Md. Code Regs. 31.15.01.04

Current through Register Vol. 51, No. 22, November 1, 2024

Section 31.15.01.04 - Guaranteed Annual Endowments

A. Because of the inherently confusing nature of a guaranteed annual endowment type of policy, a life insurance policy or annuity contract containing a series of guaranteed annual endowments evidenced by coupons, passbooks, or similar devices generally identified with investment or banking operations may not be approved for use, and any such policy or contract heretofore approved may not be issued or delivered in this State on or after September 1, 1970.

B. No other life insurance policy or annuity contract containing a series of guaranteed annual endowments may be approved for use and no such policy or contract heretofore approved may be issued or delivered in this State on or after September 1, 1970, unless the following requirements are satisfied:

(1) The gross premium for the guaranteed annual endowment benefit shall be shown prominently and separately in the policy, distinct from the gross premium for the life insurance benefit;

(2) The insured shall be entitled to withdraw the guaranteed annual endowments not less frequently than at the end of the second policy year and at the end of each policy year thereafter, the amount of the endowments available for withdrawal not to be less than the aggregate premium paid for the endowments less any prior withdrawals;

(3) Payment of any guaranteed annual endowment may not be made contingent upon the payment of premiums falling due on or after the time the guaranteed annual endowment benefit has matured;

(4) The separately stated gross premium for the series of guaranteed annual endowments shall be based on reasonable assumptions and shall be consistent with the basic policy form as to interest, mortality, and expense;

(5) The amount of each of the guaranteed annual endowments shall be expressed in dollars, both in the policy and in any sales or advertising material relating to the policy, and not as a percentage of any premium or benefit;

(6) A guaranteed annual endowment may not be described, either in the policy or in any sales or advertising material, as anything other than a guaranteed benefit for which a premium is being paid by the policyholder; and

(7) At the time the policy form is filed with the Insurance Administration for approval, it shall be accompanied by the materials, including any sales presentation kit, which the insurer proposes to use in connection with the policy.

C. Nothing in this regulation applies to any policy in which the amount of any endowment or periodic benefit or benefits payable during any policy year is greater than the total annual premium for that year.

Md. Code Regs. 31.15.01.04