Current through Register Vol. 48, No. 12, March 22, 2024
a) Illustrations of benefits payable under
any variable contract shall not include projections of past investment
experience into the future or attempted predictions of future investment
experience; provided, however, that the form of illustration found in Appendix
A of this Part may be utilized by companies in the sale of immediate variable
annuities only.
b) No individual
variable annuity contract calling for the payment of periodic stipulated
payments shall be delivered or issued for delivery in this State unless it
contains in substance the following provisions or provisions which in the
opinion of the Director are more favorable to the holders of such contracts:
1) A provision that there shall be a period
of grace of 30 days or of one month, within which any stipulated payment to the
insurer falling due after the first may be made, during which period of grace
the contract shall continue in force. The contract may include a statement of
the basis for determining the date as of which any such payment received during
the period of grace shall be applied to produce the values under the contract
arising therefrom;
2) A provision
that, at any time within 1 year from the date of default, in making periodic
stipulated payments to the insurer during the life of the annuitant and unless
the cash surrender value has been paid, the contract may be reinstated upon
payment to the insurer of such overdue payments as required by the contract,
and of all indebtedness to the insurer on the contract, including interest. The
contract may include a statement of the basis for determining the date as of
which the amount to cover such overdue payments and indebtedness shall be
applied to produce the values under the contract arising therefrom;
3) A provision specifying the options
available in the event of default in a periodic stipulated payment. Those
options may include an option to surrender the contract for a cash value as
determined by the contract, and shall include an option to receive a paid-up
annuity if the contract is not surrendered for cash, the amount of the paid-up
annuity being determined by applying the value of the contract at the annuity
commencement date in accordance with the terms of the contract.
c) No individual variable life
insurance policy shall be delivered or issued for delivery in this State unless
it contains in substance the following provisions or provisions that, in the
opinion of the Director, are more favorable to the holders of those policies:
1) A provision that there shall be a period
of grace of 30 days or of one month, within which payment of any premium after
the first may be made, during which period of grace the policy shall continue
in force, but if a claim arises under the policy during the period of grace
before the overdue premiums or the deferred premiums of the current policy
year, if any, are paid, the amount of those premiums, together with interest
not in excess of 6% per annum, may be deducted from any amount payable under
the policy in settlement. The policy may contain a statement of the basis for
determining any variation in benefits that may occur as a result of the payment
of premium during the period of grace.
2) A provision that the policy will be
reinstated at any time within 3 years from the date of default, unless the cash
surrender value has been paid or unless the period of extended insurance has
expired, upon the application of the insured and the production of evidence of
insurability, including good health, satisfactory to the insurer and the
payment of an amount not exceeding the greater of:
A) all overdue premiums and the payment of
any other indebtedness to the insurer upon said policy with interest at a rate
not exceeding 6% per annum compounded annually; or
B) 110% of the increase in cash surrender
value resulting from reinstatement.
3) A provision for cash surrender values and
paid-up insurance benefits available as non-forfeiture options under the policy
in the event of default in a premium payment after premiums have been paid for
a specified period.
A) If the policy does not
include a table of figures for the options so available, the policy shall
provide that the company will furnish at least once in each policy year a
statement showing the cash value as of a date no earlier than the prior policy
anniversary.
B) The method of
computation of cash values and other non-forfeiture benefits, as described
either in the policy or in a statement filed with the Commissioner, Director or
Superintendent of the jurisdiction in which the policy is delivered, shall be
in accordance with actuarial procedures that recognize the variable nature of
the policy. The method of computation must be such that, if the net investment
return credited to the contract at all times from the date of issue should be
equal to the assumed investment increment factor if the contract provides for
such a factor, or 31/2% if not, with premiums and benefits determined
accordingly under the terms of the policy, the resulting cash values and other
non-forfeiture benefits would be at least equal to the minimum values required
by Section 229.2 of the Code for a fixed dollar policy with those premiums and
benefits. The method of computation may disregard incidental minimum guarantees
as to the dollar amounts payable. Incidental minimum guarantees include, for
example, but are not to be limited to, a guarantee under a policy that provides
for an assumed investment increment factor that the amount payable at death or
maturity shall be at least equal to the amount that otherwise would have been
payable if the net investment return credited to the contract at all times from
the date of issue had been equal to that factor.
d) Any variable annuity contract delivered or
issued for delivery in this State shall stipulate the investment increment
factors to be used in computing the dollar amount of variable benefits or other
variable contractual payments or values thereunder, and may guarantee that
expense and/or mortality results shall not adversely affect those dollar
amounts. In the case of an individual variable annuity contract under which the
expense and mortality results may adversely affect the dollar amount of
benefits, the expense and mortality factors shall be stipulated in the
contract.
1) In computing the dollar amount
of variable benefits or other contractual payments or values under an
individual variable annuity contract:
A) The
annual net investment increment assumption shall not exceed 5%, except with the
approval of the Director;
B) To the
extent that the level of benefits may be affected by future mortality results,
the mortality factor shall be determined from the Annuity 2000 Mortality Table,
or any modification of that table not having a lower life expectancy at any
age, or any annuity mortality table adopted after 1996 by NAIC that is approved
by the Director.
2)
"Expense", as used in subsection (d), may exclude some or all taxes, as
stipulated in the contract.
e) Any individual variable life insurance
policy delivered or issued for delivery in this State shall stipulate the
investment increment factor to be used in computing the dollar amount of
variable benefits or other variable contractual payments or cash values
thereunder and shall guarantee that expense and mortality results shall not
adversely affect those dollar amounts.
f) The reserve liability for variable
contracts shall be established pursuant to the requirements of Section 223 of
the Code in accordance with actuarial procedures that recognize the variable
nature of the benefits provided and any mortality guarantees, provided those
actuarial procedures meet the approval of the Director.
