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					                      INSURANCE SUPERVISORY COMMISSION
                         OF THE REPUBLIC OF LITHUANIA


                           RESOLUTION
 ON APPROVAL OF MANDATORY GUIDELINES FOR DETERMINATION OF THE
   NEEDS OF PERSONS, INTENDING TO ENTER INTO THE LIFE INSURANCE
 CONTRACT, ASSESSMENT OF RELEVANCY OF THE PRODUCT OFFERED, AND
      INFORMATION ON THE TERMS OF LIFE INSURANCE CONTRACT

                                    1 June 2010 No. N-196
                                            Vilnius

       In observance of item 6, Par. 1, Article 193 of the Law on Insurance of the Republic of
Lithuania (“Valstybės žinios” (Official Gazette), 2003, No. 94-4246; 2007, No. 125-5092), the
Insurance Supervisory Commission of the Republic of Lithuania hereby r e s o l v e s:
       1. Approve the mandatory guidelines for determination of the needs of persons, intending
to enter into the life insurance contract, assessment of relevancy of the product offered, and
information on the terms of life insurance contract (enclosed).
       2. Determine that this resolution shall come into effect as of 1 January 2011.




CHAIRMAN OF THE INSURANCE SUPERVISORY
COMMISSION OF THE REPUBLIC OF LITHUANIA                       MINDAUGAS ŠALČIUS



                                   ____________________
                                                   APPROVED
                                                    by Resolution No. N-196
                                                    of 1 June 2010
                                                    of the Republic of Lithuania
                                                    Insurance Supervisory Commission


     MANDATORY GUIDELINES FOR DETERMINATION OF THE NEEDS OF
   PERSONS, INTENDING TO ENTER INTO THE LIFE INSURANCE CONTRACT,
       ASSESSMENT OF RELEVANCY OF THE PRODUCT OFFERED, AND
       INFORMATION ON THE TERMS OF LIFE INSURANCE CONTRACT

                                   I. GENERAL PROVISIONS

         1. Mandatory guidelines for determination of the needs of persons, intending to enter
into the life insurance contract, assessment of relevancy of the product offered, and information
on the terms of life insurance contract (hereinafter the Guidelines) determine the procedure of
determination of the needs of persons, intending to enter into the life insurance contract
(hereinafter the Customers) and assessment of relevancy of the product offered as well as
requirements for information, which must be given to the Customer prior to entering into the life
insurance contract.
         2. Terms, used in the Guidelines, are correspondent with the terms, established in the
Law on Insurance of the Republic of Lithuania (hereinafter the Law on Insurance) and legal acts,
enacted by the Insurance Supervisory Commission of the Republic of Lithuania.
         3. The Guidelines are applied to the life insurance companies, subsidiaries of insurance
companies of foreign states, set up in the Republic of Lithuania and engaged in life insurance
activities, as well as insurance companies of other European Union member states, implementing
the right of establishment and (or) the freedom to provide services in the Republic of Lithuania
and engaged in life insurance activities (hereinafter the Insurance Companies). The Guidelines
are also applied to the insurance intermediary companies, mediating in conclusion of the life
insurance contracts, subsidiaries of independent insurance intermediary companies of foreign
states, set up in the Republic of Lithuania and mediating in conclusion of the life insurance
contracts, independent insurance intermediaries of other European Union member states,
implementing the right of establishment and (or) the freedom to provide services in the Republic
of Lithuania and mediating in conclusion of the life insurance contracts (hereinafter the
Independent Insurance Intermediaries).
         4. When the life insurance contract is concluded through the mediation of the
Independent Insurance Intermediary, the requirements, specified in Chapters II and III hereof,
shall be performed by the Independent Insurance Intermediary only (in such case the Insurance
Company does not have to perform them).

        II. DETERMINATION OF THE CUSTOMER’S NEEDS AND ASSESSMENT OF
                   RELEVANCY OF THE PRODUCT OFFERED

       5. The requirements given in items 6–13 hereof are not applied in regard to the
Customers, who are legal entities.
       6. Prior to entering into the life insurance contract, the Insurance Company (its
authorized representative) or Independent Insurance Intermediary must determine the
Customer’s needs with reference to the information, provided by the Customer.
       7. The Insurance Company (its authorized representative) or Independent Insurance
Intermediary must collect information from the Customer, which is necessary for determination
of essential facts about the Customer’s needs as well as assessment of relevancy of the insurance
product. The information to be collected should cover the following:
        7.1. information on personal circumstances of the Customer (Customer’s age, family
status, number of children, etc.);
        7.2. purpose of conclusion of the insurance contract, pursued by the Customer (e.g., the
contract is aimed at collecting due amount for children’s education, additional pension, etc.);
        7.3. information on the Customer’s financial status (e.g., information on regular income,
available life insurance or accident insurance contracts, etc.) as well as amount of money per
month to make insurance contributions;
        7.4. Customer’s investment risk tolerance level and / or need for guarantees;
        7.5. information on the Customer’s knowledge and experience in the field of investment;
        7.6. other information about the Customer, which the Insurance Company or the
Independent Insurance Intermediary seems to be important.
        8. The scope of information to be collected, as provided in item 7 of the Guidelines,
may vary subject to the nature as well as complexity of the insurance product (products) offered.
        9. The Insurance Company (its authorized representative) or Independent Insurance
Intermediary, having assessed the collected information about the Customer, shall provide the
Customer with the offer (oral or written, pursuant to respective procedure, as determined by the
Insurance Company or Independent Insurance Intermediary) for the options of life insurance
contract, meeting the determined needs.
        10. If the conclusion of investment funds related to life insurance (when the investment
risk falls on the policyholder) (hereinafter the Unit-linked Insurance) contract is offered, the
Insurance Company (its authorized representative) or Independent Insurance Intermediary,
having assessed the collected information on the Customer, must have grounds to assume that a
particular contract offered for conclusion meets the following criteria:
        10.1. a contract measures up to the purpose of conclusion of the insurance contract,
aimed at by the Customer;
        10.2. a Customer realizes the risk, typical to the Unit-linked insurance contract
(particularly in such case, where the Customer intends to opt for high risk investment trends).
         11. If the Customer requests to enter into the life insurance contract, however, refuses to
provide the information, specified in item 7 of the Guidelines, relevant for due determination of
the Customer’s needs and assessment of relevancy of the insurance product, the Insurance
Company (its authorized representative) or Independent Insurance Intermediary must ensure that
the Customer expresses his will to refuse submitting the aforementioned information. The
Insurance Company or Independent Insurance intermediary must have the evidentiary material
demonstrating such fact of refusal and keep this material in the manner, prescribed in item 13 of
the Guidelines.
         12. If the Customer requests to enter into the contract, which, in the opinion of the
Insurance Company (its representative) and Independent Insurance Intermediary, does not meet
the criteria, established in item 10 of the Guidelines, the Insurance Company (its authorized
representative) or Independent Insurance Intermediary must ensure that the Customer confirms
that a particular contract has been concluded or respective investment trends have been chosen
independent of recommendations of the Insurance Company (its representative) or Independent
Insurance Intermediary. The Insurance Company or Independent Insurance Intermediary must
keep such evidentiary material, which demonstrates such Customer’s confirmation, in the
manner, prescribed in item 13 of the Guidelines.
         13. The Insurance Company or Independent Insurance Intermediary must keep the
information relevant to determination of the Customer’s needs during the entire period of effect
of the contract. Independent Insurance Intermediary is entitled to enter into agreement with the
Insurance Company on transmission of information relevant to determination of the customer’s
needs and storage thereof in the Insurance Company.
     III. REQUIREMENTS FOR INFORMATION ON THE PROVISIONS OF LIFE
                         INSURANCE CONTRACT

        14. The Insurance Company (its authorized representative) or Independent Insurance
Intermediary must duly inform the Customers on the provisions of the life insurance contract
pursuant to the following principles:
        14.1. Information shall be disclosed in due time – the Insurance Company (its authorized
representative) or Independent Insurance Intermediary shall familiarize the Customer with the
provisions of the life insurance contract and provide the Customer the information, specified in
Par. 1, Article 99 of the Law on Insurance (hereinafter the Essential Information), in writing or
such other form, as requested and accepted by the Customer (except orally) prior to conclusion
of the life insurance contract with the Customer as well as ensure that the Customer has
sufficient time to familiarize with the aforementioned information.
        14.2. Disclosure of information shall be appropriate and exhaustive – any and all
important information relevant to the provisions of the life insurance contract shall be disclosed
to the Customer avoiding the use of false and deceitful information.
        14.3. With a view to ensure the clarity of information, provided to the Customer, it is
recommended to use usual examples, schedules, graphs, tables, etc., illustrating particular
characteristics of insurance products or significance and effect of the provisions of insurance
contract.
        15. Essential Information must be given in the application to enter into the life insurance
contract and / or in the particular document (hereinafter the Documents of Essential Information)
as well as meet the following requirements, indicated in items 16–17 hereof.
        16. In the Documents of Essential Information:
        16.1. the provisions of the life insurance contract shall be set forth in explicit and
comprehensible manner, avoiding special terms, or they shall be provided with explanation;
        16.2. substantial provisions of the insurance contract, significant circumstances, and
notices shall not be suppressed or the importance thereof shall not be understated;
        16.3. the provider of the service that is offered shall be expressly indicated, specifying
the name of the Insurance Company as well as the name of insurance product to be offered,
moreover, the group, which the product is attributed to (e.g., traditional cumulative life
insurance, Unit-linked insurance, life insurance in case of death, etc.) as well as main
characteristics (object and purpose of insurance) shall be indicated as well;
        16.4. in case of life insurance contract relevant to accumulation of capital, a record,
notifying the Customer of the consequences of premature termination of the life insurance
contract, as well as reference to the table of rough surrender value or method of calculation shall
be given as well;
        16.5. information on the policyholder’s right to terminate the life insurance contract on
easy terms shall be given in highlighted font.
        17. In case of the Unit-linked insurance, the Documents of Essential Information shall
cover:
        17.1. additional information shall be provided: the risk typical to such contracts as well
as highlighted notice that the investment yield is not guaranteed; the amount of insurance benefit
in the end of the insurance contract is not known, it can be either bigger or smaller than
expected; the information that the looses from investment risk is taken by the Customer;
        17.2. where submitting the data on future results of investing activities (if available),
additional information, certifying that calculations are only forecasts and they shall not
necessarily measure up to the reality as well as that the value of investment can both go up and
go down.
        18. The Insurance Company (its authorized representative) and Independent Insurance
Intermediary shall ensure that the Customer, entering into the life insurance contract, confirms in
writing that he was furnished with the Essential Information. The record that is confirmed by the
Customer’s signature as well as information, provided in items 16.5 and 17.1 hereof, which shall
be highlighted, shall be set forth in explicit font that cannot be smaller than all other information,
given in the Documents of Essential Information.

                                    IV. FINAL PROVISIONS

        19. To ensure efficient implementation of the present Guidelines, the Insurance
Company and Independent Insurance Intermediary shall define the regulations that would cover
the following:
        19.1. grouping of insurance products in view of their nature as well as complexity;
        19.2. efficient procedures for determination of the Customer needs in view of the nature
and complexity of respective insurance product as well as establishing a respective form of
determination of the needs (e.g., standard forms for different products according to their nature
or complexity);
        19.3. methodical guidelines of collected information on the Customer for assessment, if
the presentation of the offer for the options of the life insurance contract that meets the
determined needs of the Customer, as well as in case of investment life insurance contract – for
the assessment of conformity of a particular contract with the criteria, established in item 10
hereof;
        19.4. procedures, ensuring that the principles of due disclosure of information as well as
requirements, established for the Documents of Essential Information, are complied with.
        20. Independent Insurance Intermediary, implementing item 19 of the Guidelines, shall
also consider the diversity of insurance products offered on the market.

                                     ____________________

				
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