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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Insurance Code is amended by | |||||||||||||||||||
5 | changing Section 229.4 as follows: | |||||||||||||||||||
6 |
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7 | (215 ILCS 5/229.4) (from Ch. 73, par. 841.4)
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8 | Sec. 229.4. Standard Non-forfeiture Law for Individual | |||||||||||||||||||
9 | Deferred
Annuities.
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10 | (1)
Title.
This Section shall be known as the Standard | |||||||||||||||||||
11 | Nonforfeiture Law for Individual Deferred Annuities. | |||||||||||||||||||
12 | (2) Applicability.
This Section shall not apply to any | |||||||||||||||||||
13 | reinsurance, group annuity purchased under a retirement plan or | |||||||||||||||||||
14 | plan of deferred compensation established or maintained by an | |||||||||||||||||||
15 | employer (including a partnership or sole proprietorship) or by | |||||||||||||||||||
16 | an employee organization, or by both, other than a plan | |||||||||||||||||||
17 | providing individual retirement accounts or individual | |||||||||||||||||||
18 | retirement annuities under Section 408 of the Internal Revenue | |||||||||||||||||||
19 | Code, as now or hereafter amended, premium deposit fund, | |||||||||||||||||||
20 | variable annuity, investment annuity, immediate annuity, any | |||||||||||||||||||
21 | deferred annuity contract after annuity payments have | |||||||||||||||||||
22 | commenced, or reversionary annuity, nor to any contract which | |||||||||||||||||||
23 | shall be delivered outside this State through an agent or other | |||||||||||||||||||
24 | representative of the company issuing the contract. | |||||||||||||||||||
25 | (3) Nonforfeiture Requirements. | |||||||||||||||||||
26 | (A) In the case of contracts issued on or after the | |||||||||||||||||||
27 | effective date of this Section as defined in Section 13, no | |||||||||||||||||||
28 | contract of annuity, except as stated in Section 2, shall | |||||||||||||||||||
29 | be delivered or issued for delivery in this State unless it | |||||||||||||||||||
30 | contains in substance the following provisions, or | |||||||||||||||||||
31 | corresponding provisions which in the opinion of the | |||||||||||||||||||
32 | Director of Insurance are at least as favorable to the |
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| |||||||
1 | contract holder, upon cessation of payment of | ||||||
2 | considerations under the contract:
| ||||||
3 | (1) That upon cessation of payment of considerations | ||||||
4 | under a contract, or upon the written request of the | ||||||
5 | contract owner, the company shall grant will paid-up | ||||||
6 | annuity benefit on a plan stipulated in the contract of | ||||||
7 | such value as is specified in Sections 5, 6, 7, 8 and 10; | ||||||
8 | (2)
If a contract provides for a-lump sum settlement at | ||||||
9 | maturity, or at any other time, that upon surrender of the | ||||||
10 | contract at or prior to the commencement of any annuity | ||||||
11 | payments, the company shall pay in lieu of a paid-up | ||||||
12 | annuity benefit a cash surrender benefit of such amount as | ||||||
13 | is
specified in Sections 5, 6, 8 and 10. The company may | ||||||
14 | reserve the right to
defer the payment of the cash | ||||||
15 | surrender benefit for a period not to exceed 6 months to | ||||||
16 | demand therefor with surrender of the contract after making | ||||||
17 | written request and receiving written approval of the | ||||||
18 | Director. The request shall address the necessity and | ||||||
19 | equitability to all policyholders of the deferral; | ||||||
20 | (3) A statement of the mortality table, if any, and | ||||||
21 | interest rates used calculating any minimum paid-up | ||||||
22 | annuity, cash surrender, or death benefits that are | ||||||
23 | guaranteed under the contract, together with sufficient | ||||||
24 | information to determine the amounts of the benefits; and | ||||||
25 | (4)
A statement that any paid-up annuity, cash | ||||||
26 | surrender or death benefits that may be available under the | ||||||
27 | contract are not less than the minimum benefits required by | ||||||
28 | any statute of the state in which the contract is delivered | ||||||
29 | and an explanation of the manner in which the benefits are | ||||||
30 | altered by the existence of any additional amounts credited | ||||||
31 | by the company to the contract, any indebtedness to the | ||||||
32 | company on the contract or any prior withdrawals from or | ||||||
33 | partial surrenders of the contract. | ||||||
34 | (B) Notwithstanding the requirements of this | ||||||
35 | Section, a deferred annuity contract may provide that | ||||||
36 | if no considerations have been received under a |
| |||||||
| |||||||
1 | contract for a period of 2 full years and the portion | ||||||
2 | of the paid-up annuity benefit at maturity on the plan | ||||||
3 | stipulated in the contract arising from prior | ||||||
4 | considerations paid would be less than $20 monthly, the | ||||||
5 | company may at its option terminate the contract by | ||||||
6 | payment in cash of the then present value of the | ||||||
7 | portion of the paid-up annuity benefit, calculated on | ||||||
8 | the basis on the mortality table, if any, and interest | ||||||
9 | rate specified in the contract for determining the | ||||||
10 | paid-up annuity benefit, and by this payment shall be | ||||||
11 | relieved of any further obligation under the contract. | ||||||
12 | (4) Minimum values. The minimum values as specified in | ||||||
13 | Sections 5, 6, 7, 8 and 10 of any paid-up annuity, cash | ||||||
14 | surrender or death benefits available under an annuity contract | ||||||
15 | shall be based upon minimum nonforfeiture amounts as defined in | ||||||
16 | this Section.
| ||||||
17 | (A)(1) The minimum nonforfeiture amount at any time at | ||||||
18 | or prior to the commencement of any annuity payments shall | ||||||
19 | be equal to an accumulation up to such time at rates of | ||||||
20 | interest as indicated in subsection B of the net | ||||||
21 | considerations (as hereinafter defined) paid prior to such | ||||||
22 | time, decreased by the sum of paragraphs (a) through (d) | ||||||
23 | below: | ||||||
24 | (a) Any prior withdrawals from or partial | ||||||
25 | surrenders of the contract accumulated at rates of | ||||||
26 | interest as indicated in subsection B; and
| ||||||
27 | (b) An annual contract charge of $50, | ||||||
28 | accumulated at rates of interest as indicated in | ||||||
29 | subsection B; and
| ||||||
30 | (c) Any premium tax paid by the company for the | ||||||
31 | contract, accumulated at rates of interest as | ||||||
32 | indicated in subsection B; and
| ||||||
33 | (d) The amount of any indebtedness to the | ||||||
34 | company on the contract including
interest due and | ||||||
35 | accrued. | ||||||
36 | (2) The net considerations for a given contract year |
| |||||||
| |||||||
1 | used to define the minimum nonforfeiture amount shall be an | ||||||
2 | amount
equal to 87.5% of the gross considerations,
credited | ||||||
3 | to the contract during that contract year. | ||||||
4 | (B) The interest rate used in determining minimum | ||||||
5 | nonforfeiture amounts shall be an
annual rate of | ||||||
6 | interest determined as the lesser of (3%) per annum
and | ||||||
7 | the following, which shall be specified in the contract | ||||||
8 | if the interest rate will be reset: | ||||||
9 | (1) The five-year Constant Maturity Treasury Rate | ||||||
10 | reported by the Federal Reserve as of a date, or average | ||||||
11 | over a period, rounded to the nearest 1/20th of one | ||||||
12 | percent, specified_in_the_contract _no_longer than 15_ | ||||||
13 | months prior to the contract issue date or redetermination | ||||||
14 | date under Section 4B(4) | ||||||
15 | (2) Reduced by 125 basis points: | ||||||
16 | (3) Where the resulting interest rate is not less than | ||||||
17 | l%; and | ||||||
18 | (4) The interest rate shall apply for an initial period | ||||||
19 | and may be redetermined for additional periods. The | ||||||
20 | redetermination date, basis and period, if any, shall be | ||||||
21 | stated in the contract. The basis is the date or average | ||||||
22 | over a specified period that produces the value of the | ||||||
23 | five-year Constant Maturity Treasury Rate to be used at | ||||||
24 | each redetermination date. | ||||||
25 | (C) During the period or term that a contract | ||||||
26 | provides substantive participation in an equity | ||||||
27 | indexed benefit, it may increase the reduction | ||||||
28 | described in subsection B(2)
above by up to an | ||||||
29 | additional 100 basis points to reflect the value of the | ||||||
30 | equity
index benefit. The present value at the contract | ||||||
31 | issue date, and at each
redetermination date | ||||||
32 | thereafter of the additional reduction shall not | ||||||
33 | exceed market value of the benefit. The Director may | ||||||
34 | require a demonstration that the present value of the | ||||||
35 | additional reduction does not exceed the market value | ||||||
36 | of the benefit. Lacking such a demonstration that is |
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| |||||||
1 | acceptable to the Director, the Director may disallow | ||||||
2 | or limit the additional reduction. | ||||||
3 | (D) The Director may adopt rules to implement the | ||||||
4 | provisions of Section 4C and to provide for further | ||||||
5 | adjustments to the calculation of minimum | ||||||
6 | nonforfeiture amounts for contracts that provide | ||||||
7 | substantive articulation in an equity index benefit | ||||||
8 | and for other contracts that the Director determines | ||||||
9 | adjustments are justified. | ||||||
10 | (5) Computation of Present Value.
Any paid-up annuity | ||||||
11 | benefit available under a contract shall be such that its | ||||||
12 | present value on the date annuity payments are to commence is | ||||||
13 | at least equal to the minimum nonforfeiture amount on that | ||||||
14 | date. Present value shall be computed using the mortality | ||||||
15 | table, if any, and the interest rates specified in the contract | ||||||
16 | for determining the minimum paid-up annuity benefits | ||||||
17 | guaranteed in the contract. | ||||||
18 | (6) Calculation of Cash Surrender Value.
For contracts that | ||||||
19 | provide cash surrender benefits, the cash surrender benefits | ||||||
20 | available prior to maturity shall not be less than the present | ||||||
21 | value as of the date of surrender of that portion of the | ||||||
22 | maturity value of the paid-up annuity benefit that would be | ||||||
23 | provided under the contract at maturity arising from | ||||||
24 | considerations paid prior to the time of cash surrender reduced | ||||||
25 | by the amount appropriate to reflect any prior withdrawals from | ||||||
26 | or partial surrenders of the contract, such present value being | ||||||
27 | calculated on the basis of an interest rate not more than 1% | ||||||
28 | higher than the interest rate specified in the contract for | ||||||
29 | accumulating the net considerations to determine maturity | ||||||
30 | value, decreased by the amount of any indebtedness to the | ||||||
31 | company on the contract, including interest due and accrued, | ||||||
32 | and increased by any existing additional amounts credited by | ||||||
33 | the company to the contract. In no event shall any cash | ||||||
34 | surrender benefit be less than the minimum nonforfeiture amount | ||||||
35 | at that time. The death benefit under such contracts shall be | ||||||
36 | at least equal to the cash surrender benefit. |
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| |||||||
1 | (7) Calculation of Paid-up Annuity Benefits.
For contracts | ||||||
2 | that do not provide cash surrender benefits, the present value | ||||||
3 | of any paid-up annuity benefit available as a nonforfeiture | ||||||
4 | option at any time prior to maturity shall not be less than the | ||||||
5 | present value of that portion of the maturity value of the | ||||||
6 | paid-up annuity benefit provided under the contract arising | ||||||
7 | from considerations paid prior to the time the contract is
| ||||||
8 | surrendered in exchange for, or changed to, a deferred paid-up | ||||||
9 | annuity, such present value being calculated for the period | ||||||
10 | prior to the maturity date on the basis of the interest rate | ||||||
11 | specified in the contract for accumulating the net | ||||||
12 | considerations to determine maturity value, and increased by | ||||||
13 | any additional amounts credited by the company to the contract. | ||||||
14 | For contracts that do not provide any death benefits prior to | ||||||
15 | the commencement of any annuity payments, present values shall | ||||||
16 | be calculated on the basis of such interest rate and the | ||||||
17 | mortality table specified in the contract for determining the | ||||||
18 | maturity value of the paid-up annuity benefit. However, in no | ||||||
19 | event shall the present value of a paid-up annuity benefit be | ||||||
20 | less than the minimum nonforfeiture amount at that time. | ||||||
21 | (8) Maturity Date.
For the purpose of determining the | ||||||
22 | benefits calculated under Sections 6 and 7, in the case of | ||||||
23 | annuity contracts under which an election may be made to have | ||||||
24 | annuity payments commence at optional maturity dates, the | ||||||
25 | maturity date shall be deemed to be the latest date for which | ||||||
26 | election shall be permitted by the contract, but shall not be | ||||||
27 | deemed to be later than the anniversary of the contract next | ||||||
28 | following the annuitant's seventieth birthday or the tenth | ||||||
29 | anniversary of the contract, whichever is later. | ||||||
30 | (9) Disclosure of Limited Death Benefits.
A contract that | ||||||
31 | does not provide cash surrender benefits or does not provide | ||||||
32 | death benefits at least equal to the minimum nonforfeiture | ||||||
33 | amount prior to the commencement of any annuity payments shall | ||||||
34 | include a statement in a prominent place in the contract that | ||||||
35 | such benefits are not
provided. | ||||||
36 | (10) Inclusion of Lapse of Time Considerations.
Any paid-up |
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| |||||||
1 | annuity, cash surrender or death benefits available at any | ||||||
2 | time, other than on the contract anniversary under any contract | ||||||
3 | with fixed scheduled considerations, shall be calculated with | ||||||
4 | allowance for the lapse of time and the payment of any | ||||||
5 | scheduled considerations beyond the beginning of the contract | ||||||
6 | year in which cessation of payment of considerations under the | ||||||
7 | contract occurs. | ||||||
8 | (11) Proration of Values; Additional Benefits.
For a | ||||||
9 | contract which provides, within the same contract by rider or | ||||||
10 | supplemental contract provision, both annuity benefits and | ||||||
11 | life insurance benefits that are in excess of the greater of | ||||||
12 | cash surrender benefits or a return of the gross considerations | ||||||
13 | with interest, the minimum nonforfeiture benefits shall be | ||||||
14 | equal to the sum of the minimum nonforfeiture benefits for the | ||||||
15 | annuity portion and the minimum nonforfeiture benefits, if any, | ||||||
16 | for the life insurance portion computed as if each portion were | ||||||
17 | a separate contract. Notwithstanding the provisions of | ||||||
18 | Sections 5, 6, 7, 8 and 10, additional benefits payable in the | ||||||
19 | event of total and permanent disability, as reversionary | ||||||
20 | annuity or deferred reversionary annuity benefits, or as other | ||||||
21 | policy benefits additional to life insurance, endowment and | ||||||
22 | annuity benefits, and considerations for all such additional | ||||||
23 | benefits, shall be disregarded in ascertaining the minimum | ||||||
24 | nonforfeiture amounts,
paid-up annuity, cash surrender and | ||||||
25 | death benefits that may be required under this Section. The | ||||||
26 | inclusion of such benefits shall not be required in any paid-up | ||||||
27 | benefits, unless the additional benefits separately would | ||||||
28 | require minimum nonforfeiture amounts, paid-up annuity, cash | ||||||
29 | surrender and death benefits. | ||||||
30 | (12) Rules. The Director may adopt rules to implement the | ||||||
31 | provisions of this Section. | ||||||
32 | (13) Effective Date. After the effective date of this | ||||||
33 | Section, a company may elect to apply its provisions to annuity
| ||||||
34 | contracts on a contract form-by-contract form basis before | ||||||
35 | the_effective date of this Section. In all other instances, | ||||||
36 | this Act shall become operative with respect to annuity |
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| |||||||
1 | contracts issued by_ the company after July 1, 2006.
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2 | (1) No contract of annuity issued on or after the operative | ||||||
3 | date of this
Section except as stated in subsection (11) shall | ||||||
4 | be delivered or
issued
for delivery in this State unless it | ||||||
5 | contains in substance the following
provisions or | ||||||
6 | corresponding provisions which in the opinion of the Director
| ||||||
7 | are at least as favorable to the contract holder upon cessation | ||||||
8 | of payment
of considerations under the contract:
| ||||||
9 | (a) That upon cessation of payment of considerations | ||||||
10 | under a contract,
the company will grant a paid-up annuity | ||||||
11 | benefit on a plan stipulated in
the contract of such value | ||||||
12 | as is specified in subsections (3), (4), (5), (6)
and (8).
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13 | (b) If a contract provides for a lump sum settlement at | ||||||
14 | maturity, or at
any other time, that upon surrender of the | ||||||
15 | contract at or prior to the
commencement of any annuity | ||||||
16 | payments, the company will pay in lieu of any
paid-up | ||||||
17 | annuity benefit a cash surrender benefit of such amount as | ||||||
18 | is specified
in subsections (3), (4), (6) and (8). The | ||||||
19 | company shall reserve the right
to defer the payment of | ||||||
20 | such cash surrender benefit for a period of 6 months
after | ||||||
21 | demand therefor with surrender of the contract.
| ||||||
22 | (c) A statement of the mortality table, if any, and | ||||||
23 | interest rates used
in calculating any minimum paid-up | ||||||
24 | annuity, cash surrender or death benefits
that are | ||||||
25 | guaranteed under the contract, together with sufficient | ||||||
26 | information
to determine the amount of such benefits.
| ||||||
27 | (d) A statement that any paid-up annuity, cash | ||||||
28 | surrender or death benefits
that may be available under the | ||||||
29 | contract are not less than the minimum benefits
required by | ||||||
30 | any statute of the state in which the contract is delivered
| ||||||
31 | and an explanation of the manner in which such benefits are | ||||||
32 | altered by the
existence of any additional amounts credited | ||||||
33 | by the company to the contract,
any indebtedness to the | ||||||
34 | company on the contract or any prior withdrawals
from or | ||||||
35 | partial surrenders of the contract.
| ||||||
36 | Notwithstanding the requirements of this subsection, any |
| |||||||
| |||||||
1 | deferred annuity
contract may provide that if no considerations | ||||||
2 | have been received under
a contract for a period of 2 full | ||||||
3 | years and the portion of the paid-up
annuity benefit at | ||||||
4 | maturity on the plan stipulated in the contract arising
from | ||||||
5 | considerations paid prior to such period would be less than | ||||||
6 | $20.00
monthly, the company may at its option terminate such | ||||||
7 | contract by payment
in cash of the present value of such | ||||||
8 | portion of the paid-up annuity
benefit, calculated on the basis | ||||||
9 | of the mortality table, if any, and interest
rate specified in | ||||||
10 | the contract for determining the paid-up annuity benefit,
and | ||||||
11 | by such payment shall be relieved of any further obligation | ||||||
12 | under such
contract.
| ||||||
13 | (2) The minimum values as specified in subsections (3), | ||||||
14 | (4), (5), (6)
and (8) of any paid-up annuity, cash surrender or | ||||||
15 | death benefits available
under an annuity contract shall be | ||||||
16 | based upon minimum nonforfeiture amounts
as defined in this | ||||||
17 | subsection.
| ||||||
18 | (a) With respect to contracts providing for flexible | ||||||
19 | considerations,
the minimum nonforfeiture amount at any | ||||||
20 | time at or prior to the commencement
of any annuity | ||||||
21 | payments shall be equal to an accumulation up to such time
| ||||||
22 | at a rate of interest of 3% per annum of percentages of the | ||||||
23 | net considerations,
as hereinafter defined, paid prior to | ||||||
24 | such time, decreased by the sum of
(i) any prior | ||||||
25 | withdrawals from or partial surrenders of the contract
| ||||||
26 | accumulated
at a rate of interest of 3% per annum and (ii) | ||||||
27 | the amount of any indebtedness
to the company on the | ||||||
28 | contract, including interest due and accrued, and
| ||||||
29 | increased by any existing additional amounts credited by | ||||||
30 | the company to the
contract.
| ||||||
31 | The net considerations for a given contract year used | ||||||
32 | to define the minimum
nonforfeiture amount shall be an | ||||||
33 | amount not less than zero and shall be
equal to the | ||||||
34 | corresponding gross considerations credited to the | ||||||
35 | contract
during that contract year less an annual contract | ||||||
36 | charge of $30.00 and less
a collection charge of $1.25 per |
| |||||||
| |||||||
1 | consideration credited to the contract
during that | ||||||
2 | contract year. The percentages of net considerations shall
| ||||||
3 | be 65% of the net consideration for the first contract year | ||||||
4 | and 87 1/2%
of the net considerations for the second and | ||||||
5 | later contract years.
Notwithstanding
the provisions of | ||||||
6 | the preceding sentence, the percentage shall be 65% of
the | ||||||
7 | portion of the total net consideration for any renewal | ||||||
8 | contract year
which exceeds by not more than two times the | ||||||
9 | sum of those portions of the
net considerations in all | ||||||
10 | prior contract years for which the percentage was
65%.
| ||||||
11 | (a-5) Notwithstanding the provisions of paragraph (a) | ||||||
12 | of this
subsection,
the minimum nonforfeiture amount for | ||||||
13 | any contract issued on or after July 1,
2002 and before | ||||||
14 | July 1, 2005 shall be based on a rate of interest of 1.5% | ||||||
15 | per
annum.
| ||||||
16 | (b) With respect to contracts providing for fixed | ||||||
17 | scheduled
considerations,
minimum nonforfeiture amounts | ||||||
18 | shall be calculated on the assumption that
considerations | ||||||
19 | are paid annually in advance and shall be defined as for
| ||||||
20 | contracts with flexible considerations which are paid | ||||||
21 | annually, with two
exceptions:
| ||||||
22 | (i) The portion of the net consideration for the | ||||||
23 | first contract year
to be accumulated shall be the sum | ||||||
24 | of 65% of the net consideration for the
first contract | ||||||
25 | year plus 22 1/2% of the excess of the net | ||||||
26 | consideration
for the first contract year over the | ||||||
27 | lesser of the net considerations for
the second and | ||||||
28 | third contract years.
| ||||||
29 | (ii) The annual contract charge shall be the lesser | ||||||
30 | of (A) $30.00 or
(B) 10% of the gross annual | ||||||
31 | consideration.
| ||||||
32 | (c) With respect to contracts providing for a single | ||||||
33 | consideration,
minimum nonforfeiture amounts shall be | ||||||
34 | defined as for contracts with flexible
considerations | ||||||
35 | except that the percentage of net consideration used to
| ||||||
36 | determine the minimum nonforfeiture amount shall be equal |
| |||||||
| |||||||
1 | to 90% and the net
consideration shall be the gross | ||||||
2 | consideration less a contract charge of
$75.00.
| ||||||
3 | (3) Any paid-up annuity benefit available under a contract | ||||||
4 | shall be
such that its present value on the date annuity | ||||||
5 | payments are to commence
is at least equal to the minimum | ||||||
6 | nonforfeiture amount on that date. Such
present value shall be | ||||||
7 | computed using the mortality table, if any, and the
interest | ||||||
8 | rate specified in the contract for determining the minimum | ||||||
9 | paid-up
annuity benefits guaranteed in the contract.
| ||||||
10 | (4) For contracts which provide cash surrender benefits, | ||||||
11 | such cash surrender
benefits available prior to maturity shall | ||||||
12 | not be less than the present value
as of the date of surrender | ||||||
13 | of that portion of the maturity value of the
paid-up annuity | ||||||
14 | benefit which would be provided under the contract at maturity
| ||||||
15 | arising from considerations paid prior to the time of cash | ||||||
16 | surrender reduced
by the amount appropriate to reflect any | ||||||
17 | prior withdrawals from or partial
surrenders of the contract, | ||||||
18 | such present value being calculated
on the basis of an interest | ||||||
19 | rate not more than 1% higher than the interest
rate specified | ||||||
20 | in the contract for accumulating the net considerations to
| ||||||
21 | determine such maturity value, decreased by the amount of any | ||||||
22 | indebtedness
to the company on the contract, including interest | ||||||
23 | due and accrued, and
increased by any existing additional | ||||||
24 | amounts credited by the company to
the contract. In no event | ||||||
25 | shall any cash surrender benefit be less than
the minimum | ||||||
26 | nonforfeiture amount at that time. The death benefit under
such | ||||||
27 | contracts shall be at least equal to the cash surrender | ||||||
28 | benefit.
| ||||||
29 | (5) For contracts which do not provide cash surrender | ||||||
30 | benefits, the
present value of any paid-up annuity benefit | ||||||
31 | available as a nonforfeiture
option at any time prior to | ||||||
32 | maturity shall not be less than the present
value of that | ||||||
33 | portion of the maturity value of the paid-up benefit provided
| ||||||
34 | under the contract arising from considerations paid prior to | ||||||
35 | the time of
the contract is surrendered in exchange for, or | ||||||
36 | changed to, a deferred paid-up
annuity, such present value |
| |||||||
| |||||||
1 | being calculated for the period prior to the
maturity date on | ||||||
2 | the basis of the interest rate specified in the contract
for | ||||||
3 | accumulating the net considerations to determine such maturity | ||||||
4 | value,
and increased by any existing additional amounts | ||||||
5 | credited by the company
to the contract. For contracts which do | ||||||
6 | not provide any death benefits
prior to the commencement of any | ||||||
7 | annuity payments, such present values shall
be calculated on | ||||||
8 | the basis of such interest rate and the mortality table
| ||||||
9 | specified in the contract for determining the maturity value of | ||||||
10 | the paid-up
annuity benefit. However, in no event shall the | ||||||
11 | present value of a paid-up
annuity benefit be less than the | ||||||
12 | minimum nonforfeiture amount at that time.
| ||||||
13 | (6) For the purpose of determining the benefits calculated | ||||||
14 | under subsections
(4) and (5), in the case of annuity contracts | ||||||
15 | under which an election may
be made to have annuity payments | ||||||
16 | commence at optional maturity dates, the
maturity date shall be | ||||||
17 | deemed to be the latest date for which election shall
be | ||||||
18 | permitted by the contract, but shall not be deemed to be later | ||||||
19 | than the
anniversary of the contract next following the | ||||||
20 | annuitant's seventieth birthday
or the tenth anniversary of the | ||||||
21 | contract, whichever is later.
| ||||||
22 | (7) Any contract which does not provide cash surrender | ||||||
23 | benefits or does
not provide death benefits at least equal to | ||||||
24 | the minimum nonforfeiture amount
prior to the commencement of | ||||||
25 | any annuity payments shall include a statement
in a prominent | ||||||
26 | place in the contract that such benefits are not provided.
| ||||||
27 | (8) Any paid-up annuity, cash surrender or death benefits | ||||||
28 | available
at any time, other than on the contract anniversary | ||||||
29 | under any contract with
fixed scheduled considerations, shall | ||||||
30 | be calculated with allowance for the
lapse of time and the | ||||||
31 | payment of any scheduled considerations beyond the
beginning of | ||||||
32 | the contract year in which cessation of payment of | ||||||
33 | considerations
under the contract occurs.
| ||||||
34 | (9) For any contract which provides, within the same | ||||||
35 | contract by rider
or supplemental contract provision, both | ||||||
36 | annuity benefits and life insurance
benefits that are in excess |
| |||||||
| |||||||
1 | of the greater of cash surrender benefits or
a return of the | ||||||
2 | gross considerations with interest, the minimum nonforfeiture
| ||||||
3 | benefits shall be equal to the sum of the minimum nonforfeiture | ||||||
4 | benefits
for the annuity portion and the minimum nonforfeiture | ||||||
5 | benefits, if any,
for the life insurance portion computed as if | ||||||
6 | each portion were a separate
contract. Notwithstanding the | ||||||
7 | provisions of subsections (3), (4), (5),
(6) and (8), | ||||||
8 | additional benefits payable (a) in the event of total and
| ||||||
9 | permanent disability, (b) as reversionary annuity or deferred | ||||||
10 | reversionary
annuity
benefits, or (c) as other policy benefits | ||||||
11 | additional to life insurance,
endowment, and annuity benefits, | ||||||
12 | and considerations for all such additional
benefits, shall be | ||||||
13 | disregarded in ascertaining the minimum nonforfeiture
amounts, | ||||||
14 | paid-up annuity, cash surrender and death benefits that may be
| ||||||
15 | required by this section. The inclusion of such additional | ||||||
16 | benefits shall
not be required in any paid-up benefits, unless | ||||||
17 | such additional benefits
separately would require minimum | ||||||
18 | nonforfeiture amounts, paid-up annuity,
cash surrender and | ||||||
19 | death benefits.
| ||||||
20 | (10) After the effective date of this Section, any company | ||||||
21 | may file
with the Director a written notice of its election to | ||||||
22 | comply with the
provisions of this Section after a specified | ||||||
23 | date before the second anniversary
of the effective date of | ||||||
24 | this Section. After the filing of such notice, then
upon such | ||||||
25 | specified date, which shall be the operative date of this | ||||||
26 | section
for such company, this Section shall become operative | ||||||
27 | with respect to annuity
contracts thereafter issued by such | ||||||
28 | company. If a company makes no such
election, the operative | ||||||
29 | date of this section for such company shall be the
second | ||||||
30 | anniversary of the effective date of this Section.
| ||||||
31 | (11) This Section shall not apply to any reinsurance, group | ||||||
32 | annuity
purchased under a retirement plan or plan of deferred | ||||||
33 | compensation established
or maintained by an employer | ||||||
34 | (including a partnership or sole proprietorship)
or by an | ||||||
35 | employee organization, or by both, other than a plan providing
| ||||||
36 | individual retirement accounts or individual retirement |
| |||||||
| |||||||
1 | annuities under
Section 408 of the Internal Revenue Code, as | ||||||
2 | now or hereafter amended, premium
deposit fund, variable | ||||||
3 | annuity, investment annuity, immediate annuity, any
deferred | ||||||
4 | annuity contract after annuity payments have commenced, or
| ||||||
5 | reversionary
annuity, nor to any contract which shall be | ||||||
6 | delivered outside this State
through an agent or other | ||||||
7 | representative of the company issuing the contract.
| ||||||
8 | (Source: P.A. 92-541, eff. 7-1-02.)
| ||||||
9 | Section 99. Effective date. This Act takes effect July 1, | ||||||
10 | 2006.
|