D.C. Mun. Regs. tit. 26, r. 26-A5100

Current through Register Vol. 71, No. 49, December 6, 2024

Rule 26-A5100 - CALCULATING MINIMUM VALUES

5100.1

The minimum values, as specified in section 5 c(c)(1) of Chapter V of the Life Insurance Act, effective October 13, 1978 (D.C. Law 2-120; D.C. Official Code § 31-4705.03 (2001), 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 sections 5100.2 and 5100.3.

5100.2

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 section 5100.3 of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of subsections (a) through (d) below:

(a) Any prior withdrawals from or partial surrender of the contract accumulated at rates of interest as indicated in section 5100.3;

(b) An annual contract charge of $50, accumulated at rates of interest as indicated in section 5100.3;

(c) Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in section 5100.3; and

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

5100.3

The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to the eighty-seven and one-half percent (87.5%) of the gross considerations credited to the contract during that contract year.

5100.4

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:

(a) The five-year Constant Maturity Treasury Rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20^th of one percent, specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under subsection 5100.4(d);

(b) Reduced by 125 basis points;

(c) Where the resulting interest rate is not less than 15 basis points (0.15%); and

(d) 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.

5100.5

During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subsection 5100.4(b) above by up to an additional 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 may require a demonstration 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, the Commissioner may disallow or limit the additional reduction, which shall be conducted pursuant to the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1209; D.C. Official Code § 2-501et seq. (2001)).

D.C. Mun. Regs. tit. 26, r. 26-A5100

Source: Notice of Final Rulemaking published at 51 DCR 5600 (May 28, 2006); amended by Final Rulemaking published at 70 DCR 7108 (5/19/2023)

Authority: Pursuant to the authority set forth in Section 3 of the "Standard" Valuation and Nonforfeiture Amendment Act of 2003, effective February 6, 2004 (D.C. Law 15-63; to be codified at D.C. Official Code § 31-4705.03 (2004)(Supp.)).