§ 10-7-504 — Minimum nonforfeiture amounts - rules

(1) The minimum values
specified in sections 10-7-505 to 10-7-508 and 10-7-509 (1) of any paid-up annuity,
cash surrender, or death benefits available under an annuity contract shall be
based upon the following minimum nonforfeiture amounts:

(a) (I) The minimum nonforfeiture amount at any time at or prior to the
commencement of any annuity payments shall be equal to an accumulation up to
such time at a rate of interest authorized by subsection (3) of this section of the net
considerations, as defined in subsection (2) of this section, paid prior to such time,
decreased by the following:

(A) The sum of any prior withdrawals from or partial surrenders of the
contract accumulated at a rate of interest authorized by subsection (3) of this
section;

(B) An annual contract charge of fifty dollars, accumulated at rates of
interest authorized by subsection (3) of this section;

(C) The amount of any indebtedness to the company on the contract,
including interest due and accrued.

(II) (Deleted by amendment, L. 2004, p. 818, � 2, effective July 1, 2004.)

(b) and (c) (Deleted by amendment, L. 2004, p. 818, � 2, effective July 1,
2004.)

(2) The net considerations for a given contract year used to define the
minimum nonforfeiture amount shall be equal to eighty-seven and one-half percent
of the gross considerations credited to the contract during such contract year.

(3) (a) The interest rate used to determine minimum nonforfeiture amounts
shall be the lesser of the following:

(I) Three percent per annum; or

(II) If specified in the contract that the interest rate will reset, the five-year
constant maturity treasury rate reported by the federal reserve as of a specified
date or averaged over a period reduced by one hundred twenty-five basis points so
long as:

(A) The rate is rounded to the nearest one-twentieth of one percent;

(B) The reset is specified in the contract to be no longer than fifteen months
before the contract issue or redetermination date under sub-subparagraph (E) of
this subparagraph (II);

(C) The resulting interest is not less than fifteen one-hundredths percent;

(D) The interest rate applies for an initial period and may be redetermined for
additional periods;

(E) Any redetermination date, basis, and period is stated in the contract; and

(F) The basis is the date or average over a specified period that produces the
value of the five-year constant maturity treasury rate used at each redetermination
date.

(b) During the period or term that a contract provides substantive
participation in an equity indexed benefit, the contract may increase the reduction
authorized in subparagraph (II) of paragraph (a) of this subsection (3) by an
additional rate not to exceed one hundred basis points to reflect the value of the
equity indexed benefit. The present value of the additional reduction at the contract
issue date and at each redetermination date shall not exceed the market value of
the benefit. The commissioner may disallow or limit the additional reduction.

(c) The commissioner may adopt rules to implement paragraph (b) of this
subsection (3) and to provide further adjustments to the minimum forfeiture
amounts for contracts that provide substantive participation in an equity indexed
benefit and for other contracts for which the commissioner determines adjustments
are justified.

Legislative History

Source: L. 77: Entire part added, p. 529, � 11, effective July 1. L. 2003: (1)(a) amended, p. 1345, � 1, effective August 6. L. 2004: Entire section amended, p. 818, � 2, effective July 1. L. 2021: (3)(a)(II)(C) amended, (SB 21-259), ch. 387, p. 2587, � 1, effective June 30.