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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 and adding Section 229.4a as follows:
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6 | (215 ILCS 5/229.4) (from Ch. 73, par. 841.4)
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7 | Sec. 229.4. Standard Non-forfeiture Law for Individual | ||||||
8 | Deferred
Annuities.
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9 | (1) No contract of annuity issued on or after the operative | ||||||
10 | date of this
Section except as stated in subsection (11) shall | ||||||
11 | be delivered or
issued
for delivery in this State unless it | ||||||
12 | contains in substance the following
provisions or | ||||||
13 | corresponding provisions which in the opinion of the Director
| ||||||
14 | are at least as favorable to the contract holder upon cessation | ||||||
15 | of payment
of considerations under the contract:
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16 | (a) That upon cessation of payment of considerations | ||||||
17 | under a contract,
the company will grant a paid-up annuity | ||||||
18 | benefit on a plan stipulated in
the contract of such value | ||||||
19 | as is specified in subsections (3), (4), (5), (6)
and (8).
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20 | (b) If a contract provides for a lump sum settlement at | ||||||
21 | maturity, or at
any other time, that upon surrender of the | ||||||
22 | contract at or prior to the
commencement of any annuity | ||||||
23 | payments, the company will pay in lieu of any
paid-up | ||||||
24 | annuity benefit a cash surrender benefit of such amount as | ||||||
25 | is specified
in subsections (3), (4), (6) and (8). The | ||||||
26 | company shall reserve the right
to defer the payment of | ||||||
27 | such cash surrender benefit for a period of 6 months
after | ||||||
28 | demand therefor with surrender of the contract.
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29 | (c) A statement of the mortality table, if any, and | ||||||
30 | interest rates used
in calculating any minimum paid-up | ||||||
31 | annuity, cash surrender or death benefits
that are | ||||||
32 | guaranteed under the contract, together with sufficient |
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1 | information
to determine the amount of such benefits.
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2 | (d) A statement that any paid-up annuity, cash | ||||||
3 | surrender or death benefits
that may be available under the | ||||||
4 | contract are not less than the minimum benefits
required by | ||||||
5 | any statute of the state in which the contract is delivered
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6 | and an explanation of the manner in which such benefits are | ||||||
7 | altered by the
existence of any additional amounts credited | ||||||
8 | by the company to the contract,
any indebtedness to the | ||||||
9 | company on the contract or any prior withdrawals
from or | ||||||
10 | partial surrenders of the contract.
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11 | Notwithstanding the requirements of this subsection, any | ||||||
12 | deferred annuity
contract may provide that if no considerations | ||||||
13 | have been received under
a contract for a period of 2 full | ||||||
14 | years and the portion of the paid-up
annuity benefit at | ||||||
15 | maturity on the plan stipulated in the contract arising
from | ||||||
16 | considerations paid prior to such period would be less than | ||||||
17 | $20.00
monthly, the company may at its option terminate such | ||||||
18 | contract by payment
in cash of the present value of such | ||||||
19 | portion of the paid-up annuity
benefit, calculated on the basis | ||||||
20 | of the mortality table, if any, and interest
rate specified in | ||||||
21 | the contract for determining the paid-up annuity benefit,
and | ||||||
22 | by such payment shall be relieved of any further obligation | ||||||
23 | under such
contract.
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24 | (2) The minimum values as specified in subsections (3), | ||||||
25 | (4), (5), (6)
and (8) of any paid-up annuity, cash surrender or | ||||||
26 | death benefits available
under an annuity contract shall be | ||||||
27 | based upon minimum nonforfeiture amounts
as defined in this | ||||||
28 | subsection.
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29 | (a) With respect to contracts providing for flexible | ||||||
30 | considerations,
the minimum nonforfeiture amount at any | ||||||
31 | time at or prior to the commencement
of any annuity | ||||||
32 | payments shall be equal to an accumulation up to such time
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33 | at a rate of interest of 3% per annum of percentages of the | ||||||
34 | net considerations,
as hereinafter defined, paid prior to | ||||||
35 | such time, decreased by the sum of
(i) any prior | ||||||
36 | withdrawals from or partial surrenders of the contract
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1 | accumulated
at a rate of interest of 3% per annum and (ii) | ||||||
2 | the amount of any indebtedness
to the company on the | ||||||
3 | contract, including interest due and accrued, and
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4 | increased by any existing additional amounts credited by | ||||||
5 | the company to the
contract.
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6 | The net considerations for a given contract year used | ||||||
7 | to define the minimum
nonforfeiture amount shall be an | ||||||
8 | amount not less than zero and shall be
equal to the | ||||||
9 | corresponding gross considerations credited to the | ||||||
10 | contract
during that contract year less an annual contract | ||||||
11 | charge of $30.00 and less
a collection charge of $1.25 per | ||||||
12 | consideration credited to the contract
during that | ||||||
13 | contract year. The percentages of net considerations shall
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14 | be 65% of the net consideration for the first contract year | ||||||
15 | and 87 1/2%
of the net considerations for the second and | ||||||
16 | later contract years.
Notwithstanding
the provisions of | ||||||
17 | the preceding sentence, the percentage shall be 65% of
the | ||||||
18 | portion of the total net consideration for any renewal | ||||||
19 | contract year
which exceeds by not more than two times the | ||||||
20 | sum of those portions of the
net considerations in all | ||||||
21 | prior contract years for which the percentage was
65%.
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22 | (a-5) Notwithstanding the provisions of paragraph (a) | ||||||
23 | of this
subsection,
the minimum nonforfeiture amount for | ||||||
24 | any contract issued on or after July 1,
2002 and before | ||||||
25 | July 1, 2005 shall be based on a rate of interest of 1.5% | ||||||
26 | per
annum.
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27 | (b) With respect to contracts providing for fixed | ||||||
28 | scheduled
considerations,
minimum nonforfeiture amounts | ||||||
29 | shall be calculated on the assumption that
considerations | ||||||
30 | are paid annually in advance and shall be defined as for
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31 | contracts with flexible considerations which are paid | ||||||
32 | annually, with two
exceptions:
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33 | (i) The portion of the net consideration for the | ||||||
34 | first contract year
to be accumulated shall be the sum | ||||||
35 | of 65% of the net consideration for the
first contract | ||||||
36 | year plus 22 1/2% of the excess of the net |
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1 | consideration
for the first contract year over the | ||||||
2 | lesser of the net considerations for
the second and | ||||||
3 | third contract years.
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4 | (ii) The annual contract charge shall be the lesser | ||||||
5 | of (A) $30.00 or
(B) 10% of the gross annual | ||||||
6 | consideration.
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7 | (c) With respect to contracts providing for a single | ||||||
8 | consideration,
minimum nonforfeiture amounts shall be | ||||||
9 | defined as for contracts with flexible
considerations | ||||||
10 | except that the percentage of net consideration used to
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11 | determine the minimum nonforfeiture amount shall be equal | ||||||
12 | to 90% and the net
consideration shall be the gross | ||||||
13 | consideration less a contract charge of
$75.00.
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14 | (3) Any paid-up annuity benefit available under a contract | ||||||
15 | shall be
such that its present value on the date annuity | ||||||
16 | payments are to commence
is at least equal to the minimum | ||||||
17 | nonforfeiture amount on that date. Such
present value shall be | ||||||
18 | computed using the mortality table, if any, and the
interest | ||||||
19 | rate specified in the contract for determining the minimum | ||||||
20 | paid-up
annuity benefits guaranteed in the contract.
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21 | (4) For contracts which provide cash surrender benefits, | ||||||
22 | such cash surrender
benefits available prior to maturity shall | ||||||
23 | not be less than the present value
as of the date of surrender | ||||||
24 | of that portion of the maturity value of the
paid-up annuity | ||||||
25 | benefit which would be provided under the contract at maturity
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26 | arising from considerations paid prior to the time of cash | ||||||
27 | surrender reduced
by the amount appropriate to reflect any | ||||||
28 | prior withdrawals from or partial
surrenders of the contract, | ||||||
29 | such present value being calculated
on the basis of an interest | ||||||
30 | rate not more than 1% higher than the interest
rate specified | ||||||
31 | in the contract for accumulating the net considerations to
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32 | determine such maturity value, decreased by the amount of any | ||||||
33 | indebtedness
to the company on the contract, including interest | ||||||
34 | due and accrued, and
increased by any existing additional | ||||||
35 | amounts credited by the company to
the contract. In no event | ||||||
36 | shall any cash surrender benefit be less than
the minimum |
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1 | nonforfeiture amount at that time. The death benefit under
such | ||||||
2 | contracts shall be at least equal to the cash surrender | ||||||
3 | benefit.
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4 | (5) For contracts which do not provide cash surrender | ||||||
5 | benefits, the
present value of any paid-up annuity benefit | ||||||
6 | available as a nonforfeiture
option at any time prior to | ||||||
7 | maturity shall not be less than the present
value of that | ||||||
8 | portion of the maturity value of the paid-up benefit provided
| ||||||
9 | under the contract arising from considerations paid prior to | ||||||
10 | the time of
the contract is surrendered in exchange for, or | ||||||
11 | changed to, a deferred paid-up
annuity, such present value | ||||||
12 | being calculated for the period prior to the
maturity date on | ||||||
13 | the basis of the interest rate specified in the contract
for | ||||||
14 | accumulating the net considerations to determine such maturity | ||||||
15 | value,
and increased by any existing additional amounts | ||||||
16 | credited by the company
to the contract. For contracts which do | ||||||
17 | not provide any death benefits
prior to the commencement of any | ||||||
18 | annuity payments, such present values shall
be calculated on | ||||||
19 | the basis of such interest rate and the mortality table
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20 | specified in the contract for determining the maturity value of | ||||||
21 | the paid-up
annuity benefit. However, in no event shall the | ||||||
22 | present value of a paid-up
annuity benefit be less than the | ||||||
23 | minimum nonforfeiture amount at that time.
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24 | (6) For the purpose of determining the benefits calculated | ||||||
25 | under subsections
(4) and (5), in the case of annuity contracts | ||||||
26 | under which an election may
be made to have annuity payments | ||||||
27 | commence at optional maturity dates, the
maturity date shall be | ||||||
28 | deemed to be the latest date for which election shall
be | ||||||
29 | permitted by the contract, but shall not be deemed to be later | ||||||
30 | than the
anniversary of the contract next following the | ||||||
31 | annuitant's seventieth birthday
or the tenth anniversary of the | ||||||
32 | contract, whichever is later.
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33 | (7) Any contract which does not provide cash surrender | ||||||
34 | benefits or does
not provide death benefits at least equal to | ||||||
35 | the minimum nonforfeiture amount
prior to the commencement of | ||||||
36 | any annuity payments shall include a statement
in a prominent |
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1 | place in the contract that such benefits are not provided.
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2 | (8) Any paid-up annuity, cash surrender or death benefits | ||||||
3 | available
at any time, other than on the contract anniversary | ||||||
4 | under any contract with
fixed scheduled considerations, shall | ||||||
5 | be calculated with allowance for the
lapse of time and the | ||||||
6 | payment of any scheduled considerations beyond the
beginning of | ||||||
7 | the contract year in which cessation of payment of | ||||||
8 | considerations
under the contract occurs.
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9 | (9) For any contract which provides, within the same | ||||||
10 | contract by rider
or supplemental contract provision, both | ||||||
11 | annuity benefits and life insurance
benefits that are in excess | ||||||
12 | of the greater of cash surrender benefits or
a return of the | ||||||
13 | gross considerations with interest, the minimum nonforfeiture
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14 | benefits shall be equal to the sum of the minimum nonforfeiture | ||||||
15 | benefits
for the annuity portion and the minimum nonforfeiture | ||||||
16 | benefits, if any,
for the life insurance portion computed as if | ||||||
17 | each portion were a separate
contract. Notwithstanding the | ||||||
18 | provisions of subsections (3), (4), (5),
(6) and (8), | ||||||
19 | additional benefits payable (a) in the event of total and
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20 | permanent disability, (b) as reversionary annuity or deferred | ||||||
21 | reversionary
annuity
benefits, or (c) as other policy benefits | ||||||
22 | additional to life insurance,
endowment, and annuity benefits, | ||||||
23 | and considerations for all such additional
benefits, shall be | ||||||
24 | disregarded in ascertaining the minimum nonforfeiture
amounts, | ||||||
25 | paid-up annuity, cash surrender and death benefits that may be
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26 | required by this section. The inclusion of such additional | ||||||
27 | benefits shall
not be required in any paid-up benefits, unless | ||||||
28 | such additional benefits
separately would require minimum | ||||||
29 | nonforfeiture amounts, paid-up annuity,
cash surrender and | ||||||
30 | death benefits.
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31 | (10) After the effective date of this Section, any company | ||||||
32 | may file
with the Director a written notice of its election to | ||||||
33 | comply with the
provisions of this Section after a specified | ||||||
34 | date before the second anniversary
of the effective date of | ||||||
35 | this Section. After the filing of such notice, then
upon such | ||||||
36 | specified date, which shall be the operative date of this |
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1 | section
for such company, this Section shall become operative | ||||||
2 | with respect to annuity
contracts thereafter issued by such | ||||||
3 | company. If a company makes no such
election, the operative | ||||||
4 | date of this section for such company shall be the
second | ||||||
5 | anniversary of the effective date of this Section.
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6 | (11) This Section shall not apply to any reinsurance, group | ||||||
7 | annuity
purchased under a retirement plan or plan of deferred | ||||||
8 | compensation established
or maintained by an employer | ||||||
9 | (including a partnership or sole proprietorship)
or by an | ||||||
10 | employee organization, or by both, other than a plan providing
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11 | individual retirement accounts or individual retirement | ||||||
12 | annuities under
Section 408 of the Internal Revenue Code, as | ||||||
13 | now or hereafter amended, premium
deposit fund, variable | ||||||
14 | annuity, investment annuity, immediate annuity, any
deferred | ||||||
15 | annuity contract after annuity payments have commenced, or
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16 | reversionary
annuity, nor to any contract which shall be | ||||||
17 | delivered outside this State
through an agent or other | ||||||
18 | representative of the company issuing the contract.
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19 | (12) This Section is repealed on July 1, 2006.
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20 | (Source: P.A. 92-541, eff. 7-1-02.)
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21 | (215 ILCS 5/229.4a new)
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22 | Sec. 229.4a. Standard Non-forfeiture Law for Individual | ||||||
23 | Deferred
Annuities. | ||||||
24 | (1)
Title.
This Section shall be known as the Standard | ||||||
25 | Nonforfeiture Law for Individual Deferred Annuities. | ||||||
26 | (2) Applicability.
This Section shall not apply to any | ||||||
27 | reinsurance, group annuity purchased under a retirement plan or | ||||||
28 | plan of deferred compensation established or maintained by an | ||||||
29 | employer (including a partnership or sole proprietorship) or by | ||||||
30 | an employee organization, or by both, other than a plan | ||||||
31 | providing individual retirement accounts or individual | ||||||
32 | retirement annuities under Section 408 of the Internal Revenue | ||||||
33 | Code, as now or hereafter amended, premium deposit fund, | ||||||
34 | variable annuity, investment annuity, immediate annuity, any | ||||||
35 | deferred annuity contract after annuity payments have |
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1 | commenced, or reversionary annuity, nor to any contract which | ||||||
2 | shall be delivered outside this State through an agent or other | ||||||
3 | representative of the company issuing the contract. | ||||||
4 | (3) Nonforfeiture Requirements. | ||||||
5 | (A) In the case of contracts issued on or after the | ||||||
6 | operative date of this Section
as defined in subsection | ||||||
7 | (13), no contract of annuity, except as stated in | ||||||
8 | subsection (2), shall be delivered or issued for delivery | ||||||
9 | in this State unless it contains in substance the following | ||||||
10 | provisions, or corresponding provisions which in the | ||||||
11 | opinion of the Director of Insurance are at least as | ||||||
12 | favorable to the contract holder, upon cessation of payment | ||||||
13 | of considerations under the contract: | ||||||
14 | (i) That upon cessation of payment of | ||||||
15 | considerations under a contract, or upon the written | ||||||
16 | request of the contract owner, the company shall grant | ||||||
17 | a paid-up annuity benefit on a plan stipulated in the | ||||||
18 | contract of such value as is specified in subsections | ||||||
19 | (5), (6), (7), (8) and (10); | ||||||
20 | (ii)
If a contract provides for a lump sum | ||||||
21 | settlement at maturity, or at any other time, that upon | ||||||
22 | surrender of the contract at or prior to the | ||||||
23 | commencement of any annuity payments, the company | ||||||
24 | shall pay in lieu of a paid-up annuity benefit a cash | ||||||
25 | surrender benefit of such amount as is
specified in | ||||||
26 | subsections (5), (6), (8) and (10). The company may | ||||||
27 | reserve the right to
defer the payment of the cash | ||||||
28 | surrender benefit for a period not to exceed 6 months | ||||||
29 | after demand therefor with surrender of the contract | ||||||
30 | after making written request and receiving written | ||||||
31 | approval of the Director. The request shall address the | ||||||
32 | necessity and equitability to all policyholders of the | ||||||
33 | deferral; | ||||||
34 | (iii) A statement of the mortality table, if any, | ||||||
35 | and interest rates used calculating any minimum | ||||||
36 | paid-up annuity, cash surrender, or death benefits |
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1 | that are guaranteed under the contract, together with | ||||||
2 | sufficient information to determine the amounts of the | ||||||
3 | benefits; and | ||||||
4 | (iv)
A statement that any paid-up annuity, cash | ||||||
5 | surrender or death benefits that may be available under | ||||||
6 | the contract are not less than the minimum benefits | ||||||
7 | required by any statute of the state in which the | ||||||
8 | contract is delivered and an explanation of the manner | ||||||
9 | in which the benefits are altered by the existence of | ||||||
10 | any additional amounts credited by the company to the | ||||||
11 | contract, any indebtedness to the company on the | ||||||
12 | contract or any prior withdrawals from or partial | ||||||
13 | surrenders of the contract. | ||||||
14 | (B) Notwithstanding the requirements of this Section, | ||||||
15 | a deferred annuity contract may provide that if no | ||||||
16 | considerations have been received under a contract for a | ||||||
17 | period of 2 full years and the portion of the paid-up | ||||||
18 | annuity benefit at maturity on the plan stipulated in the | ||||||
19 | contract arising from prior considerations paid would be | ||||||
20 | less than $20 monthly, the company may at its option | ||||||
21 | terminate the contract by payment in cash of the then | ||||||
22 | present value of the portion of the paid-up annuity | ||||||
23 | benefit, calculated on the basis on the mortality table, if | ||||||
24 | any, and interest rate specified in the contract for | ||||||
25 | determining the paid-up annuity benefit, and by this | ||||||
26 | payment shall be relieved of any further obligation under | ||||||
27 | the contract. | ||||||
28 | (4) Minimum values. The minimum values as specified in | ||||||
29 | subsections (5), (6), (7), (8) and (10) of any paid-up annuity, | ||||||
30 | cash surrender or death benefits available under an annuity | ||||||
31 | contract shall be based upon minimum nonforfeiture amounts as | ||||||
32 | defined in this subsection.
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33 | (A)(i) The minimum nonforfeiture amount at any time at | ||||||
34 | or prior to the commencement of any annuity payments shall | ||||||
35 | be equal to an accumulation up to such time at rates of | ||||||
36 | interest as indicated in subdivision (4)(B) of the net |
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| |||||||
1 | considerations (as hereinafter defined) paid prior to such | ||||||
2 | time, decreased by the sum of paragraphs (a) through (d) | ||||||
3 | below: | ||||||
4 | (a) Any prior withdrawals from or partial | ||||||
5 | surrenders of the contract accumulated at rates of | ||||||
6 | interest as indicated in subdivision (4)(B);
| ||||||
7 | (b) An annual contract charge of $50, | ||||||
8 | accumulated at rates of interest as indicated in | ||||||
9 | subdivision (4)(B);
| ||||||
10 | (c) Any premium tax paid by the company for the | ||||||
11 | contract, accumulated at rates of interest as | ||||||
12 | indicated in subdivision (4)(B); and
| ||||||
13 | (d) The amount of any indebtedness to the | ||||||
14 | company on the contract, including
interest due and | ||||||
15 | accrued. | ||||||
16 | (ii) The net considerations for a given contract year | ||||||
17 | used to define the minimum nonforfeiture amount shall be an | ||||||
18 | amount
equal to 87.5% of the gross considerations,
credited | ||||||
19 | to the contract during that contract year. | ||||||
20 | (B) The interest rate used in determining minimum | ||||||
21 | nonforfeiture amounts shall be an
annual rate of interest | ||||||
22 | determined as the lesser of 3% per annum
and the following, | ||||||
23 | which shall be specified in the contract if the interest | ||||||
24 | rate will be reset: | ||||||
25 | (i) The five-year Constant Maturity Treasury Rate | ||||||
26 | reported by the Federal Reserve as of a date, or | ||||||
27 | average over a period, rounded to the nearest 1/20th of | ||||||
28 | one percent, specified in the contract no longer than | ||||||
29 | 15 months prior to the contract issue date or | ||||||
30 | redetermination date under subdivision (4)(B)(iv); | ||||||
31 | (ii) Reduced by 125 basis points; | ||||||
32 | (iii) Where the resulting interest rate is not less | ||||||
33 | than l%; and | ||||||
34 | (iv) The interest rate shall apply for an initial | ||||||
35 | period and may be redetermined for additional periods. | ||||||
36 | The redetermination date, basis and period, if any, |
| |||||||
| |||||||
1 | shall be stated in the contract. The basis is the date | ||||||
2 | or average over a specified period that produces the | ||||||
3 | value of the 5-year Constant Maturity Treasury Rate to | ||||||
4 | be used at each redetermination date. | ||||||
5 | (C) During the period or term that a contract provides | ||||||
6 | substantive participation in an equity indexed benefit, it | ||||||
7 | may increase the reduction described in subdivision | ||||||
8 | (4)(B)(ii)
above by up to an additional 100 basis points to | ||||||
9 | reflect the value of the equity
index benefit. The present | ||||||
10 | value at the contract issue date, and at each
| ||||||
11 | redetermination date thereafter, of the additional | ||||||
12 | reduction shall not exceed market value of the benefit. The | ||||||
13 | Director may require a demonstration that the present value | ||||||
14 | of the additional reduction does not exceed the market | ||||||
15 | value of the benefit. Lacking such a demonstration that is | ||||||
16 | acceptable to the Director, the Director may disallow or | ||||||
17 | limit the additional reduction. | ||||||
18 | (D) The Director may adopt rules to implement the | ||||||
19 | provisions of subdivision (4)(C) and to provide for further | ||||||
20 | adjustments to the calculation of minimum nonforfeiture | ||||||
21 | amounts for contracts that provide substantive | ||||||
22 | participation in an equity index benefit and for other | ||||||
23 | contracts that the Director determines adjustments are | ||||||
24 | justified. | ||||||
25 | (5) Computation of Present Value.
Any paid-up annuity | ||||||
26 | benefit available under a contract shall be such that its | ||||||
27 | present value on the date annuity payments are to commence is | ||||||
28 | at least equal to the minimum nonforfeiture amount on that | ||||||
29 | date. Present value shall be computed using the mortality | ||||||
30 | table, if any, and the interest rates specified in the contract | ||||||
31 | for determining the minimum paid-up annuity benefits | ||||||
32 | guaranteed in the contract. | ||||||
33 | (6) Calculation of Cash Surrender Value.
For contracts that | ||||||
34 | provide cash surrender benefits, the cash surrender benefits | ||||||
35 | available prior to maturity shall not be less than the present | ||||||
36 | value as of the date of surrender of that portion of the |
| |||||||
| |||||||
1 | maturity value of the paid-up annuity benefit that would be | ||||||
2 | provided under the contract at maturity arising from | ||||||
3 | considerations paid prior to the time of cash surrender reduced | ||||||
4 | by the amount appropriate to reflect any prior withdrawals from | ||||||
5 | or partial surrenders of the contract, such present value being | ||||||
6 | calculated on the basis of an interest rate not more than 1% | ||||||
7 | higher than the interest rate specified in the contract for | ||||||
8 | accumulating the net considerations to determine maturity | ||||||
9 | value, decreased by the amount of any indebtedness to the | ||||||
10 | company on the contract, including interest due and accrued, | ||||||
11 | and increased by any existing additional amounts credited by | ||||||
12 | the company to the contract. In no event shall any cash | ||||||
13 | surrender benefit be less than the minimum nonforfeiture amount | ||||||
14 | at that time. The death benefit under such contracts shall be | ||||||
15 | at least equal to the cash surrender benefit. | ||||||
16 | (7) Calculation of Paid-up Annuity Benefits.
For contracts | ||||||
17 | that do not provide cash surrender benefits, the present value | ||||||
18 | of any paid-up annuity benefit available as a nonforfeiture | ||||||
19 | option at any time prior to maturity shall not be less than the | ||||||
20 | present value of that portion of the maturity value of the | ||||||
21 | paid-up annuity benefit provided under the contract arising | ||||||
22 | from considerations paid prior to the time the contract is
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23 | surrendered in exchange for, or changed to, a deferred paid-up | ||||||
24 | annuity, such present value being calculated for the period | ||||||
25 | prior to the maturity date on the basis of the interest rate | ||||||
26 | specified in the contract for accumulating the net | ||||||
27 | considerations to determine maturity value, and increased by | ||||||
28 | any additional amounts credited by the company to the contract. | ||||||
29 | For contracts that do not provide any death benefits prior to | ||||||
30 | the commencement of any annuity payments, present values shall | ||||||
31 | be calculated on the basis of such interest rate and the | ||||||
32 | mortality table specified in the contract for determining the | ||||||
33 | maturity value of the paid-up annuity benefit. However, in no | ||||||
34 | event shall the present value of a paid-up annuity benefit be | ||||||
35 | less than the minimum nonforfeiture amount at that time. | ||||||
36 | (8) Maturity Date.
For the purpose of determining the |
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1 | benefits calculated under subsections (6) and (7), in the case | ||||||
2 | of annuity contracts under which an election may be made to | ||||||
3 | have annuity payments commence at optional maturity dates, the | ||||||
4 | maturity date shall be deemed to be the latest date for which | ||||||
5 | election shall be permitted by the contract, but shall not be | ||||||
6 | deemed to be later than the anniversary of the contract next | ||||||
7 | following the annuitant's seventieth birthday or the tenth | ||||||
8 | anniversary of the contract, whichever is later. | ||||||
9 | (9) Disclosure of Limited Death Benefits.
A contract that | ||||||
10 | does not provide cash surrender benefits or does not provide | ||||||
11 | death benefits at least equal to the minimum nonforfeiture | ||||||
12 | amount prior to the commencement of any annuity payments shall | ||||||
13 | include a statement in a prominent place in the contract that | ||||||
14 | such benefits are not
provided. | ||||||
15 | (10) Inclusion of Lapse of Time Considerations.
Any paid-up | ||||||
16 | annuity, cash surrender or death benefits available at any | ||||||
17 | time, other than on the contract anniversary under any contract | ||||||
18 | with fixed scheduled considerations, shall be calculated with | ||||||
19 | allowance for the lapse of time and the payment of any | ||||||
20 | scheduled considerations beyond the beginning of the contract | ||||||
21 | year in which cessation of payment of considerations under the | ||||||
22 | contract occurs. | ||||||
23 | (11) Proration of Values; Additional Benefits.
For a | ||||||
24 | contract which provides, within the same contract by rider or | ||||||
25 | supplemental contract provision, both annuity benefits and | ||||||
26 | life insurance benefits that are in excess of the greater of | ||||||
27 | cash surrender benefits or a return of the gross considerations | ||||||
28 | with interest, the minimum nonforfeiture benefits shall be | ||||||
29 | equal to the sum of the minimum nonforfeiture benefits for the | ||||||
30 | annuity portion and the minimum nonforfeiture benefits, if any, | ||||||
31 | for the life insurance portion computed as if each portion were | ||||||
32 | a separate contract. Notwithstanding the provisions of | ||||||
33 | subsections (5), (6), (7), (8) and (10), additional benefits | ||||||
34 | payable in the event of total and permanent disability, as | ||||||
35 | reversionary annuity or deferred reversionary annuity | ||||||
36 | benefits, or as other policy benefits additional to life |
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1 | insurance, endowment and annuity benefits, and considerations | ||||||
2 | for all such additional benefits, shall be disregarded in | ||||||
3 | ascertaining the minimum nonforfeiture amounts,
paid-up | ||||||
4 | annuity, cash surrender and death benefits that may be required | ||||||
5 | under this Section. The inclusion of such benefits shall not be | ||||||
6 | required in any paid-up benefits, unless the additional | ||||||
7 | benefits separately would require minimum nonforfeiture | ||||||
8 | amounts, paid-up annuity, cash surrender and death benefits. | ||||||
9 | (12) Rules. The Director may adopt rules to implement the | ||||||
10 | provisions of this Section. | ||||||
11 | (13) Effective Date. After the effective date of this | ||||||
12 | amendatory Act of the 93rd General Assembly, a company may | ||||||
13 | elect to apply its provisions to annuity
contracts on a | ||||||
14 | contract form-by-contract form basis before July 1, 2006. In | ||||||
15 | all other instances, this Section shall become operative with | ||||||
16 | respect to annuity contracts issued by the company on or after | ||||||
17 | July 1, 2006.
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18 | (14) This Section is repealed on July 1, 2007.
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19 | Section 99. Effective date. This Act takes effect on July | ||||||
20 | 1, 2004.
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