SECTION 4.1509. Reports to Contract Holders

Any insurer delivering or issuing for delivery in this state any variable life contracts must mail to each variable life insurance contract holder at their last known address the following reports.

(1) Within 30 days after each anniversary of the contract, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or contract loan, any interest charge, any optional payments allowed under §4.1504(4) of this title (relating to Insurance Contract and Filing Requirements) under the contract computed as the contract anniversary date. Provided, however, that such statement may be furnished within 30 days after a specified date in each contract year so long as the information contained in the statement is computed as of a date not more than 60 days before the mailing of such notice. This statement must state that, in accordance with the investment experience of the separate account, the cash surrender values and the variable death benefit may increase or decrease, and must prominently identify any value described in the statement that may be recomputed before the next statement required by this section. If the contract guarantees that the variable death benefit on the next contract anniversary date will not be less than the variable death benefit specified in such statement, the statement must be modified to so indicate. For flexible premium contracts, the report must contain a reconciliation of the change since the previous report in contract value and cash surrender value, if different, because of payments made less deduction for expense charges, withdrawals, investment experience, insurance charges, and any other charges made against the contract value. In addition, the report must show the projected contract value and cash surrender value, if different, as of one year from the end of the period covered by the report assuming that:

(A) planned periodic premiums, if any, are paid as scheduled;

(B) guaranteed costs of insurance are deducted; and

(C) the net return is equal to the assumed rate or, in the absence of an assumed rate, is not greater than zero. If the projected value is less than zero, a warning message must be included that states that the contract may be in danger of terminating without value in the next 12 months unless additional premium is paid.

(2) Annually, a statement or statements including:

(A) a summary of the financial statement of the separate account based on the annual statement last filed with the commissioner;

(B) the net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five years when available;

(C) a list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the commissioner;

(D) any charges levied against the separate account during the previous year; and

(E) a statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment advisor of the separate account.

(3) For flexible premium contracts, a report must be sent to the contract holder if the amounts available under the contract on any contract processing day to pay the charges authorized by the contract are less than the amount necessary to keep the contract in force until the next following contract processing day. The report must indicate the minimum payment required under the terms of the contract to keep it in force and the length of the grace period for payment of such amount.

Source Note: The provisions of this §4.1509 adopted to be effective June 5, 1985, 10 TexReg 1676; transferred effective September 1, 2023, as published in the July 28, 2023, issue of the Texas Register, 48 TexReg 4127; amended to be effective January 24, 2024, 49 TexReg 250