§ 27-1-12.5-3 — Minimum nonforfeiture amounts

Indiana § 27-1-12.5-3

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 12.5: Nonforfeiture Provisions of Annuity Contracts

Text

(a) The minimum values as specified in
sections 4, 5, 6, 7, and 9 of this chapter of any paid-up annuity, cash
surrender or death benefits available under an annuity contract shall be
based upon minimum nonforfeiture amounts as defined in this section.
(b) With respect to any annuity contract, the minimum nonforfeiture
amounts at any time at or prior to the commencement of any annuity
payments shall be equal to an accumulation up to such time at an
annual rate of interest determined under subsections (d) and (e) of the
net considerations as set forth in subsection (c) paid prior to such time,
decreased by the sum of the following:
(1) Any prior withdrawals from or partial surrenders of the
annuity contract accumulated at an annual rate of interest
determined under subsections (d) and (e).
(2) The amount of any indebtedness to the company on the
annuity contract, including interest due and accrued.
(3) An annual contract charge of fifty dollars ($50), accumulated
at the annual rate of interest determined under subsections (d) and
(e).
(c) The net considerations for a given contract year used to define
the minimum nonforfeiture amount shall be an amount equal to
eighty-seven and one-half percent (87.5%) of the gross considerations
credited to the annuity contract during that contract year.
(d) Except as provided in subsection (e), the interest rate used in
determining minimum nonforfeiture amounts is an annual rate of
interest determined under either of the following methods:
(1) The five-year constant maturity treasury rate, rounded to the
nearest five-hundredths of one percent (0.05%), as reported by the
Federal Reserve as of a date specified in the annuity contract.
Reduce this amount by one hundred twenty-five (125) basis
points.
(2) An average of the five-year constant maturity treasury rate as
reported by the Federal Reserve, rounded to the nearest
five-hundredths of one percent (0.05%), over a specified period
as set forth in the annuity contract. Reduce this amount by one
hundred twenty-five (125) basis points.
The date under subdivision (1) or the average period used under
subdivision (2) may not be longer than fifteen (15) months before the
annuity contract issue date or the redetermination date as determined
under subsection (f).
(e) If the rate of interest determined under subsection (d) is:
(1) less than one percent (1%), the interest rate used in
determining minimum nonforfeiture amounts is fifteen
one-hundredths of one percent (0.15%); or
(2) greater than three percent (3%), the interest rate used in
determining minimum nonforfeiture amounts is three percent
(3%).
(f) The interest rate determined under subsections (d) and (e)
applies for an initial period and may be redetermined for subsequent
periods. The redetermination date, basis, and period, if any, must be
specified in the annuity contract. The basis is:
(1) the date; or
(2) an average calculated over a specified period;
that produces the value of the five-year constant maturity treasury rate
reported by the Federal Reserve to be used at each redetermination
date.
(g) During the period or term that an annuity contract provides
substantive participation in an equity index benefit, the contract may
increase the basis point reduction described in subsection (d) by not
more than an additional one hundred (100) basis points to reflect the
value of the equity index benefit. The present value at the annuity
contract issue date, and at each redetermination date after the annuity
contract issue date, of the additional reduction may not exceed the
market value of the benefit. The commissioner may require a
demonstration that the present value of the additional reduction does
not exceed the market value of the benefit. If the demonstration is not
acceptable to the commissioner, the commissioner may disallow or
limit the additional reduction.
(h) The commissioner may adopt rules under IC 4-22-2 to provide
for further adjustments to the calculation of minimum nonforfeiture
amounts for:
(1) annuity contracts that provide participation in an equity index
benefit; and
(2) other annuity contracts for which the commissioner
determines adjustments are justified.
As added by Acts 1977, P.L.286, SEC.1. Amended by
P.L.130-2002, SEC.1; P.L.59-2004, SEC.2; P.L.165-2022,
SEC.3.