# KS Bulletin 1987-10: Bulletin 1987-10 > Kansas · Agency guidance · In force URL: https://www.frixlaw.com/law-library/statutes/KS_INS_B_1987_10 ## Section - **Citation:** KS Bulletin 1987-10 - **Heading:** Bulletin 1987-10 - **Jurisdiction:** Kansas - **Kind:** Agency guidance - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** Kansas Insurance Department Bulletins / Bulletin 1987-10 ## Text [LOGO] STATE OF KANSAS KANSAS INSURANCE DEPARTMENT 420 S.W. 9th Topeka 66612-1678 913-296-3071 1-800-432-2484 Consumer Assistance Division calls only FLETCHER BELL Commissioner Bulletin 1987-10 TO: All Insurers Authorized to Write Life Insurance IMPORTANT: For Distribution to Supervisor(s) of Kansas Operations FROM: Fletcher Bell Commissioner of Insurance SUBJECT: Disclosure of Surrender & Expense Charges to Interest Sensitive Products DATE: April 22, 1987 This department has encountered complaints and received numerous indications that some companies and agents in Kansas may be failing to adequately describe or disclose pertinent information regarding expense and/or surrender charges associated with Universal Life products as defined by K.A.R. 40-15b-1. Policies included are Single Premium Excess Interest Life, Flexible Premium Adjustable Whole Life Policies, Interest Sensitive Life and other similar terms. The use of illustrations in sales presentations or advertisements in which these costs are not disclosed has a tendency and capacity to mislead or deceive purchasers or prospective purchasers as to the nature or extent of policy benefits. Purchasers should be clearly advised of the effect of expense and surrender charges on all premium payments made or anticipated through roll-over or lump sum additional payments. The purpose of this Bulletin is to advise all life insurance companies to immediately notify their agents and personnel that inadequate disclosure practices may constitute violations of Kansas statutes and regulations specifically, K.S.A. 40-2404(1)(a) and (f), K.A.R. 40-9-121(b) and K.A.R. 40-2-14(c)(1) and (2). This department will take administrative actions against any company or agent failing to act in compliance with such laws and regulations. Page-2 # INSURANCE DEPARTMENT TOPEKA their agents and personnel that inadequate disclosure practices may constitute violations of Kansas statutes and regulations specifically, K.S.A. 40-2404(1)(a) and (f), K.A.R. 40-9-121(b) and K.A.R. 40-2-14(c)(1) and (2). This department will take administrative actions against any company or agent failing to act in compliance with such laws and regulations. Page-2 # INSURANCE DEPARTMENT TOPEKA We request that you immediately notify all of your agents licensed in the state of Kansas as to the contents of this Bulletin and, furthermore, request that you acknowledge your receipt and understanding of this Bulletin no later than May 4, 1987. Fletcher Bell Commissioner of Insurance FB:mkb,res # M E M O R A N D U M TO: Fletcher Bell Commissioner of Insurance FROM: John H. Reimer, Representative Life/Accident & Health Unit Consumer Assistance Division SUBJECT: Universal Life Surrender Charge Complaints DATE: March 16, 1987 I would like to call to your attention a matter which appears to have become a major problem in the Universal Life/Adjustable Premium Whole Life policies. The problem arises from the surrender charges applicable to these type policies particularly when an exchange or rollover from the cash values of existing policies has occurred. There appears to be a substantial lack of disclosure of surrender or withdrawal charges applicable to the funds which have been rolled over from other policies or lump sum premium payments made on these type policies. I do not object to the use of surrender charges, but do object to the apparent lack of disclosure of those charges. In my opinion the department should consider revising the Notice of Replacement to Applicants to provide for the disclosure of surrender charges which may be applicable or issue a department bulletin which would specify that the applicable surrender charges on the amount of any rollover must be disclosed and considered as an essential element of the replacing policy and violations would be subject to K.A.R. 40-2-14(b)(c)(1). should consider revising the Notice of Replacement to Applicants to provide for the disclosure of surrender charges which may be applicable or issue a department bulletin which would specify that the applicable surrender charges on the amount of any rollover must be disclosed and considered as an essential element of the replacing policy and violations would be subject to K.A.R. 40-2-14(b)(c)(1). The following are taken from our Consumer Assistance files which are examples of the common complaint of the surrender charges were not disclosed or explained properly by the replacing company. File No. 006602825 The Union Central Life Insurance Company Gary R. Shull, Insured Amount of Rollover $1,364.99 Amount of Surrender Charge $1,300 Memo Page 2 March 16, 1987 File No. 02600681 Cimarron Life Insurance Company Leland Nuss, Insured Amount of Rollover $9,149.63 Amount of Surrender Charge $1,765 File No. 08604303 American Family Life Insurance Company Gregory T. Fagan, Insured Amount of Lump Sum Payment $6,000 Amount of Surrender Charge $1,129.86 File No. 05602180 Farmland Insurance Company Thomas J. Spies, Insured Amount of Rollover $1,000 Amount of Surrender Charge $813 File No. 08603911 Modern American Life Insurance Company James H. Shaw, Insured Amount of Rollover $2,000, plus monthly premium Amount of Surrender Charge $978 File No. 08604202 American Republic Life Insurance Company Joseph C. Collins, Insured Accumulation Account Value $1,241.81 Amount of Surrender Charge $874.40 File No. 10605451 Midland National Life Insurance Company Gregory Davis, Insured Amount of Rollover $1,100 Policy Surrender Charge $1,900 Deborah Davis, Insured Amount of Rollover $600 Amount of Surrender Charge $450 File No. 10605440 John Hancock Mutual Life Insurance Company Winfred D. Hicks, Insured Amount of Rollover $8,332.42 Amount of Surrender Charge $1,612.80 Memo Page 3 March 16, 1987 File No. 1120606369 Ohio National Life Insurance Company Marion Thul, Insured f Rollover $1,100 Policy Surrender Charge $1,900 Deborah Davis, Insured Amount of Rollover $600 Amount of Surrender Charge $450 File No. 10605440 John Hancock Mutual Life Insurance Company Winfred D. Hicks, Insured Amount of Rollover $8,332.42 Amount of Surrender Charge $1,612.80 Memo Page 3 March 16, 1987 File No. 1120606369 Ohio National Life Insurance Company Marion Thul, Insured Amount of Rollover $6,326.71 Amount of Surrender Charge $2,709.71 These examples are illustrative of the types of problems which are being dealt with regarding problems where agents have failed to disclose surrender charges clearly to the applicants when recommending the rollover or lump sum contributions to a universal life policy when they are replacing an existing policy. It is my opinion that the number of complaints will continue to increase in this area and I believe that the department should take some type of action to insure policyholders of this state that they will have adequate disclosure and explanation of the type and amount of surrender charges which may be applied against their new policy. Respectfully submitted, John H. Reimer JHR:lbca 5405 cc: Frank A. Caro, Jr. Donald W. Bond Marlyn Burch ## Nearby sections - [KS Bulletin 1987-06 Bulletin 1987-6](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1987_06.md) - [KS Bulletin 1987-08 Bulletin 1987-8](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1987_08.md) - [KS Bulletin 1987-10 Bulletin 1987-10](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1987_10.md) - [KS Bulletin 1991-04 Bulletin 1991-4](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1991_04.md) - [KS Bulletin 1993-21 Bulletin 1993-21](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1993_21.md) - [KS Bulletin 1995-19 Bulletin 1995-19](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1995_19.md) - [KS Bulletin 1995-21 Bulletin 1995-21](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1995_21.md) - [KS Bulletin 1995-22 Bulletin 1995-22](https://www.frixlaw.com/law-library/statutes/KS_INS_B_1995_22.md) - [KS Bulletin 2001-04 Response to the terrorist attacks, Bulletin 2001-4](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2001_04.md) - [KS Bulletin 2001-05 Trust Agreements, Bulletin 2001-5](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2001_05.md) - [KS Bulletin 2001-06 Company Identification, Bulletin 2001-6](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2001_06.md) - [KS Bulletin 2002-01 Terrorist Exclusion, Bulletin 2002-1](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2002_01.md) - [KS Bulletin 2002-02 Terrorist Exclusion, Bulletin 2002-2](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2002_02.md) - [KS Bulletin 2002-03 Terrorist Exclusion, Bulletin 2002-3](https://www.frixlaw.com/law-library/statutes/KS_INS_B_2002_03.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/KS_INS_B_1987_10. 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