Insurance (GIN) — Title 16. Life Insurance and Annuities

invalidate a contract made in violation of this section; or

prohibit the exchange, alteration, or conversion of a policy of life insurance.

a notice to the policyholder that:

a similar notice to the policyholder that in the opinion of the Commissioner is not less favorable to the policyholder.

conforms with the laws in force on the date of the original policy or annuity contract, if the rewritten policy is, by its terms, made effective as of that date; or

conforms with the laws in force on a subsequent date as of which the rewritten policy is, by its terms, made effective.

This subsection applies only if the rewritten policy is made effective as of a date earlier than the date on which the exchange, alteration, or conversion occurs.

The amount of insurance under a rewritten policy subject to this subsection may not exceed the greater of:

If evidence of insurability is required in conjunction with an exchange, alteration, or conversion to a policy on a plan that requires a lower premium rate, or to a policy to which benefits or features are added that differ from the original policy, the rewritten policy may provide that the date on which the exchange, alteration, or conversion occurs shall be used to determine:

A reinstated policy of life insurance or reinstated annuity contract may exclude or restrict liability to the same extent that liability might have been or was excluded or restricted when the policy or annuity contract originally was issued.

The exclusion or restriction is effective as of the date of reinstatement.

An insurer need not pay interest on benefits if the proceeds of the policy are paid within 30 days after the date of death of the insured.

If proof of death is submitted to the insurer more than 180 days after the date of death of the insured, interest accrues and is payable from the date on which proof of death is submitted to the date on which the proceeds of the policy are paid.

an affidavit that states that the entire estate of the decedent, including life insurance proceeds, does not exceed $1,000; or

a letter of administration as provided by the Small Estate Law, §§ 5-601 through 5-607 of the Estates and Trusts Article.

the sale, solicitation, or delivery of stock or shares of stock in a company;

a benefit certificate, securities, or special advisory board contract, or other similar contracts or resolutions; or

policy dividends bearing a stated relationship to dividends on the stock of a company.

a person, or a subsidiary of the person, that is authorized by a state or foreign country to engage in the insurance business; or

a person, other than a person or a subsidiary of the person that is authorized to engage in the insurance business, to fund:

An amount may not be guaranteed or credited under a funding agreement except on a reasonable assumption as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class.

A funding agreement may not provide for payment to or by the insurer based on a mortality or morbidity contingency.

Under a funding agreement, an insurer may allocate amounts paid to the insurer and proceeds applied under optional modes of settlement to the insurer’s general account or to one or more separate accounts.

Amounts allocated to the insurer’s general account and any resulting accumulations shall be invested and reinvested in accordance with the provisions of this article governing investment of the reserves of life insurers.

Amounts allocated to a separate account and any resulting accumulations may be invested and reinvested subject only to §§ 5–506, 5–507, and 5–512(b), (e), (f), (g), (h), and (i) of this article and regulations adopted under subsection (e) of this section.

The Commissioner may adopt regulations governing:

With respect to separate accounts and any resulting accumulations, the Commissioner shall adopt regulations governing the type and amount of investments that may be made under a funding agreement.

Notwithstanding any other provision of law, the Commissioner has sole authority to regulate:

The issuance or delivery of a funding agreement is not the business of life insurance, annuities, health insurance, property insurance, casualty insurance, surety insurance, marine insurance, wet marine and transportation insurance, title insurance, or reinsurance, but is an insurance business.

Solely for the purpose of application of the Tax - General Article, the funding agreements authorized by this section are deemed to be annuity contracts.

formed to receive contributions and distribute money to meet cultural, educational, charitable, environmental, civic, or other similar needs of a community; and

governed by a board of private citizens who reside in the community.

On application, the Commissioner may issue a special permit to make agreements for annuity payments with donors to an educational or religious organization not conducted for profit and engaged in bona fide educational or religious activities, to a hospital in the State, or to a community foundation if the educational or religious organization, hospital, or community foundation:

The Commissioner may issue a special permit to a community foundation that has been in existence for at least 5 years but less than 10 years if the community foundation maintains assets in an amount up to 100% of the contributions made to the community foundation, as determined by the Commissioner.

Each special permit holder shall have and maintain assets at least equal to adequate reserves on its outstanding agreements for annuity payments with donors as indicated by its audited fiscal year–end financial statements.

In determining the reserves of a special permit holder on outstanding agreements for annuity payments with donors, a deduction shall be made for all or part of an annuity risk that is reinsured by an authorized life insurer.

The audited fiscal year–end financial statements shall be treated as confidential by the Commissioner and are not available for public inspection.

On application by the special permit holder, the Commissioner:

If the Commissioner finds, after notice and hearing, that a special permit holder has failed to comply with the requirements of this section or is not exempt from federal income taxation under § 501 of the Internal Revenue Code, the Commissioner may:

In case of revocation or suspension, outstanding agreements for annuity payments with donors shall remain in force.

The action of the Commissioner under this subsection is subject to judicial review under § 2–215 of this article.

Except as otherwise provided in this section, a special permit holder is exempt from the provisions of this article with respect to issuing annuities.

Special permit holders are not subject to a law enacted after June 1, 1957, unless they are expressly designated in the law.

Other than by agreements for annuity payments with donors, an educational or religious organization, hospital, or community foundation may agree to:

An educational or religious organization, hospital, or community foundation that accepts conditional donations and pays a specified return to donors under paragraph (1) of this subsection is exempt from this section and all other provisions of this article with respect to issuing annuities.

Educational or religious organizations, hospitals, or community foundations that accept conditional donations and pay specified returns to donors under this subsection are not subject to any law enacted after June 1, 1957, unless they are expressly designated in the law.

a political subdivision of the State;

a unit of the State or a local government; or

a nonprofit or nonstock corporation that:

offers the beneficiary at least one other mode of settlement of proceeds; and

complies with the provisions of subsections (c) and (d) of this section.

Except as provided in subsection (e) of this section, if an insurer offers to a beneficiary a retained asset account as a settlement option, the insurer shall provide to the beneficiary in writing:

The information required under paragraph (1) of this subsection shall be in easy to read language.

the insurer permits the beneficiary to file the claim over the telephone;

the insurer does not require the beneficiary to file a death certificate or other paperwork to file the claim for proceeds; and

the beneficiary selects payment of a lump sum check, payable directly to the beneficiary, as the settlement option during the telephone call in which the beneficiary files the claim for proceeds.

In this section the following words have the meanings indicated.

“Credit life insurance” has the meaning stated in § 13–101 of this article.

“Death master file” means:

“Death master file match” means a match, resulting from a search of a death master file, of a Social Security number or a name and date of birth of an individual on the death master file with the Social Security number or the name and date of birth of an insured, annuitant, or retained asset account holder.

“Pre–need insurance contract” means a life insurance policy or certificate, annuity contract, or other insurance contract that, by assignment or otherwise, has as a purpose the funding of an agreement relating to the purchase or provision of specific funeral or cemetery merchandise or services to be provided at the time of death of an individual.

“Retained asset account” has the meaning stated in § 16–117(a) of this subtitle.

an annuity contract that:

a policy or certificate of life insurance that provides a death benefit under:

a pre–need insurance contract;

a policy or certificate of credit life insurance; or

a policy or certificate of accidental death and dismemberment insurance.

An insurer that issues, delivers, or renews a policy of life insurance or an annuity contract in the State shall perform a comparison of the insurer’s in–force life insurance policies, annuity contracts, and retained asset accounts against the latest version of a death master file to identify any death benefit payments that may be due under the policies, contracts, or retained asset accounts as a result of the death of an insured, annuitant, or retained asset account holder.

An insurer shall perform the comparison required under paragraph (1) of this subsection:

For a group life insurance policy, an insurer is not required to perform the comparison required under paragraph (1) of this subsection unless the insurer provides full record–keeping services to the group life insurance policy holder.

If a comparison performed by an insurer under subsection (c) of this section results in a death master file match with an insured, annuitant, or retained asset account holder, the insurer, within 90 days after the comparison was performed, shall:

An insurer shall document the good faith efforts made to:

To the extent permitted by law, an insurer may disclose the minimum necessary personal information about an insured, an annuitant, a retained asset account holder, or a beneficiary to a person that the insurer reasonably believes may be able to assist the insurer in locating a beneficiary as required under paragraph (1)(iii)1 of this subsection.

A life insurer may refuse an application for a policy of life insurance on the life of a minor only if the refusal is consistent with § 27–501(a)(2) of this article.

An application for a policy of life insurance on the life of a minor that is submitted for underwriting shall include:

The life insurer shall include on the first page of the application for a policy of life insurance on the life of a minor, on a disclosure provided to the applicant at the time of application, or on an endorsement to the policy the following statement in 12 point bold type:

request that the applicant for a policy of life insurance on the life of a minor identify the amount of other life insurance coverage on the life of the minor that is in force or pending at the time of the application;

document the applicant’s response on the application; and

take reasonable steps to verify the amount of other life insurance in force or pending.

request that the applicant for a policy of life insurance on the life of a minor identify the amount, if any, of other life insurance coverage on the life of the minor that is in force or pending at the time of the application;

document the applicant’s response on the application;

take reasonable steps to verify the total amount of life insurance in force or pending; and

document the steps taken on a particular application to verify the total amount of life insurance in force or pending.

For each application for a policy of life insurance on the life of a minor that is rejected by a life insurer, the life insurer shall maintain at the life insurer’s home or principal office, for at least 3 years after the date the application was signed by the applicant, a complete file containing:

The life insurer shall obtain and keep records sufficient to demonstrate that the applicant for a policy of life insurance on the life of a minor has an insurable interest in the life of the minor in accordance with § 12–201 of this article.

group life insurance;

pure endowments;

annuity contracts; or

a provision of a policy of life insurance or contract supplemental to the policy that relates to disability benefits or to additional benefits for death by accident or accidental means.

Each policy of life insurance shall contain a provision that a grace period shall be allowed within which the payment of any premium after the first may be made.

The grace period shall be:

precludes only a contest of the validity of the policy; and

does not preclude the assertion of defenses based on provisions in the policy that exclude or restrict coverage, whether or not the restrictions or exclusions are excepted in the provision.

If an application or policy expressly limits the insurable age and the correct age at the date of issue is outside the insurable age limit, the policy is voidable at the option of the insurer during the lifetime of the insured, but not later than 3 years after the date of issue of the policy.

If the insurer exercises the option to void the policy, the insurer shall return to the insured the aggregate of gross premiums charged on the policy, less:

The insurer may not exercise the option to void the policy more than 30 days after the correct age is established.

Subject to paragraph (5) of this subsection, if the insurer does not exercise the option to void the policy or if the age discrepancy is not discovered within 3 years after the date of issue of the policy, the insurer may not void the policy and the amount payable shall be determined in accordance with subsection (a) of this section.

If the premium rates of the insurer at the date of issue of the policy do not include a rate for the correct age, the amount payable shall be determined in accordance with established actuarial principles.

Each participating ordinary life insurance policy shall contain a provision that:

Each participating industrial life insurance policy shall contain a provision that:

The policy may not contain a provision that the payment of any dividend payable under this section is contingent on the payment of any premium due on or after the date when the dividend becomes payable.

Subject to paragraph (2) of this subsection, each policy shall contain a provision that the party entitled to the dividend may elect to have the dividend:

A term policy need not provide the dividend options specified in paragraph (1)(iii) and (iv) of this subsection.

Each participating ordinary life insurance policy shall contain a provision that a specified option becomes effective unless the party entitled to the dividend notifies the insurer in writing of a different option within 30 days after the date on which the dividend is payable.

term policies;

term insurance benefits provided by rider or supplemental policy provisions; or

industrial life insurance policies.

after premiums have been paid for at least 3 years;

after the policy has a cash surrender value; and

while no premium is in default beyond the grace period.

Except as provided in paragraph (2) of this subsection and subject to § 16-208 of this subtitle, the insurer may charge interest on the advance at a rate specified in the policy not exceeding an effective rate of 6% per year.

The Commissioner may authorize an interest rate exceeding an effective rate of 6% but not exceeding 8% per year if the Commissioner finds that a greater rate will reduce the net cost of life insurance offered by the insurer in direct relationship to the revenue from the increase.

Subject to paragraph (2) of this subsection, the loan value of a policy shall at least equal the cash surrender value of the policy at the end of the current policy year.

In determining the cash surrender value of a policy, the insurer may deduct from the loan value or from the proceeds of the loan:

interest on any indebtedness that is not paid when due shall be added to the existing indebtedness and shall bear interest at the same rate; and

the policy terminates if:

In this section the following words have the meanings indicated.

“Policy” includes:

“Policyholder” includes:

“Policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as the premiums fell due.

“Published monthly average” means:

allows a maximum interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, not exceeding an effective rate of 8% per year; or

allows an adjustable maximum annual interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, set by the insurer as allowed by law not exceeding the greater of:

If the maximum rate of interest is determined under subsection (b)(2) of this section, the policy shall include provisions that disclose the frequency at which the rate will be determined for the policy.

The maximum annual interest rate for each policy with an adjustable policy loan interest rate must be determined at regular intervals at least once every 12 months, but not more than once in any 3-month period.

the interest rate may be increased if the calculation under subsection (b)(2) of this section would increase the annual rate by at least 0.5%; and

the interest rate shall be reduced if the calculation under subsection (b)(2) of this section would reduce the annual rate by at least 0.5%.

This subsection applies only to a policy with an adjustable policy loan interest rate.

When a cash loan is made, the life insurer shall notify the policyholder of the beginning annual interest rate on the loan.

When a premium loan is made, the life insurer shall notify the policyholder as soon as is reasonably practical after making the initial loan of the beginning annual interest rate on the loan.

The life insurer shall give reasonable advance notice to policyholders with outstanding loans of any increase in interest rates.

The notices required under this subsection shall include the substance of the relevant provisions of subsections (b) and (c)(2) of this section.

This subsection applies only to a policy with an adjustable policy loan interest rate.

The loan value of the policy shall be determined under Subtitle 3 of this title.

A policy may not terminate during a policy year solely as the result of a change in the interest rate during the policy year.

The life insurer shall maintain coverage during the policy year until the time that the policy would otherwise have terminated had there been no change in interest rate during the policy year.

written application for reinstatement;

the production of evidence of insurability satisfactory to the insurer; and

the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer on the policy, with interest on the premiums and other indebtedness at a specified rate not exceeding an effective rate of 6% per year compounded annually.

the policy has been surrendered for its cash surrender value;

the cash surrender value of the policy has been exhausted because of policy indebtedness; or

any paid-up term insurance has expired.

Each policy of life insurance shall have the name of the beneficiary designated on the policy, or in the application or another form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the policy is issued, unless the beneficiary is irrevocably designated.

An insurer may include in the policy a provision that a designation or change of beneficiary is not binding on the insurer until endorsed on the policy or otherwise accepted by the insurer.

Subject to paragraph (2) of this subsection, a policy of life insurance may provide that the insurer may make a payment under the policy to:

The insurer may make a payment under paragraph (1) of this subsection only if:

A policy of life insurance may include a provision that is similar to that described in paragraphs (1) and (2) of this subsection and is applicable to any other payment due under the policy.

A policy of industrial life insurance also may provide that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.

the title or type or plan of policy, including the term “industrial” or “wholesale” if applicable;

how long premiums are to be paid;

if and when the premium may change, except for a change because of a supplementary agreement;

if the benefit is not level, the use of the term “graded benefit” or a similar term to so indicate;

whether the policy is participating or nonparticipating;

if the policy is written on a rated underwriting basis, the terms “substandard class” or “rated class” or a substantially similar term; and

if the policy provides for the return of premiums as an additional benefit, the period during which the benefit is applicable.

already contained in and presented conspicuously in tabular form on the first page of the policy; or

presented conspicuously elsewhere in the policy and referred to in the description on the first page of the policy.

Except as provided in paragraph (2) of this subsection, a policy of life insurance may contain a provision that excludes or restricts coverage for death under any of the following circumstances:

A policy of life insurance may not be delivered or issued for delivery in the State if the policy excludes or restricts liability for death that is the result of an act of terrorism that the covered person did not commit and in which the covered person did not participate.

If a policy contains an exclusion or restriction listed in this subsection, the policy also shall provide that, for death under the circumstances to which the exclusion or restriction applies, the insurer shall pay a determinable amount of at least:

The table and interest rate used under paragraph (3) of this subsection must be acceptable as a standard for the valuation of the policy in accordance with Title 5, Subtitle 3 of this article with adjustment for indebtedness or dividend credit.

group life insurance;

reinsurance; or

a provision in a policy of life insurance that relates to additional disability benefits or to additional benefits for death by accident or accidental means.

the exclusion for death as a result of suicide may begin on the date of issue of the new policy if the prior policy terminates:

if the newly issued policy provides death benefits in excess of the amount of death benefits payable under the prior policy, the exclusion for death as a result of suicide as to the excess amount of death benefits only may begin on the date of issue of the new policy; and

for purposes of the exclusion for death as a result of suicide, if more than one prior policy is terminated within the 12-month period specified in item (1) of this subsection, the suicide exclusion period for the amount of death benefits represented by the terminated policies is deemed to have begun on the dates of issue of those policies.

a provision that the insurer may reduce or deny liability under the policy because the insured has previously obtained other insurance from the same insurer;

a provision that gives the insurer the right to declare the policy void because the insured has had a disease or ailment, whether specified or not, or has received institutional, hospital, medical, or surgical treatment or attention; or

a provision that gives the insurer the right to declare the policy void because the insured has been rejected for insurance, unless the right is conditioned on a showing by the insurer that knowledge of the rejection would have led to a refusal by the insurer to issue the policy.

the insured has received institutional, hospital, medical, or surgical treatment or attention within 2 years before the policy was issued; and

the insured or a claimant under the policy fails to show that the condition occasioning the treatment or attention was not serious or was not material to the risk.

If a policy of universal or variable life insurance contains a provision that allows a policyholder to reduce the face amount of the policy, the insurer shall provide a written notice to the policyholder.

The notice shall state:

at the beginning of the grace period under § 16–202 of this subtitle; and

at least 30 days before termination of coverage.

reinsurance;

group life insurance;

a pure endowment;

an annuity contract or reversionary annuity contract;

a term policy of a uniform amount that:

a term policy of a decreasing amount:

a policy that:

each provision in subsections (b) through (g) of this section; or

corresponding provisions that in the opinion of the Commissioner are at least as favorable to a defaulting or surrendering policyholder as the corresponding minimum requirements in subsections (b) through (g) of this section and that essentially comply with § 16-312 of this subtitle.

Each policy shall contain a provision that if a premium payment is in default after premiums have been paid for at least 1 year, on proper request under paragraph (2) of this subsection the insurer will grant:

The request for a paid-up nonforfeiture benefit must be made to the insurer within 60 days after the due date of the premium in default.

3 years for ordinary life insurance; or

5 years for industrial life insurance.

is paid-up by completion of all premium payments; or

is continued under a paid-up nonforfeiture benefit that became effective on or after:

If a policy provides for unscheduled changes in benefits or premiums on a basis guaranteed by the policy or provides an option for changes in benefits or premiums, other than a change to a new policy, the policy shall contain a statement of the mortality table, interest rate, and method used to calculate cash surrender values and paid-up nonforfeiture benefits available under the policy.

a statement that cash surrender values and paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by this article;

an explanation how cash surrender values and paid-up nonforfeiture benefits are altered due to paid-up additions credited to the policy or indebtedness to the insurer on the policy;

a statement that the method of calculating cash surrender values and paid-up nonforfeiture benefits has been filed with the Commissioner if a detailed statement of the calculation method is not stated in the policy; and

a statement of the method of calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary after the last anniversary for which the cash surrender values and paid-up nonforfeiture benefits are shown consecutively in the policy.

the present value of the future guaranteed benefits, calculated as of that policy anniversary, that would have been provided under the policy, including any existing paid-up additions; less

the sum of:

This subsection applies only to a policy that:

On a policy subject to this subsection, the cash surrender value referred to in subsection (a) of this section shall be at least the sum of:

This subsection applies only to a family policy that:

On a policy subject to this subsection, the cash surrender value referred to in subsection (a) of this section shall be at least the sum of:

This subsection applies to a policy of life insurance that is paid-up by completion of all premium payments or is continued under any paid-up nonforfeiture benefit, regardless of whether the cash surrender value is required under § 16-303 of this subtitle.

On a policy subject to this subsection, the cash surrender value available within 30 days after a policy anniversary shall be at least the present value, calculated as of the policy anniversary, of the future guaranteed benefits, including any existing paid-up additions, reduced by any indebtedness to the insurer on the policy.

For purposes of this section, the date of issue of a policy is the date as of which the rated age of the insured is determined.

Subject to subsection (d) of this section, the adjusted premiums for a policy shall be calculated on an annual basis and shall be a uniform percentage of the premiums specified in the policy for each policy year, excluding extra premiums on a substandard policy, so that the present value of the adjusted premiums, calculated as of the date of issue, shall equal the sum of:

In applying the percentages specified in paragraph (2)(iii) and (iv) of this subsection, adjusted premiums may not be considered to exceed 4% of the amount of insurance or of the equivalent uniform amount of insurance.

Subject to paragraph (2) of this subsection, if a policy has a variable amount of insurance over its duration, for purposes of subsection (b) of this section the equivalent uniform amount of insurance shall be based on the uniform amount of insurance provided by an otherwise similar policy that:

If the policy that has a variable amount of insurance is issued on the life of a child under age 10, the equivalent uniform amount of insurance may be calculated as though the amount of insurance provided by the policy before age 10 was the amount provided by the policy at age 10.

Subject to paragraph (2) of this subsection, the adjusted premiums for a policy that provides term insurance benefits by rider or supplemental policy provision shall equal the sum of:

Paragraph (1)(i) and (ii) of this subsection shall be calculated separately in accordance with subsections (b) and (c) of this section except that, for purposes of subsection (b)(2)(ii), (iii), and (iv) of this section, the amount of insurance or the equivalent uniform amount of insurance used in calculating the adjusted premiums in paragraph (1)(ii) of this subsection shall equal the corresponding amount determined for the entire policy less the amount used in calculating the adjusted premiums in paragraph (1)(i) of this subsection.

This subsection does not apply to a policy governed by subsection (c) or (d) of this section.

For policies of industrial life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the 1941 Standard Industrial Mortality Table.

Adjusted premiums and present values shall be calculated at an interest rate, not exceeding a rate of 3.5% per year, specified in the policy for calculating cash surrender values and paid–up nonforfeiture values.

In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed 130% of the rates of mortality according to the applicable table.

In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be calculated based on another mortality table specified by the insurer and approved by the Commissioner.

This subsection applies to policies of ordinary life insurance issued:

For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits.

Adjusted premiums and present values shall be calculated at an interest rate specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits, not exceeding a rate of:

Adjusted premiums and present values calculated for any category of ordinary life insurance issued on female risks may be calculated according to an age not more than 6 years younger than the actual age of the insured.

In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates in the Commissioners 1958 Extended Term Insurance Table.

In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be calculated based on another mortality table specified by the insurer and approved by the Commissioner.

This subsection applies to policies of industrial life insurance issued:

For policies of industrial life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits.

Adjusted premiums and present values shall be calculated at an interest rate specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits, not exceeding a rate of:

In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates in the Commissioners 1961 Industrial Extended Term Insurance Table.

In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be based on another mortality table specified by the insurer and approved by the Commissioner.

In this section the following words have the meanings indicated.

“Operative date of the valuation manual” has the meaning stated in § 5–201.1(a) of this article.

“Valuation manual” has the meaning stated in § 5–201.1(a) of this article.

on or after January 1, 1989; or

on or after an operative date that is before January 1, 1989, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this section on a date before January 1, 1989.

For purposes of this section, the date of issue of a policy is the date as of which the rated age of the insured is determined.

Except as provided in subsection (h) of this section, and subject to paragraph (3) of this subsection, the adjusted premiums for a policy shall be calculated on an annual basis and shall be a uniform percentage of the premiums specified in the policy for each policy year so that the present value of the adjusted premiums shall equal the sum of:

In calculating adjusted premiums, any extra premium for impairments or special hazards or any uniform annual contract charge or policy fee specified in the policy in a statement of the method used to calculate cash surrender values and paid–up nonforfeiture benefits is excluded.

The nonforfeiture net level premium shall equal the present value of the guaranteed benefits, calculated as of the date of issue, provided by the policy divided by the present value of an annuity of 1 per year, calculated as of the date of issue, payable on the date of issue of the policy and on each anniversary on which a premium is due.

In applying the percentage specified in paragraph (2)(iii) of this subsection, a nonforfeiture net level premium may not be considered to exceed 4% of:

If a policy provides for unscheduled changes in benefits or premiums on a basis guaranteed by the policy or provides an option for changes in benefits or premiums, other than a change to a new policy, the adjusted premiums and present values initially shall be calculated on the assumption that future benefits and premiums will not change from those stipulated at the date of issue of the policy.

When benefits or premiums are changed, the future adjusted premiums, nonforfeiture net level premiums, and present values shall be recalculated as of the date of the change in the policy in accordance with this section on the assumption that future benefits and premiums will not change from those stipulated by the policy immediately after the change.

Except as provided in subsection (h) of this section, the future adjusted premiums recalculated under subsection (d)(2) of this section shall be a uniform percentage of the future premiums specified in the policy for each policy year so that the present value of the future adjusted premiums, calculated as of the time of the change to the newly defined benefits or premiums, shall equal the remainder of:

In recalculating future adjusted premiums, any extra premium for impairments or special hazards or any uniform annual contract charge or policy fee specified in the policy in a statement of the method used to calculate cash surrender values and paid–up nonforfeiture benefits is excluded.

1% of the remainder, if positive, of:

125% of the increase, if positive, in the nonforfeiture net level premium.

the sum of:

the present value of an annuity of 1 per year payable on each anniversary of the policy on or after the date of change on which a premium is due.

This subsection applies only to policies issued on a substandard basis that provide reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on a standard basis that provides higher uniform amounts of insurance.

Notwithstanding any other provision of this section, the adjusted premiums and present values for a substandard policy subject to this subsection may be calculated as if the policy was issued to provide the higher uniform amounts of insurance on the standard basis.

Adjusted premiums and present values for policies issued in any calendar year shall be calculated based on an interest rate that does not exceed the nonforfeiture interest rate calculated under this section:

Any cash surrender value available under a paid–up nonforfeiture benefit, including any paid–up dividend additions, regardless of whether required under § 16–303 of this subtitle, shall be calculated based on the mortality table and interest rate used to determine the amount of the paid–up nonforfeiture benefit and any paid–up dividend additions.

An insurer may not calculate the amount of any guaranteed paid–up nonforfeiture benefit including any paid–up additions under the policy based on an interest rate lower than the rate specified in the policy for calculating cash surrender values.

In calculating the present value of any paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, an insurer may not assume a mortality rate greater than the mortality rates shown in:

The calculation of adjusted premiums and present values for insurance issued on a substandard basis may be based on appropriate modifications of the tables required under this section.

For policies issued before the operative date of the valuation manual, the nonforfeiture interest rate per year for a policy issued during a calendar year shall equal the greater of:

For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per year for a policy issued during a calendar year shall be the interest rate provided by the valuation manual.

that provides that the insurer will determine future premiums based on future experience estimates; or

the minimum values of which cannot be determined under the applicable provisions of §§ 16-303 through 16-309 of this subtitle.

the benefits provided under the plan described in subsection (a) of this section are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by §§ 16-303 through 16-309 of this subtitle; and

the benefits and the pattern of premiums under the plan do not mislead prospective policyholders or insureds.

benefits payable for death by accident or accidental means;

benefits payable for dismemberment or loss of sight;

benefits payable for total and permanent disability;

benefits payable as a reversionary annuity or deferred reversionary annuity benefits;

benefits for long-term home health care and long-term care in a nursing home or similar institution;

term insurance benefits provided by a rider or supplemental policy provision if this subtitle would not apply had the rider or supplemental policy provision been issued as a separate policy;

term insurance benefits payable on the life of a child provided in a policy on the life of a parent of the child if the term insurance:

other policy benefits additional to life insurance or endowment benefits.

the amount of insurance if the insurance is a uniform amount; or

the average amount of insurance at the beginning of each of the first 10 policy years.

the present value of the future guaranteed benefits, calculated as of the anniversary, that would have been provided by the policy, excluding any existing paid-up additions and before the deduction of any indebtedness to the insurer on the policy; less

the present value of the nonforfeiture factors, calculated under subsection (e) of this section, corresponding to the premiums that would have fallen due on or after the anniversary.

The nonforfeiture factor for each policy year shall be equal to the percentage of the adjusted premium for that policy year calculated in accordance with the applicable provisions of § 16-307, § 16-308(b), or § 16-309 of this subtitle.

Except as required under paragraph (4) of this subsection, the percentage of the adjusted premium shall be the same percentage for each policy year between:

The percentage of the adjusted premium after the later of the 2 policy anniversaries specified in paragraph (2) of this subsection shall apply for at least 5 consecutive policy years.

The basic cash value may not be less than the value that would be obtained if the adjusted premiums for the policy calculated under the applicable provisions of § 16-307, § 16-308(b), or § 16-309 of this subtitle were substituted for the nonforfeiture factors in the calculation of the basic cash value.

Any cash surrender value available under a policy, other than on default of a premium due on a policy anniversary, and any paid-up nonforfeiture benefit available under a policy on default of a premium payment shall be determined in a manner consistent with the manner specified to determine the analogous minimum amounts under the applicable provisions of §§ 16-303 through 16-306, § 16-309, and § 16-311 of this subtitle.

Any cash surrender value and any paid-up nonforfeiture benefits granted in connection with additional benefits similar to those under § 16-311(d)(1) through (7) of this subtitle shall conform to the principles of this section.

reversionary annuities or survivorship annuities;

group annuities; or

contracts for deferred annuities included in or on the lives of beneficiaries under policies of life insurance.

Each participating annuity contract and each participating pure endowment contract shall contain a provision that:

The payment of any dividend payable on or after the end of the third contract year may not be made contingent on the payment of any consideration due on or after the date when the dividend becomes payable.

Each contract shall contain a provision that the party entitled to the dividend may elect to have the dividend paid in cash or applied to the payment of any consideration then due.

Each contract shall contain a provision that a specified option becomes effective unless the party entitled to the dividend notifies the insurer in writing of election of a different option within 30 days after the date on which the dividend is payable.

Except as provided in paragraph (2) of this subsection, each contract for a reversionary or survivorship annuity shall include each provision specified in §§ 16-402 through 16-406 of this subtitle.

As to the provision required by § 16-402(d) of this subtitle, the insurer may provide for an equitable reduction of the amount of annuity payments in settlement of an overdue payment instead of providing for deduction of payments from an amount payable on settlement under the contract.

the production of evidence of insurability satisfactory to the insurer; and

This section does not apply to group annuities or to annuities included in policies of life insurance.

To the extent that a provision required by this section does not apply to a single premium annuity, the provision need not be incorporated in the contract.

each applicable provision of subsections (b) through (g) of this section; or

corresponding provisions that the Commissioner believes are at least as favorable to the contract holder after payment of considerations under the annuity contract stops.

Each annuity contract shall contain a provision that if the annuity contract provides for a lump-sum settlement at maturity or at any other time, on surrender of the annuity contract on or before the start of annuity payments, the insurer will pay a cash surrender benefit in accordance with §§ 16-505, 16-506, 16-508, and 16-509 of this subtitle instead of a paid-up annuity benefit.

Each annuity contract shall contain a statement that any paid-up annuity, cash surrender, or death benefits available under the annuity contract are not less than the minimum benefits required under this article.

Each annuity contract shall contain an explanation of how benefits are altered due to any additional amount that the insurer credits to the annuity contract, any indebtedness to the insurer on the annuity contract, and any prior withdrawal from or partial surrender of the annuity contract.

Notwithstanding the requirements of this section, a deferred annuity contract may contain a provision that the insurer may terminate the contract by making a single payment calculated under paragraph (2) of this subsection if:

The payment shall equal the present value of the part of the paid-up annuity benefit available under the contract, calculated as of the date of termination, based on any mortality table and interest rate specified in the contract for determining the paid-up annuity benefit.

A payment by an insurer under this section shall relieve the insurer of any further obligation under the deferred annuity contract.

At any time before or at the start of any annuity payments, the minimum nonforfeiture amount under an annuity contract shall equal the remainder of:

The net considerations for a given contract year used to calculate the minimum nonforfeiture amount shall equal 87.5% of the gross considerations credited to the contract during that contract year.

The interest rate used to determine the minimum nonforfeiture amounts under subsection (b) of this section shall be an annual rate of interest that is equal to the lesser of:

The 5–year constant maturity treasury rate under paragraph (1)(ii) of this subsection shall be:

The interest rate calculated under paragraphs (1) and (2) of this subsection may not be less than 0.15%.

During the period that a contract provides for substantive participation in an equity index benefit, the insurer may increase the 125 basis points under subsection (c)(2)(ii) of this section up to an additional 100 basis points to reflect the value of the equity index benefit.

On the issue date of the contract, and on each redetermination date, the present value of the additional reduction may not exceed the market value of the equity index benefit.

The Commissioner may adopt regulations to implement the provisions of this section.

The regulations under paragraph (1) of this subsection may provide for:

the present value of the annuity benefit on the date annuity payments are to begin; and

at least the minimum nonforfeiture amount on that date.

the present value as of the surrender date of the part of the maturity value of the paid-up annuity benefit that would be provided at maturity from considerations paid before the surrender date and any existing additional amount credited by the insurer to the contract; less

the appropriate amount that reflects prior withdrawals from or partial surrenders of the contract and any indebtedness to the insurer on the contract, including interest due and accrued.

A cash surrender benefit may not be less than the minimum nonforfeiture amount at the time of surrender.

A death benefit under a contract subject to this section shall equal at least the cash surrender benefit.

the present value of that part of the maturity value of the paid-up annuity benefit under the annuity contract from considerations paid before the contract is surrendered for or changed to a deferred paid-up annuity; and

any existing additional amount credited by the insurer to the contract.

The present value under subsection (b)(1) of this section shall be calculated for the period before the maturity date using an interest rate specified in the annuity for accumulating the net considerations to determine the maturity value.

If the contract does not provide a death benefit before the start of annuity payments, the present value shall be calculated using the interest rate and mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit.

This subsection applies only to an annuity contract that provides by rider or supplemental contract provision both annuity benefits and life insurance benefits that exceed the greater of:

The minimum nonforfeiture benefits shall:

benefits payable for total and permanent disability;

benefits payable as reversionary annuity or deferred reversionary annuity benefits; or

other policy benefits additional to life insurance, endowment, and annuity benefits.

A stock insurer or mutual insurer may issue individual and group variable life insurance contracts that provide for payment varying directly with the investment experience of a segregated asset account if the stock insurer or mutual insurer:

A stock insurer or mutual insurer may issue individual and group variable annuity contracts that provide for payment varying directly with the investment experience of a segregated asset account if the stock insurer or mutual insurer:

requirements for a minimum capital and surplus in excess of the amount otherwise required for the issuance of life insurance contracts and annuity contracts that are not variable contracts; and

other requirements that the Commissioner considers appropriate to safeguard the interests of variable contract holders, other policyholders, insurers, and the public.

A segregated asset account may invest in any investments contractually permitted for the segregated asset account and specified in a plan of operation, and the restrictions, limitations, and other provisions of this article relating to investments shall not apply to the investments contained in the segregated asset account, provided that prior to delivery or issuance for delivery in the State, the form of the policy or annuity contract and the plan of operation have been filed with and approved by the Commissioner.

Preferred and common stock investments of amounts allocated to a segregated asset account may not be included in applying the 10% limitations under § 5–511(f) of this article.