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S. B. No. 187As Introduced
As Introduced
125th General Assembly | Regular Session | 2003-2004 |
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SENATORS Nein, Robert Gardner, Armbruster, Schuler, Stivers, Mumper
A BILLTo amend sections 3915.02, 3915.073, and 3915.14 of the Revised Code to adopt a new formula for determining the minimum nonforfeiture value of an individual deferred annuity, to require insurance companies to obtain the Superintendent of Insurance's approval prior to deferring the payment of a cash surrender benefit, and to prohibit the delivery or use of an annuity contract and its related endorsements for thirty days after the form of the contract or endorsement is filed with the Superintendent, unless earlier approved by the Superintendent, and to amend the version of section 3915.073 of the Revised Code as results from this act two years after the act's effective date. BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 3915.02, 3915.073, and 3915.14 of the Revised Code be amended to read as follows:
Sec. 3915.02. This chapter does not apply to annuities
except as provided in sections 3915.051, 3915.073, 3915.14, and 3915.21 to
3915.24 of the Revised Code, industrial policies except as
provided in sections 3915.07 and 3915.071 of the Revised Code,
fraternal benefit societies, corporations or associations
operating on the assessment plan, or corporations or associations
which have been organized under sections 3919.01 to 3919.19 of
the Revised Code, except corporations and associations which, as
of September 28, 1933, have amended their articles of
incorporation under section 3919.13 of the Revised Code.
Sec. 3915.073. (A) This section shall be known as the
standard nonforfeiture law for individual deferred annuities. (B) This section does not apply to any reinsurance, group
annuity purchased under a retirement plan or plan of deferred
compensation established or maintained by an employer, including
a
partnership or sole proprietorship, or by an employee
organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under
section 408 of the Internal Revenue Code of 1954, 26 U.S.C.A.
408,
as amended, premium deposit fund, variable annuity,
investment
annuity, immediate annuity, any deferred annuity
contract after
annuity payments have commenced, or reversionary
annuity, nor to
any contract which is delivered outside this
state through an
agent or other representative of the company
issuing the contract. (C) In the case of contracts issued on or after the
operative date of this section as defined in division (L)(M) of this
section, no contract of annuity, except as stated in division (B)
of this section, shall be delivered or issued for delivery in this
state unless it the contract contains in substance the following provisions,
or
corresponding provisions that in the opinion of the
superintendent of insurance
are at least as favorable to the contractholder,
upon contract owners, relative to the cessation of
payment of consideration under the contract: (1) That upon cessation of payment of considerations under
a
contract, or upon the written request of the contract owner, the company will shall grant a paid-up annuity benefit on a
plan stipulated in the contract of such value as is specified in
divisions (E), (F), (G), (H), and (J) of this section; (2) If a contract provides for a lump sum settlement at
maturity, or at any other time, that upon surrender of the
contract at or prior to the commencement of any annuity payments,
the company will shall pay in lieu of any paid-up annuity benefit a
cash
surrender benefit of such amount as is specified in
divisions (E),
(F), (H), and (J) of this section. The company
shall may reserve the
right to defer the payment of such cash
surrender benefit for a
period of not to exceed six months after demand
therefor with surrender of the
contract. The deferral is contingent upon the company's conveyance of a written request for the deferral to the superintendent and the company's receipt of written approval from the superintendent for the deferral. The request shall address the necessity and equitability to all contract owners of the deferral. (3) A statement of the mortality table, if any, and
interest
rates used in calculating any minimum paid-up annuity,
cash
surrender, or death benefits that are guaranteed under the
contract, together with sufficient information to determine the
amounts of such benefits; (4) A statement that any paid-up annuity, cash surrender,
or
death benefits that may be available under the contract are
not
less than the minimum benefits required by any statute of the
state in which the contract is delivered and an explanation of
the
manner in which such benefits are altered by the existence of
any
additional amounts credited by the company to the contract,
any
indebtedness to the company on the contract, or any prior
withdrawals from or partial surrenders of the contract. Notwithstanding the requirements of this section, any
deferred annuity contract may provide that if no considerations
have been received under a contract for a period of two full
years
and the portion of the paid-up annuity benefit at maturity
on the
plan stipulated in the contract arising from
considerations paid
prior to such period would be less than
twenty dollars monthly,
the company may at its option terminate
such contract by payment
in cash of the then present value of
such portion of the paid-up
annuity benefit, calculated on the
basis of the mortality table,
if any, and interest rate specified
in the contract for
determining the paid-up annuity benefit, and
by such payment shall
be relieved of any further obligation under
such contract. (D) The minimum values as specified in divisions (E), (F),
(G), (H), and (J) of this section 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 divisions (D)(1), (2), and (3) or divisions (D)(4), (5), (6), and (7) of
this section. (1) With respect to contracts providing for flexible
considerations, 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 of
three one and one-half
per cent per annum of percentages of the net
considerations, as
defined in division (D)(1) of this section, paid prior to such
time, decreased by the
sum of: (a) Any prior withdrawals from or partial surrenders of
the
contract accumulated at a rate of interest of three one and one-half per cent
per
annum; and (b) The amount of any indebtedness to the company on the
contract, including interest due and accrued; and increased by
any
existing additional amounts credited by the company to the
contract. The net considerations for a given contract year used to
define the minimum nonforfeiture amount shall be an amount not
less than zero and shall be equal to the corresponding gross
considerations credited to the contract during that contract year
less an annual contract charge of thirty dollars and less a
collection charge of one dollar and twenty-five cents per
consideration credited to the contract during that contract year.
The percentages of net considerations shall be sixty-five per
cent
of the net consideration for the first contract year and
eighty-seven and one-half per cent of the net considerations for
the second and later contract years. Notwithstanding the
provisions of the preceding sentence, the percentage shall be
sixty-five per cent of the portion of the total net consideration
for any renewal contract year that exceeds by not more than two
times the sum of those portions of the net considerations in all
prior contract years for which the percentage was sixty-five per
cent.
Notwithstanding any other provision of this section, for any
contract issued on or after
the effective date of this amendment,
and before September 1, 2004,
the interest rate at which net
considerations, partial
withdrawals, and partial surrenders shall
be accumulated for
purposes of determining minimum nonforfeiture
amounts shall be one
and one-half per cent per annum.
(2) With respect to contracts providing for fixed
scheduled
considerations, minimum nonforfeiture amounts shall be
calculated
on the assumption that considerations are paid
annually in advance
and shall be defined as for contracts with
flexible considerations
which are paid annually with two
exceptions: (a) The portion of the net consideration for the first
contract year to be accumulated shall be the sum of sixty-five
per
cent of the net consideration for the first contract year
plus
twenty-two and one-half per cent of the excess of the net
consideration for the first contract year over the lesser of the
net considerations for the second and third contract years; (b) The annual contract charge shall be the lesser of (i)
thirty dollars or (ii) ten per cent of the gross annual
consideration. (3) With respect to contracts providing for a single
consideration, minimum nonforfeiture amounts shall be defined as
for contracts with flexible considerations except that the
percentage of net consideration used to determine the minimum
nonforfeiture amount shall be equal to ninety per cent and the
net
consideration shall be the gross consideration less a
contract
charge of seventy-five dollars.
(4)(a) 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 rates of interest determined in accordance with division (D)(5) of this section of the net considerations, determined in accordance with division (D)(4)(b) of this section, paid prior to such time, decreased by the sum of:
(i) Any prior withdrawals from or partial surrenders of the contract, accumulated at rates of interest determined in accordance with division (D)(5) of this section;
(ii) An annual contract charge of fifty dollars, accumulated at rates of interest determined in accordance with division (D)(5) of this section;
(iii) Any premium tax paid by the company for the contract, accumulated at rates of interest determined in accordance with division (D)(5) of this section;
(iv) The amount of any indebtedness to the company on the contract, including interest due and accrued.
(b) 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 per cent of the gross considerations credited to the contract during that contract year.
(5)(a) The interest rate used in determining minimum nonforfeiture amounts under divisions (D)(4) to (D)(7) of this section shall be an annual rate of interest determined as the lesser of three per cent per annum or the following:
(i) The five-year constant maturity treasury rate reported by the federal reserve as of a date or an average over a period, as specified in the contract, rounded to the nearest one-twentieth of one per cent, with a period extending no longer than fifteen months prior to the contract issue date or the redetermination date specified in division (D)(5)(b) of this section;
(ii) Reduced by one hundred twenty-five basis points;
(iii) Where the resulting interest rate is not less than one per cent.
(b) The interest rate determined under division (D)(5)(a) of this section 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 constant maturity treasury rate to be used at each redetermination date.
(6) During the period or term that a contract provides substantative participation in an equity-indexed benefit, the contract may provide for an increase in the reduction described in division (D)(5)(a)(ii) of this section by a maximum of one hundred basis points to reflect the value of the equity-indexed 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 superintendent 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 superintendent, the superintendent may disallow or limit the additional reduction.
(7) The superintendent may adopt rules to implement division (D)(6) 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-indexed benefit and for other contracts for which the superintendent determines adjustments are justified. (E) Any paid-up annuity benefit available under a contract
shall be such that its present value on the date annuity payments
are to commence is at least equal to the minimum nonforfeiture
amount on that date. Such present value shall be computed using
the mortality table, if any, and the interest rate specified in
the contract for determining the minimum paid-up annuity benefits
guaranteed in the contract. (F) For contracts which provide cash surrender benefits,
such cash surrender benefits available prior to maturity shall
not
be less than the present value as of the date of surrender of
that
portion of the maturity value of the paid-up annuity benefit
that
would be provided under the contract at maturity arising
from
considerations paid prior to the time of cash surrender
reduced by
the amount appropriate to reflect any prior
withdrawals from or
partial surrenders of the contract, such
present value being
calculated on the basis of an interest rate
not more than one per
cent higher than the interest rate
specified in the contract for
accumulating the net considerations
to determine such maturity
value, decreased by the amount of any
indebtedness to the company
on the contract, including interest
due and accrued, and increased
by any existing additional amounts
credited by the company to the
contract. In no event shall any
cash surrender benefit be less
than the minimum nonforfeiture
amount at that time. The death
benefit under such contracts
shall be at least equal to the cash
surrender benefit. (G) For contracts that do not provide cash surrender
benefits, the present value of any paid-up annuity benefit
available as a nonforfeiture option at any time prior to maturity
shall not be less than the present value of that portion of the
maturity value of the paid-up annuity benefit provided under the
contract arising from considerations paid prior to the time the
contract is surrendered in exchange for, or changed to, a
deferred
paid-up annuity, such present value being calculated for
the
period prior to the maturity date on the basis of the
interest
rate specified in the contract for accumulating the net
considerations to determine such maturity value, and increased by
any existing additional amounts credited by the company to the
contract. For contracts that do not provide any death benefits
prior to the commencement of any annuity payments, such present
values shall be calculated on the basis of such interest rate and
the mortality table specified in the contract for determining the
maturity value of the paid-up annuity benefit. However, in no
event shall the present value of a paid-up annuity benefit be
less
than the minimum nonforfeiture amount at that time. (H) For the purpose of determining the benefits calculated
under divisions (F) and (G) of this section, in the case of
annuity contracts under which an election may be made to have
annuity payments commence at optional maturity dates, the
maturity
date shall be deemed to be the latest date for which
election
shall be permitted by the contract, but shall not be
deemed to be
later than the anniversary of the contract next
following the
annuitant's seventieth birthday or the tenth
anniversary of the
contract, whichever is later. (I) Any contract that does not provide cash surrender
benefits or does not provide death benefits at least equal to the
minimum nonforfeiture amount prior to the commencement of any
annuity payments shall include a statement in a prominent place
in
the contract that such benefits are not provided. (J) Any paid-up annuity, cash surrender, or death benefits
available at any time, other than on the contract anniversary
under any contract with fixed scheduled considerations, shall be
calculated with allowance for the lapse of time and the payment
of
any scheduled considerations beyond the beginning of the
contract
year in which cessation of payment of considerations
under the
contract occurs. (K) For any contract that provides, within the same
contract
by rider or supplemental contract provision, both
annuity benefits
and life insurance benefits that are in excess
of the greater of
cash surrender benefits or a return of the
gross considerations
with interest, the minimum nonforfeiture
benefit shall be equal to
the sum of the minimum nonforfeiture
benefits for the annuity
portion and the minimum nonforfeiture
benefits, if any, for the
life insurance portion computed as if
each portion were a separate
contract. Notwithstanding the
provisions of divisions (E), (F),
(G), (H), and (J) of this
section, additional benefits payable: (1) In the event of total and permanent disability; (2) As reversionary annuity or deferred reversionary
annuity
benefits; or (3) As other policy benefits additional to life insurance,
endowment and annuity benefits, and considerations for all such
additional benefits shall be disregarded in ascertaining the
minimum nonforfeiture amounts, paid-up annuity, cash surrender,
and death benefits that may be required by this section. The inclusion of such additional benefits shall not be
required in any paid-up benefits, unless such additional benefits
separately would require minimum nonforfeiture amounts, paid-up
annuity, cash surrender, and death benefits. (L) Any company may file with the superintendent a written
notice of its election to comply with the provisions of this
section on or before July 1, 1980. The date specified in the
notice shall be the operative date of this section for such
company. If a company makes no such election, the operative date
of this section for the company shall be July 1, 1980. The superintendent may adopt rules in accordance with Chapter 119. of the Revised Code to implement this section.
(M) Before the second anniversary of the effective date of this amendment, a company may elect to apply this section to annuity contracts on a contract-form-by-contract-form basis by using either divisions (D)(1), (2), and (3) or divisions (D)(4), (5), (6), and (7) of this section. Divisions (D)(1), (2), and (3) of this section shall be repealed on the second anniversary date of the effective date of this amendment.
Sec. 3915.14. (A) No policy of life insurance, nor any indorsement, rider, or
application which becomes or is designed to become a part of any such policy,
shall be delivered, issued for delivery, or used in this state, or be issued
by a life insurance company organized under the laws of this state, until
thirty days after the form of said policy, indorsement, rider, or application
has been filed with the superintendent of insurance, unless within such that time
the superintendent gives the insurer insurance company written approval for the use of such the
form. When (B) No individual or group annuity policy or contract, including, but not limited to, a guaranteed investment contract, deposit administration contract, funding agreement, structured settlement agreement, or similar types, excluding those required to be filed with the superintendent pursuant to section 3911.011 of the Revised Code, and no certificate, endorsement, rider, or application which becomes or is designed to become a part of any such policy, contract, or agreement, shall be delivered, issued for delivery, or used in this state, or shall be issued by a life insurance company organized under the laws of this state, until thirty days after the form of the policy, contract, agreement, certificate, endorsement, rider, or application has been filed with the superintendent, unless within that time the superintendent gives the insurance company written approval for the use of the form. (C) When the superintendent finds within such thirty-day period that the
form filed contains any language which that is prohibited by any law of this state,
including any rule of the superintendent, or is inconsistent, ambiguous,
misleading, deceptive, or likely to mislead an applicant or policyholder,
he the superintendent shall give written notice of such finding
to any insurer which the insurance company that filed such the form, and thereafter it the insurance company shall not deliver,
issue for delivery, or use such the form. The superintendent's action is subject to review by any court of competent
jursdiction jurisdiction, subject to Chapter 119. of the Revised Code.
Section 2. That existing sections 3915.02, 3915.073, and 3915.14 of the Revised Code are hereby repealed.
Section 3. That section 3915.073 of the Revised Code as it results from Section 1 of this act be amended to read as follows:
Sec. 3915.073. (A) This section shall be known as the
standard nonforfeiture law for individual deferred annuities. (B) This section does not apply to any reinsurance, group
annuity purchased under a retirement plan or plan of deferred
compensation established or maintained by an employer, including
a
partnership or sole proprietorship, or by an employee
organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under
section 408 of the Internal Revenue Code of 1954, 26 U.S.C.A.
408,
as amended, premium deposit fund, variable annuity,
investment
annuity, immediate annuity, any deferred annuity
contract after
annuity payments have commenced, or reversionary
annuity, nor to
any contract which is delivered outside this
state through an
agent or other representative of the company
issuing the contract. (C) In the case of contracts issued on or after the
operative date of this section as defined in division (M) of this
section, no No contract of annuity, except as stated in division (B)
of this section, shall be delivered or issued for delivery in this
state unless the contract contains in substance the following provisions,
or
corresponding provisions that in the opinion of the
superintendent of insurance
are at least as favorable to the contract owners, relative to the cessation of
payment of consideration under the contract: (1) That upon cessation of payment of considerations under
a
contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity benefit on a
plan stipulated in the contract of such value as is specified in
divisions (E), (F), (G), (H), and (J) of this section; (2) If a contract provides for a lump sum settlement at
maturity, or at any other time, that upon surrender of the
contract at or prior to the commencement of any annuity payments,
the company shall pay in lieu of any paid-up annuity benefit a
cash
surrender benefit of such amount as is specified in
divisions (E),
(F), (H), and (J) of this section. The company
may reserve the
right to defer the payment of such cash
surrender benefit for a
period not to exceed six months after demand
therefor with surrender of the
contract. The deferral is contingent upon the company's conveyance of a written request for the deferral to the superintendent and the company's receipt of written approval from the superintendent for the deferral. The request shall address the necessity and equitability to all contract owners of the deferral. (3) A statement of the mortality table, if any, and
interest
rates used in calculating any minimum paid-up annuity,
cash
surrender, or death benefits that are guaranteed under the
contract, together with sufficient information to determine the
amounts of such benefits; (4) A statement that any paid-up annuity, cash surrender,
or
death benefits that may be available under the contract are
not
less than the minimum benefits required by any statute of the
state in which the contract is delivered and an explanation of
the
manner in which such benefits are altered by the existence of
any
additional amounts credited by the company to the contract,
any
indebtedness to the company on the contract, or any prior
withdrawals from or partial surrenders of the contract. Notwithstanding the requirements of this section, any
deferred annuity contract may provide that if no considerations
have been received under a contract for a period of two full
years
and the portion of the paid-up annuity benefit at maturity
on the
plan stipulated in the contract arising from
considerations paid
prior to such period would be less than
twenty dollars monthly,
the company may at its option terminate
such contract by payment
in cash of the then present value of
such portion of the paid-up
annuity benefit, calculated on the
basis of the mortality table,
if any, and interest rate specified
in the contract for
determining the paid-up annuity benefit, and
by such payment shall
be relieved of any further obligation under
such contract. (D) The minimum values as specified in divisions (E), (F),
(G), (H), and (J) of this section 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 divisions (D)(1), (2), and (3) or divisions (D)(4), (5), (6), and (7) of
this section division. (1) With respect to contracts providing for flexible
considerations, 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 of
one and one-half
per cent per annum of percentages of the net
considerations, as
defined in division (D)(1) of this section, paid prior to such
time, decreased by the
sum of: (a) Any prior withdrawals from or partial surrenders of
the
contract accumulated at a rate of interest of one and one-half per cent
per
annum;
(b) The amount of any indebtedness to the company on the
contract, including interest due and accrued; and increased by
any
existing additional amounts credited by the company to the
contract.
The net considerations for a given contract year used to
define the minimum nonforfeiture amount shall be an amount not
less than zero and shall be equal to the corresponding gross
considerations credited to the contract during that contract year
less an annual contract charge of thirty dollars and less a
collection charge of one dollar and twenty-five cents per
consideration credited to the contract during that contract year.
The percentages of net considerations shall be sixty-five per
cent
of the net consideration for the first contract year and
eighty-seven and one-half per cent of the net considerations for
the second and later contract years. Notwithstanding the
provisions of the preceding sentence, the percentage shall be
sixty-five per cent of the portion of the total net consideration
for any renewal contract year that exceeds by not more than two
times the sum of those portions of the net considerations in all
prior contract years for which the percentage was sixty-five per
cent.
(2) With respect to contracts providing for fixed
scheduled
considerations, minimum nonforfeiture amounts shall be
calculated
on the assumption that considerations are paid
annually in advance
and shall be defined as for contracts with
flexible considerations
which are paid annually with two
exceptions:
(a) The portion of the net consideration for the first
contract year to be accumulated shall be the sum of sixty-five
per
cent of the net consideration for the first contract year
plus
twenty-two and one-half per cent of the excess of the net
consideration for the first contract year over the lesser of the
net considerations for the second and third contract years;
(b) The annual contract charge shall be the lesser of (i)
thirty dollars or (ii) ten per cent of the gross annual
consideration.
(3) With respect to contracts providing for a single
consideration, minimum nonforfeiture amounts shall be defined as
for contracts with flexible considerations except that the
percentage of net consideration used to determine the minimum
nonforfeiture amount shall be equal to ninety per cent and the
net
consideration shall be the gross consideration less a
contract
charge of seventy-five dollars.
(4)(a) 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 rates of interest determined in accordance with division (D)(5)(2) of this section of the net considerations, determined in accordance with division (D)(4)(1)(b) of this section, paid prior to such time, decreased by the sum of:
(i) Any prior withdrawals from or partial surrenders of the contract, accumulated at rates of interest determined in accordance with division (D)(5)(2) of this section;
(ii) An annual contract charge of fifty dollars, accumulated at rates of interest determined in accordance with division (D)(5)(2) of this section;
(iii) Any premium tax paid by the company for the contract, accumulated at rates of interest determined in accordance with division (D)(5)(2) of this section;
(iv) The amount of any indebtedness to the company on the contract, including interest due and accrued.
(b) 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 per cent of the gross considerations credited to the contract during that contract year. (5)(2)(a) The interest rate used in determining minimum nonforfeiture amounts under divisions (D)(4)(1) to (7)(4) of this section shall be an annual rate of interest determined as the lesser of three per cent per annum and or the following:
(i) The five-year constant maturity treasury rate reported by the federal reserve as of a date or an average over a period, as specified in the contract, rounded to the nearest one-twentieth of one per cent, with a period extending no longer than fifteen months prior to the contract issue date or the redetermination date specified in division (D)(5)(2)(b) of this section;
(ii) Reduced by one hundred twenty-five basis points;
(iii) Where the resulting interest rate is not less than one per cent.
(b) The interest rate determined under division (D)(5)(2)(a) of this section 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 constant maturity treasury rate to be used at each redetermination date.
(6)(3) During the period or term that a contract provides substantative participation in an equity-indexed benefit, the contract may provide for an increase in the reduction described in division (D)(5)(2)(a)(ii) of this section by a maximum of one hundred basis points to reflect the value of the equity-indexed 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 superintendent 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 superintendent, the superintendent may disallow or limit the additional reduction. (7)(4) The superintendent may adopt rules to implement division (D)(6)(3) 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-indexed benefit and for other contracts for which the superintendent determines adjustments are justified.
(E) Any paid-up annuity benefit available under a contract
shall be such that its present value on the date annuity payments
are to commence is at least equal to the minimum nonforfeiture
amount on that date. Such present value shall be computed using
the mortality table, if any, and the interest rate specified in
the contract for determining the minimum paid-up annuity benefits
guaranteed in the contract. (F) For contracts which provide cash surrender benefits,
such cash surrender benefits available prior to maturity shall
not
be less than the present value as of the date of surrender of
that
portion of the maturity value of the paid-up annuity benefit
that
would be provided under the contract at maturity arising
from
considerations paid prior to the time of cash surrender
reduced by
the amount appropriate to reflect any prior
withdrawals from or
partial surrenders of the contract, such
present value being
calculated on the basis of an interest rate
not more than one per
cent higher than the interest rate
specified in the contract for
accumulating the net considerations
to determine such maturity
value, decreased by the amount of any
indebtedness to the company
on the contract, including interest
due and accrued, and increased
by any existing additional amounts
credited by the company to the
contract. In no event shall any
cash surrender benefit be less
than the minimum nonforfeiture
amount at that time. The death
benefit under such contracts
shall be at least equal to the cash
surrender benefit. (G) For contracts that do not provide cash surrender
benefits, the present value of any paid-up annuity benefit
available as a nonforfeiture option at any time prior to maturity
shall not be less than the present value of that portion of the
maturity value of the paid-up annuity benefit provided under the
contract arising from considerations paid prior to the time the
contract is surrendered in exchange for, or changed to, a
deferred
paid-up annuity, such present value being calculated for
the
period prior to the maturity date on the basis of the
interest
rate specified in the contract for accumulating the net
considerations to determine such maturity value, and increased by
any existing additional amounts credited by the company to the
contract. For contracts that do not provide any death benefits
prior to the commencement of any annuity payments, such present
values shall be calculated on the basis of such interest rate and
the mortality table specified in the contract for determining the
maturity value of the paid-up annuity benefit. However, in no
event shall the present value of a paid-up annuity benefit be
less
than the minimum nonforfeiture amount at that time. (H) For the purpose of determining the benefits calculated
under divisions (F) and (G) of this section, in the case of
annuity contracts under which an election may be made to have
annuity payments commence at optional maturity dates, the
maturity
date shall be deemed to be the latest date for which
election
shall be permitted by the contract, but shall not be
deemed to be
later than the anniversary of the contract next
following the
annuitant's seventieth birthday or the tenth
anniversary of the
contract, whichever is later. (I) Any contract that does not provide cash surrender
benefits or does not provide death benefits at least equal to the
minimum nonforfeiture amount prior to the commencement of any
annuity payments shall include a statement in a prominent place
in
the contract that such benefits are not provided. (J) Any paid-up annuity, cash surrender, or death benefits
available at any time, other than on the contract anniversary
under any contract with fixed scheduled considerations, shall be
calculated with allowance for the lapse of time and the payment
of
any scheduled considerations beyond the beginning of the
contract
year in which cessation of payment of considerations
under the
contract occurs. (K) For any contract that provides, within the same
contract
by rider or supplemental contract provision, both
annuity benefits
and life insurance benefits that are in excess
of the greater of
cash surrender benefits or a return of the
gross considerations
with interest, the minimum nonforfeiture
benefit shall be equal to
the sum of the minimum nonforfeiture
benefits for the annuity
portion and the minimum nonforfeiture
benefits, if any, for the
life insurance portion computed as if
each portion were a separate
contract. Notwithstanding the
provisions of divisions (E), (F),
(G), (H), and (J) of this
section, additional benefits payable: (1) In the event of total and permanent disability; (2) As reversionary annuity or deferred reversionary
annuity
benefits; or (3) As other policy benefits additional to life insurance,
endowment and annuity benefits, and considerations for all such
additional benefits shall be disregarded in ascertaining the
minimum nonforfeiture amounts, paid-up annuity, cash surrender,
and death benefits that may be required by this section. The inclusion of such additional benefits shall not be
required in any paid-up benefits, unless such additional benefits
separately would require minimum nonforfeiture amounts, paid-up
annuity, cash surrender, and death benefits. (L) The superintendent may adopt rules in accordance with Chapter 119. of the Revised Code to implement this section.
(M) Before the second anniversary of the effective date of this amendment, a company may elect to apply this section to annuity contracts on a contract-form-by-contract-form basis by using either divisions (D)(1), (2), and (3) or divisions (D)(4), (5), (6), and (7) of this section. Divisions (D)(1), (2), and (3) of this section shall be repealed on the second anniversary date of the effective date of this amendment.
Section 4. That existing section 3915.073 of the Revised Code as it results from Section 1 of this act is hereby repealed.
Section 5. Sections 3 and 4 of this act shall take effect two years after the effective date of this act.
Section 6. Section 3915.02 of the Revised Code is
presented in
this act as a composite of the section as amended by
both Sub. H.B. 16 and Sub. S.B. 137 of
the 119th General
Assembly. The General Assembly, applying the
principle stated in
division (B) of section 1.52 of the Revised
Code that amendments
are to be harmonized if reasonably capable of
simultaneous
operation, finds that the composite is the resulting
version of
the section in effect prior to the effective date of
the section
as presented in this act.
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