The New York State Insurance Department has unveiled a draft of a variable life insurance regulation that includes new sections dealing with private placement variable life arrangements.

The proposed amendment to New York Regulation 77 would define a “private placement variable life insurance policy” as any variable life insurance policy that is exempt from registration under federal securities laws; includes one or more separate accounts that are exempt from registration as an investment company; is only available to a sophisticated investor who has enough assets to qualify under New Yorkfederal law as an accredited investor, according to the draft text.

A variable life issuer would have to value the assets in private placement variable life separate accounts at least every year, or every time the account benefits were determined, if the benefits were determined more often than once a year.

A private placement variable life policy would have to state that the issuer would pay death benefits within 30 days after the claimant asked for payment and provided the necessary documentation.

The policy would have to provide for payment of partial withdrawals, partial surrenders, cash surrender values and other amounts other than death benefits within 15 months of a request for payment being received.

- Allison Bell