§ 27-4.4-4. Minimum values.
(a) The minimum values as specified in §§ 27-4.4-5 — 27-4.4-8 and 27-4.4-10 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) 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 that time at rates of interest
as provided in subsection (d) of this section of the net considerations as defined
in this section paid prior to that time, decreased by the sum of:
(1) Any prior withdrawals from or partial surrenders of the contract accumulated at rates
of interest as provided in subsection (d) of this section;
(2) The amount of any indebtedness to the company on the contract, including interest
due and accrued;
(3) An annual contract charge of fifty dollars ($50.00), accumulated at rates of interest
as provided in subsection (d) of this section; and
(4) Any premium tax paid by the company for the contract, accumulated at rates of interest
as provided in subsection (d) of this section.
(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 contract during that contract year.
(d) The interest rate used in determining minimum nonforfeiture amounts shall be an annual
rate of interest determined as the lesser of three percent (3%) per annum and the
following, which shall be specified in the contract if the interest rate will be reset:
(1) The five-year (5) Constant Maturity Treasury Rate reported by the Federal Reserve
as of a date, or average over a period, rounded to the nearest one twentieth of one
percent (1/20%), specified in the contract no longer than fifteen (15) months prior to the contract
issue date or redetermination date under subsection (d)(4) of this section;
(2) Reduced by one hundred twenty-five (125) basis points;
(3) Where the resulting interest rate is not less than one percent (1%); and
(4) The interest rate shall apply for an initial period and may be redetermined for additional
periods. The redetermination date, basis, and period, if any, shall be stated in the
contract. The basis is the date or average over a specified period that produces the
value of the five-year (5) Constant Maturity Treasury Rate to be used at each redetermination
date.
(e) During the period or term that a contract provides substantive participation in an
equity indexed benefit, it may increase the reduction described in subsection (d)(2)
of this section above by up to an additional one hundred (100) basis points to reflect
the value of the equity index benefit. The present value at the contract issue date,
and at each redetermination date thereafter, of the additional reduction shall not
exceed the market value of the benefit. The commissioner of insurance may require
a demonstration that the present value of the reduction does not exceed the market
value of the benefit. Lacking such a demonstration that is acceptable to the commissioner,
the commissioner may disallow or limit the additional reduction.
(f) The commissioner of insurance may adopt rules to implement the provisions of subsection
(e) of this section and to provide for further adjustments to the calculation of minimum
nonforfeiture amounts for contracts that provide substantive participation in an equity
index benefit and for other contracts that the commissioner determines adjustments
are justified.