Illinois Administrative Code
Title 50 - INSURANCE
Part 1410 - GENERAL ACCOUNT MODIFIED GUARANTEED ANNUITY (GAMGA) CONTRACTS
Section 1410.60 - General Account Modified Guaranteed Annuity (GAMGA) Contract Requirements
Universal Citation: 50 IL Admin Code ยง 1410.60
Current through Register Vol. 48, No. 12, March 22, 2024
a) Mandatory Contract Benefit and Design Requirements
1) Any MGA contract delivered or issued for
delivery in this State shall contain a statement of the procedures to be
followed by the insurer in determining the dollar amount of nonforfeiture
benefits.
2) No MGA contract
calling for the payment of periodic stipulated payments shall be delivered or
issued for delivery in this State unless it contains the following provisions:
A) A provision that there shall be a grace
period of 30 days or one month following the premium due date during which the
contract shall remain in force and, within which any payment due to the
insurer, other than the first, may be made. The contract may include a
statement of the basis for determining the date as of which any payment
received during the grace period shall be applied to produce the values under
the contract.
B) A provision that,
at any time within one year from the date of default, the contract may be
reinstated upon payment to the insurer of any overdue payments required by
contract, and of all indebtedness to the insurer on the contract, including
interest. Reinstatement may not occur if the cash value has been paid. The
contract may include a statement of the basis for determining the date as of
which the amount to cover the overdue payments and indebtedness shall be
applied to produce the values under the contract.
3) The MVA formula, used in determining
nonforfeiture benefits, must be stated in the contract and must be applicable
for both upward and downward adjustments. When a contract is filed, it must be
accompanied by an actuarial certification by a qualified actuary indicating the
basis for the MVA formula and that the formula provides reasonable equity to
both the contractholder and the insurer.
b) Nonforfeiture Benefits
1) This subsection (b) does not apply to any
of the contracts excluded in Section 229.4 a(2) of the Code.
2) Any paid-up annuity benefit available
under an MGA contract shall be such that its present value on the annuity
commencement date is at least equal to the Adjusted Minimum Nonforfeiture
Amount on that date. The present value shall be computed using the mortality
table, if any, and the guaranteed or assumed interest rates used in calculating
the annuity payments.
3) For MGA
contracts that provide cash surrender benefits, the cash surrender benefit at
any time prior to the annuity commencement date shall not be less than the
Adjusted Minimum Nonforfeiture Amount next computed after the request for
surrender is received by the insurer. The death benefit under MGA contracts
shall be at least equal to the cash surrender benefit. The contract may provide
that the insurer may defer payment of the cash surrender benefit for a period
of 6 months after demand.
4) Any
MGA contract that does not provide cash surrender benefits or does not provide
death benefits at least equal to the Adjusted Minimum Nonforfeiture Amount
prior to the annuity commencement date shall include a statement in a prominent
place in the contract that the benefits are not provided.
5) For any MGA contract that provides, within
the same contract by rider or supplemental contract provision, both annuity
benefits and life insurance benefits that are in excess of the greater of cash
surrender benefits (without regard to any surrender charges) or a return of the
gross considerations with interest, the minimum nonforfeiture benefits shall be
equal to the sum of the Adjusted Minimum Nonforfeiture Amount for the annuity
portion and the minimum nonforfeiture benefits, if any, for the life insurance
portion computed as if each portion were a separate contract.
c) The Application
The application for an MGA shall prominently state that amounts payable under the contract are subject to a market value adjustment prior to a date or dates specified in the contract. The statement shall be placed immediately above the signature line on the application.
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