South Dakota Administrative Rules
Title 20 - PUBLIC SAFETY
Article 20:06 - INSURANCE
Chapter 20:06:07 - Variable annuity contracts
Section 20:06:07:05 - Contracts providing for variable benefits

Universal Citation: SD Admin Rules 20:06:07:05

Current through Register Vol. 50, page 114, March 25, 2024

Features required are as follows:

(1) Any variable contract providing benefits payable in variable amounts delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. Any such contract, including a group contract and any certificate issued under it, shall state that the dollar amount will vary to reflect investment experience. The contract shall contain on its first page a clear statement to the effect that the benefits under it are on a variable basis;

(2) Illustrations of benefits payable under any contract providing benefits payable in variable amounts shall not include projections of past investment experience into the future or attempted predictions of future investment experience. Nothing contained in this subdivision is intended to prohibit use of hypothetical assumed rates of return to illustrate possible levels of annuity payments;

(3) No individual variable annuity contract calling for the payment of periodic stipulated payments may 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:

(a) 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 from the payment;

(b) A provision that, at any time within one 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 the 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 the overdue payments and indebtedness shall be applied to produce the values under the contract arising from them;

(c) A provision specifying the options available in the event of default in a periodic stipulated payment. Such 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 shall be determined by applying the value of the contract at the annuity commencement date in accordance with the terms of the contract;

(4) An individual variable annuity contract delivered or issued for delivery in this state shall stipulate the expense, mortality, and investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values under it, and may guarantee that expense, mortality results or both shall not adversely affect such dollar amounts. The following provisions apply 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 five percent, except with the approval of the director;

(b) To the extent that the level of benefits may be affected by mortality results, the mortality factor shall be determined from the Annuity Mortality Table of 1949, Ultimate, or any modification of that table not having a higher mortality rate at any age, or, if approved by the director, from another table. "Expense," as used in this section, may exclude some or all taxes, as stipulated in the contract;

(5) The reserve liability for variable annuities shall be established pursuant to the requirements of SDCL 58-26 in accordance with actuarial procedures that recognize the variable nature of the benefits provided.

General Authority: SDCL 58-28-31.

Law Implemented: SDCL 58-28-31.

Disclaimer: These regulations may not be the most recent version. South Dakota may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.