Current through Register Vol. 54, No. 44, November 2, 2024
(a)
The following types of benefits guaranteed as to dollar amount shall be
permitted in variable annuity contracts or variable accumulation annuity
contracts; any other benefits guaranteed as to dollar amount which are not
described in this subsection may be permitted if the Department determines that
these benefits afford the policyholders and the public protection substantially
equal to that provided by the benefits described in this subsection:
(1) Minimum Death Benefit, which guarantees
that, upon the death of the annuitant, the beneficiary will be paid a specified
percentage of gross premium paid to date, less any payments already made. The
maximum percentage of gross premium that is payable is 100%.
(2) Minimum Surrender Value, which guarantees
that, prior to the commencement of annuity payments but on or after a specified
policy anniversary or of a group certificate which shall not be earlier than
the tenth anniversary if the issue age is less than 55 nor earlier than the
fifth anniversary if the issue age is greater than or equal to 55, the cash
value of the contract will not be less than some specified percentage, not to
exceed 100%, of the gross premium paid to date for the contract.
(b) A separate account contract
containing any of the benefits described in subsection (a) shall cause the
issuer to be subject to the following additional requirements:
(1) Reserves for any minimum guarantees of
variable benefits shall be maintained in the general account of the insurer and
shall be determined according to a reserve formula approved in advance by the
Commissioner.
(2) Any premium
charges of more than 1% or charges against the separate account assets of more
than an effective annual rate of .5%, to provide minimum guarantee or variable
benefits, shall be separately disclosed in the contract and shall be equitably
determined so as not to unfairly discriminate by age, sex, size of policy, or
generation of policyholders.
(3) No
insurer may issue variable annuity or variable accumulation annuity contracts
providing minimum surrender value guarantees if the sum of the excess of the
minimum surrender value guarantees over 1/2 of the current cash of the current
cash value would exceed 20% of the insurer's surplus. This amount may be
considered as net of reinsurance ceded provided that such reinsurance contracts
have prior approval of the Commissioner.
(4) Investments in separate accounts used to
fund contracts containing either of the minimum guarantees set forth in
paragraphs (2) or (3) shall be limited to the following:
(i) Common stock, preferred stocks, and bonds
listed and traded on a national stock exchange or listed by the National
Association of Securities Dealers Automated Quotations (NASDAQ).
(ii) Bonds, notes, or obligations of such
governmental instrumentalities as are permitted by Pennsylvania law for the
investment of assets held to satisfy capital requirements of life insurance
companies.
(iii) Shares of an
investment company registered pursuant to the investment Company Act of 1940
(15 U.S.C.A. §§ 80a-1-80 a-52).
(iv) Prime commercial paper and certificates
of deposit to the extent insured.
(v) Corporate obligations which meet the
requirements of section 404(d) of the act (40 P. S. §
504(d)).
(vi) Real estate located within the United
States which the insurer is authorized to hold under section 406(c), (d) or (f)
of the act (40 P. S. §
506(c), (d) or
(f)), provided that no real estate authorized
under section 406(f) is acquired if the market value of all real estate held by
the separate account immediately subsequent to the acquisition would exceed 15%
of the reserve liability held in the separate account.
(vii) Cash.
(viii) Policy loans.
The provisions of this §85.40 issued under section
406.2(d) of The
Insurance Company Law of 1921 (40 P. S. §
506.2(d)); The Insurance
Company Law of 1921 (40 P. S. §§ 101-1101); The Insurance Department Act of
1921 (40 P. S. §§ 1-321);
and sections 206, 506, 1501 and 1502 of The Administrative Code of 1929
(71
P. S. §§
66,
186,
411 and
412).
This section cited in 31 Pa. Code §
85.4 (relating to Departmental
review).
