Current through Register Vol. 46, No. 12, March 20, 2024
(a)
Every variable annuity contract shall be subject to the following provisions:
(1) Each variable annuity contract delivered
or issued for delivery in this State shall provide that neither expenses
actually incurred, other than taxes on the investment return, nor mortality
actually experienced, shall adversely affect the dollar amount of variable
annuity payments to any annuitant for whom variable annuity payments have
commenced. Where a group variable annuity contract provides that the scale of
charges to be made against the assets of a separate account may be changed
without the consent of the participants for whom variable annuity payments have
commenced, the contract shall provide that such changes may not adversely
affect the dollar amount of variable annuity payments which have commenced. The
method of computing the dollar amount of variable annuity payments shall be
such that, if the annual rate of investment return of the separate account, as
defined in section
50.1(a)(6)
of this Part, were six and one-half percent at all times from the issue of the
contract, such amounts would not decrease. The superintendent may authorize the
use of other methods or rates in computing the dollar amount of variable
annuity payments where such methods or rates are determined by the
superintendent to be fair, equitable, reasonable and not less favorable to
participants or annuitants.
(2) The
reserve liability for variable annuities shall be established in compliance
with the applicable provisions of section
4217 of the Insurance Law, as amended, and
in accordance with actuarial procedures that recognize the variable nature of
the benefits provided and their dependence on the net investment return of the
separate account or accounts. With respect to individual variable annuities,
the mortality table used in calculating the reserve liability shall be:
(i) the annuity table for 1949 with
projection scale B; or
(ii) the
progressive annuity table applicable to persons born in 1900, adjusted by a
setback of one year of age for each complete 25 years by which the year of
birth is later than 1900, and a set-forward of one year with respect to lives
born before 1900; or
(iii) any
other table approved by the superintendent. With respect to group variable
annuities, the mortality table used in calculating the reserve liability shall
be:
(a) the group annuity mortality table for
1951, projected to the year of retirement, using projection scale C;
or
(b) any other table approved by
the superintendent. In determining the valuation factors for group variable
annuities, a five-year grouping of calendar years of retirement may be
used.
(3)
Except as otherwise permitted by the superintendent, each authorized insurance
company issuing variable annuity contracts shall accumulate an annuitant
mortality fluctuation fund or funds over and above the required contract
reserves and liabilities, pursuant to a plan for such accumulation which
specifies reasonable maximum targets for such fund or funds and is approved by
the superintendent as otherwise reasonable. Losses arising from mortality
actually experienced shall first be charged against such mortality fluctuation
fund or funds until such fund or funds are exhausted and shall then be charged
against the special contingent reserve fund.
(b) Every individual variable annuity
contract delivered or issued for delivery in this State, and every certificate
or other writing furnished by the insurer to an employee in this State under a
group variable annuity contract in connection with the election of a variable
annuity shall contain on its first page, in addition to the required provisions
of section
4240(a)(11) of the
Insurance Law, a statement which:
(1)
discloses the smallest annual rate of investment return which would have to be
earned on the assets of the separate account so that the dollar amount of
variable annuity payments will not decrease; or
(2) sets forth the conditions under which the
dollar amount of variable annuity payments will not decrease, and a statement
of any explicit charges against the assets of the separate account.
(c) Every variable annuity
contract or certificate and any other writing furnished by the insurer to any
person in connection with the sale or election of a variable annuity shall
contain a concise and clear statement of the method used in computing the
dollar amount of variable benefits.