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ENGROSSED SENATE
BILL NO. 529 By: Quinn of the Senate
and
Mize of the House
An Act relating to life insurance and annuities;
amending 36 O.S. 2011, Section 4030.5, which relates
to minimum nonforfeiture amounts; modifying
calculation of certain interest rate; and providing
an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 36 O.S. 2011, Section 4030.5, is
amended to read as follows:
Section 4030.5. A. The minimum values as specified in Sections
4030.6, 4030.7, 4030.8, 4030.9 and 4030.11 of this title, of any
paid-up annuity, cash surrender or death benefits available under an
annuity contract shall be bas ed upon minimum nonforfeiture amounts
as defined in this section.
B. 1. 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 as indicated in
subsection C of this section of the net considerations, as
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hereinafter defined, paid prior to such time, decreased by the sum
of:
a. any prior withdrawals from or partial surrenders of
the contract accumulated at rates of interest
indicated in subsection C of this section,
b. an annual contract cha rge of Fifty Dollars ($50.00),
accumulated at rates of interest indicated in
subsection C of this sectio n,
c. any premium tax paid by the company for the contract,
accumulated at rates of interest indicated in
subsection C of this section, and
d. the amount of any indebtedness to the company on the
contract, including interest due and accrued.
2. The net considerations for a given contract year used to
define the minimum nonforfeiture a mount shall be an amou nt equal to
eighty-seven and one-half percent (87.5%) of the gross
considerations credited to the contract during that contract year.
C. The interest rate used in determining minimum nonforfeiture
amounts shall be an annual rate of i nterest determined as the lesser
of three percent (3%) per annum and th e following, which shall be
specified in the contract if the interest rate will be reset:
1. The five-year Constant Maturity Treasury Rate reported by
the Federal Reserve as of a date, or average over a per iod, rounded
to the nearest one-twentieth of one percent (1/20 of 1%), specified
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in the contract no longer than fifteen (15) months prior to the
contract issue date or redetermination date under paragraph 4 of
this subsection;
2. Reduced by one hundred tw enty-five (125) basis points;
3. If the resulting interest rate is not less than one percent
(1%) fifteen one-hundredths of one percent (.15%) ; 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 Constant Maturity Treasury Rate to be
used at each redetermination date.
D. During the period or term that a contract provides
substantive participation in an equity indexed benefit, it may
increase the reduction described in paragraph 2 of subsecti on C of
this section 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 e xceed the market
value of the benefit. The Commissioner may require a demonst ration
that the present value of the additional reduction does not exceed
the market value of the benefit. Lacking such a demonstration that
is acceptable to the Commissioner, t he Commissioner may disallow or
limit the additional reduction.
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E. The Commissioner may adopt rules to implement the provisi ons
of paragraph 4 of subsection C of this section and to provide for
further adjustments to the calculation of minimum nonforfeitu re
amounts for contracts that provide substantive participation in an
equity index benefit and for other contracts that the C ommissioner
determines are justified.
SECTION 2. This act shall become effective November 1, 2021.
Passed the Senate the 8th day of March, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of _______ ___,
2021.
Presiding Officer of the House
of Representatives