Current through Register Vol. 39, No. 6, September 16, 2024
(a) Financing
Options:
(1) The insurer may require a
premium charge or cost of insurance charge for the accelerated benefit. These
charges shall be based on sound actuarial principles. In the case of group
insurance, the additional cost may also be reflected in experience
rating.
(2) The insurer may pay a
present value of the face amount. The calculation shall be based on any
applicable actuarial discount appropriate to the policy design. The interest
rate or interest rate methodology used in the calculation shall be based on
sound actuarial principles and disclosed in the contract or actuarial
memorandum. The maximum interest rate used shall be no more than the greater
of:
(A) The current yield on 90 day treasury
bills; or
(B) The current maximum
statutory adjustable policy loan interest rate.
(3) The insurer may accrue an interest charge
on the amount of the accelerated benefits. The interest rate or interest rate
methodology used in the calculation shall be based on sound actuarial
principles and disclosed in the contract or actuarial memorandum. The maximum
interest rate used shall be no more than the greater of:
(A) The current yield on 90 day treasury
bills; or
(B) The current maximum
statutory adjustable policy loan interest rate.
The interest rate on the portion of the lien that is equal in
amount to the cash value of the contract at the time of the benefit
acceleration shall be no more than the policy loan interest rate stated in the
contract.
(b) Effect on Cash Value:
(1) Except as provided in Subparagraph (b)(2)
of this Rule, when an accelerated benefit is payable, there shall be no more
than a pro rata reduction in the cash value based on the percentage of death
benefits accelerated to produce the accelerated benefit payment.
(2) Alternatively, the payment of accelerated
benefits, any administrative expense charges, any future premiums and any
accrued interest can be considered a lien against the death benefit of the
policy or rider and the access to the cash value may be restricted to any
excess of the cash value over the sum of any other outstanding loans and the
liens. Future access to additional policy loans may also be limited to any
excess of the cash value over the sum of the lien and any other outstanding
policy loans.
(c) Effect
of Any Outstanding Policy Loans on Accelerated Death Benefit Payment. When
payment of an accelerated benefit results in a pro rata reduction in the cash
value, the payment may not be applied toward repaying an amount greater than a
pro rata portion of any outstanding policy loans.
Authority
G.S.
58-2-40;
58-3-150;
58-7-15(1);
58-58-1;
Eff. March 1,
1992;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. May 1, 2018.
