Current through Register Vol. 49, No. 6, March 15, 2024
(1) Definitions.
(A) Policy shall mean any policy, contract or
certificate containing a provision for policy loans issued by a life insurance
company or a fraternal benefit society in this state.
(B) Published monthly average means-
1.
The Moody's Corporate Bond Yield
Average-Monthly Average Corporates as published by Moody's Investors
Service, Inc. or any successor to it; or
2. In the event that The Moody's
Corporate Bond Yield Average-Monthly Average Corporates is no longer
published, a substantially similar average, established by the
director.
(C) Policy
loan includes any premium loan made under a policy to pay one (1) or more
premiums that were not paid to the life insurer or fraternal benefit society as
they fell due.
(D) Policyholder
includes the owner of the policy or the person designated to pay premiums as
shown on the records of the life insurer or fraternal benefit
society.
(2) Maximum
Rate of Interest of Policy Loans.
(A)
Policies issued on or after August 13, 1982 shall provide for policy loan
interest rates as follows:
1. A provision
permitting a maximum interest rate of not more than eight percent (8%) per
annum; or
2. A provision permitting
an adjustable maximum interest rate established from time-to-time by the life
insurer or fraternal benefit society as permitted by law.
(B) The rate of interest charged on a policy
loan made under paragraph (2)(A)2. shall not exceed the higher of the
following:
1. The Published Monthly Average
for the calendar month ending two (2) months before the date on which the rate
is determined; or
2. The rate used
to compute the cash surrender values under the policy during the applicable
period plus one percent (1%) per annum.
(C) If the maximum rate of interest is
determined pursuant to paragraph (2)(A)2., the policy shall contain a provision
setting forth the frequency at which the rate is to be determined for that
policy.
(D) The maximum rate for
each policy must be determined at regular intervals at least once every twelve
(12) months, but not more frequently than once in any three (3)-month period.
At the following intervals specified in the policy:
1. The rate being charged may be increased
whenever the increase as determined under subsection (2)(B) would increase that
rate by one-half percent (1/2%) or more per annum; and
2. The rate charged must be reduced whenever
this reduction as determined under subsection (2)(B) would decrease that rate
by one-half percent (1/2%) or more per annum.
(E) The life insurer or fraternal benefit
society shall-
1. Notify the policyholder at
the time a cash loan is made of the initial rate of interest on the
loan;
2. Notify the policyholder
with respect to the premium loans of the initial rate of interest on the loan
as soon as it is reasonably practical to do so after making the initial loan.
Notice need not be given to the policyholder when a further premium loan is
added, except as provided in paragraph (2)(E)3.;
3. Send to policyholders with loans
reasonable advance notice of any increase in the rate; and
4. Include in the notices required, the
substance of the pertinent provisions of subsections (2)(A) and (C).
(F) No policy shall terminate in a
policy year as the sole result of change in the interest rate during that
policy year and the life insurer or fraternal benefit society shall maintain
coverage during that policy year until the time at which it would otherwise
have terminated if there had been no change during that policy year.
(G) The substance of the pertinent provisions
of subsections (2)(A) and (C) shall be set forth in the policies to which they
apply.
(H) The rate of interest on
policy loans permitted under this section includes the interest rate charged on
reinstatement of policy loans for the period during and after any lapse of a
policy.
*Original authority: 374.045, RSMo 1967 and 536.021, RSMo
1975, amended 1976, 1989 and 1992.
