P.L.1995, c.73 (C.17B:25-18.2). Such disapproval of the commissioner shall be subject to review in accordance with the procedure described in the "Administrative Procedure Act" P.L.1968, c.410 (C.52:14B-1 et seq.) and any rules adopted thereunder. Any such form which is filed by the commissioner or deemed filed may be so delivered or issued for delivery until such time as any subsequent withdrawal of the filing by the commissioner, following an opportunity for a hearing held in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) and any rules adopted thereunder, becomes final in accordance therewith.

(b) Illustrations of benefits payable under any contract on a variable basis shall not involve projections of past investment experience into the future and shall conform with reasonable regulations promulgated by the commissioner.

(c) No individual annuity contract on a variable basis shall be delivered or issued for delivery in this State unless it contains in substance the following provisions:

(i) That, in the event of default in the payment of any consideration beyond the period of grace allowed by the contract for the payment thereof, the insurer will make payment of the value of the contract, in accordance with a plan provided by the contract, commencing not later than the date contractual payments by the insurer were otherwise to have commenced in accordance with the contract;

(ii) That, upon request of the contract holder received by the insurer at least 4 months prior to the date contractual payments by the insurer were otherwise to have commenced, the insurer will make payment of the value of the contract in accordance with a plan provided by the contract and selected by the contract holder, commencing as of the first day of the first month which is at least 4 months after the date of receipt of such request, unless another date of commencement is requested by the contract holder and agreed to by the insurer;

(iii) That the insurer will mail to the contract holder at least once in each contract year after the first, at his last address known to the insurer, a report in a form approved by the commissioner, which shall include a statement of the number of units credited to such contract and the dollar value of a unit as of a date not more than 2 months previous to the date of mailing and a statement in a form and of a date approved by the commissioner of the investments held in the variable contract account designated in such contract.

(d) Any individual contract on a variable basis delivered or issued for delivery in this State shall stipulate the investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values thereunder, and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts, except that such guarantee need not apply to any investment management fee which is subject to change with the approval by vote of the persons having beneficial interests in the variable contract account in which such contract participates. The mortality and investment increment factors used in computing the dollar amount of variable benefits or other contractual payments or values under an individual annuity contract on a variable basis shall not produce a larger initial payment than would be produced by the use of the mortality table or tables specified in N.J.S. 17B:19-8 (the Standard Valuation Law), as amended, and as such provision may be amended from time to time, as acceptable minimum mortality standards for the valuation of the reserve liabilities of individual annuity and pure endowment contracts, and an annual investment increment assumption of 5%.

Any group contract on a variable basis delivered or issued for delivery in the State shall stipulate the expense, mortality and investment increment factors to be used in computing the dollar amount payable with respect to a unit of variable benefits purchased thereunder and shall guarantee that expense and mortality results shall not adversely affect such dollar amounts, except that such guarantee need not apply to any investment management fee which is subject to change with the approval by vote of the persons having beneficial interests in the variable contract account in which such contract participates.

"Expense," as used in this subsection (d), may exclude some or all taxes, as stipulated in the contract.

(e) (Deleted by amendment).

L.1971, c.144; amended 1977,c.37,s.3; 1995,c.73,s.22.