<section article="gin" article_name="Insurance" number="16-101" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <text>Except as otherwise provided in this title, this title applies to contracts of life insurance and annuities, other than reinsurance, group life insurance, and group annuities.</text> </section> <section article="gin" article_name="Insurance" number="16-102" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <text>An insurer that is authorized to issue ordinary life insurance in the State may issue wholesale life insurance.</text> </section> <section article="gin" article_name="Insurance" number="16-103" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <text>A life insurer may not:</text> <level label="1"> <text>issue or deliver in the State a policy of life insurance or an annuity contract that provides for the payment of an assessment by a policyholder or member in addition to the premium stated in the policy or annuity contract to be charged for the life insurance or annuity; or</text> </level> <level label="2"> <text>levy or collect an assessment prohibited by item (1) of this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-104" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>An insurer may not knowingly deliver or issue for delivery in the State a policy of life insurance that purports to be issued or to take effect as of a date more than 6 months before the application for the policy was made, if, as a result, the premium on the policy is reduced below the premium that would have been payable on the policy as determined by the insuring age of the insured when the application was made.</text> </level> <level label="b"> <text>An insurance producer or other representative of an insurer may not in the State prepare, submit, or accept an application for life insurance that bears a date earlier than the date when the application was made by the insured or applicant, if, as a result, the premium on the policy is reduced below the premium that would have been payable on the policy as determined by the insuring age of the insured when the application was made.</text> </level> <level label="c"> <text>This section does not:</text> <level label="1"> <text>invalidate a contract made in violation of this section; or</text> </level> <level label="2"> <text>prohibit the exchange, alteration, or conversion of a policy of life insurance.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-105" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>This section does not apply to policies or contracts issued to an employee in connection with the funding of a pension, annuity, or profit-sharing plan that is qualified or exempt under § 401, § 403, § 404, or § 501 of the Internal Revenue Code, if participation in the plan is a condition of employment.</text> </level> <level label="b"> <text>Each policy of life insurance or annuity contract subject to this title shall have attached to or prominently printed on its face the following information:</text> <level label="1"> <text>a notice to the policyholder that:</text> <level label="i"> <text>for 10 days after the date the policy or annuity contract is delivered to the policyholder, the policyholder may surrender the policy or annuity contract to the insurer for cancellation by giving the insurer written notice of cancellation; and</text> </level> <level label="ii"> <text>the insurer shall return to the policyholder a pro rata premium for the unexpired term of the policy or annuity contract; or</text> </level> </level> <level label="2"> <text>a similar notice to the policyholder that in the opinion of the Commissioner is not less favorable to the policyholder.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-106" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>On request of a policyholder, a life insurer may exchange, alter, or convert a policy of life insurance or endowment insurance or an annuity contract issued by the life insurer or any other benefits additional to the policy or annuity contract, for or into a policy that:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>conforms with the laws in force on a subsequent date as of which the rewritten policy is, by its terms, made effective.</text> </level> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>The amount of insurance under a rewritten policy subject to this subsection may not exceed the greater of:</text> <level label="i"> <text>the amount of insurance under the original policy or annuity contract; and</text> </level> <level label="ii"> <text>the amount of insurance that the premium paid for the original policy or annuity contract would have purchased if the rewritten policy had been applied for originally.</text> </level> </level> <level label="3"> <text>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:</text> <level label="i"> <text>the applicability of an incontestability clause in the rewritten policy to the right of the insurer to contest the exchange, alteration, or conversion; or</text> </level> <level label="ii"> <text>the applicability of a clause in the rewritten policy that limits liability in the event of the suicide of the insured.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-107" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>A reinstated policy of life insurance or reinstated annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period after reinstatement and with the same conditions and exceptions as the policy or annuity contract provides with respect to contestability after original issue.</text> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>The exclusion or restriction is effective as of the date of reinstatement.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-108" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>A life insurer may hold under agreement the proceeds of a policy issued by it on the terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with the exemptions from the claims of creditors of beneficiaries other than the policyholder, as set forth in the policy or as agreed to in writing by the life insurer and the policyholder.</text> </level> <level label="b"> <text>If a policyholder has not made an agreement described in subsection (a) of this section, on maturity of the policy the life insurer may hold the proceeds of the policy under an agreement with the beneficiaries.</text> </level> <level label="c"> <text>The life insurer need not segregate any funds held under this section, but may hold the funds as part of the life insurer’s general assets.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-109" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>Except as provided in subsection (b) of this section, interest on benefits payable under a policy of life insurance issued in the State accrues and is payable from the date of death of the insured to the date the proceeds of the policy are paid.</text> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <text>Interest under this section accrues and is payable at a rate not less than the rate of interest payable on death proceeds left on deposit with the insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-110" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>If a resident of the State dies intestate and leaves an estate that consists of assets, including life insurance proceeds, in a total amount not exceeding $1,000, an insurer may pay the life insurance proceeds to the decedent’s surviving spouse, child, or parent, without the grant of letters of administration, if the individual to whom payment is to be made provides the insurer with:</text> <level label="1"> <text>an affidavit that states that the entire estate of the decedent, including life insurance proceeds, does not exceed $1,000; or</text> </level> <level label="2"> <text>a letter of administration as provided by the Small Estate Law, §§ 5-601 through 5-607 of the Estates and Trusts Article.</text> </level> </level> <level label="b"> <text>The insurer may pay the share of a minor to an institution or to a relative of the minor, with custody of the minor, without requiring the institution or relative to be appointed the legal guardian of the minor.</text> </level> <level label="c"> <text>Payment by an insurer under this section, or under a facility of payment clause in a policy of life insurance, discharges the insurer from all further liability with respect to the life insurance proceeds.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-111" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>The proceeds of a policy of life insurance or under an annuity contract on the life of an individual made for the benefit of or assigned to the spouse, child, or dependent relative of the individual are exempt from all claims of the creditors of the individual arising out of or based on an obligation created after June 1, 1945, whether or not the right to change the named beneficiary is reserved or allowed to the individual.</text> </level> <level label="b"> <text>For purposes of this section, proceeds include death benefits, cash surrender and loan values, premiums waived, and dividends, whether used to reduce the premiums or used or applied in any other manner, except if the debtor has, after issuance of the policy, elected to receive the dividends in cash.</text> </level> <level label="c"> <text>This section does not prohibit a creditor from collecting a debt out of the proceeds of a life insurance policy pledged by the insured as security for the debt.</text> </level> <level label="d"> <text>A change of beneficiary, assignment, or other transfer is valid except for transfer with actual intent to hinder, delay, or defraud creditors.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-112" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <text>A life insurer may not deliver in the State, as part of or in combination with an insurance, endowment, or annuity contract, and additional to the rights, dividends, and benefits arising out of the contract, an agreement or plan that:</text> <level label="1"> <text>provides for the accumulation of profits over a period of years and for payment of all or part of the accumulated profits only to members or policyholders of a designated group or class who continue as members or policyholders until the end of a specified period of years;</text> </level> <level label="2"> <text>provides that, on the death of anyone other than a beneficiary or an insured under the contract, the owner or beneficiary of the contract shall receive the payment or granting of anything of value;</text> </level> <level label="3"> <text>provides that all or part of the premiums or consideration for the contract, dividends, coupons, reserves, special reserves, excess interest, or money in excess of the normal reserve required to meet the contractual guarantees of the contract are to be placed or invested in special funds or segregated accounts without insurance or life contingency features, if the funds or earnings are divided among those taking the contract or their beneficiaries or assignees; or</text> </level> <level label="4"> <text>as an inducement to or in connection with the sale or acceptance of the contract, provides for:</text> <level label="i"> <text>the sale, solicitation, or delivery of stock or shares of stock in a company;</text> </level> <level label="ii"> <text>a benefit certificate, securities, or special advisory board contract, or other similar contracts or resolutions; or</text> </level> <level label="iii"> <text>policy dividends bearing a stated relationship to dividends on the stock of a company.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-113" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>Subject to the approval of the Commissioner, an insurer authorized to deliver or issue for delivery an annuity contract in the State may deliver or issue for delivery funding agreements.</text> </level> <level label="b"> <text>A funding agreement may be issued to:</text> <level label="1"> <text>a person, or a subsidiary of the person, that is authorized by a state or foreign country to engage in the insurance business; or</text> </level> <level label="2"> <text>a person, other than a person or a subsidiary of the person that is authorized to engage in the insurance business, to fund:</text> <level label="i"> <text>benefits directly or indirectly under an employee benefit plan, as defined in the federal Employee Retirement Income Security Act of 1974, that is maintained in the United States, or under a similar plan maintained in a foreign country;</text> </level> <level label="ii"> <text>the activities of an organization exempt from taxation under § 501(c) of the Internal Revenue Code, or of a similar organization in a foreign country;</text> </level> <level label="iii"> <text>a program, or plan as defined in § 457 of the Internal Revenue Code, of the federal government, a state or political subdivision of a state, or a foreign country or political subdivision of a foreign country;</text> </level> <level label="iv"> <text>an agreement that provides for periodic payments in satisfaction of a claim; or</text> </level> <level label="v"> <text>a program of an institution that has assets in excess of $25,000,000.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>A funding agreement may not provide for payment to or by the insurer based on a mortality or morbidity contingency.</text> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="e"> <level label="1"> <text>The Commissioner may adopt regulations governing:</text> <level label="i"> <text>the standards for approval of forms of funding agreements;</text> </level> <level label="ii"> <text>the reserves to be maintained by insurers that issue funding agreements;</text> </level> <level label="iii"> <text>the accounting and reporting of funds credited under funding agreements;</text> </level> <level label="iv"> <text>the disclosure of information to holders and prospective holders of funding agreements; and</text> </level> <level label="v"> <text>the qualification and compensation of persons that sell funding agreements on behalf of insurers.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>Notwithstanding any other provision of law, the Commissioner has sole authority to regulate:</text> <level label="i"> <text>the issuance and sale of funding agreements; and</text> </level> <level label="ii"> <text>the persons that sell funding agreements on behalf of insurers.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>Solely for the purpose of application of the Tax - General Article, the funding agreements authorized by this section are deemed to be annuity contracts.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-114" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>In this section, “community foundation” means a nonprofit organization that is:</text> <level label="1"> <text>formed to receive contributions and distribute money to meet cultural, educational, charitable, environmental, civic, or other similar needs of a community; and</text> </level> <level label="2"> <text>governed by a board of private citizens who reside in the community.</text> </level> </level> <level label="b"> <text>An educational or religious organization, hospital, or community foundation may not make or issue in the State agreements for annuity payments with donors until it has obtained from the Commissioner a special permit issued in accordance with this section.</text> </level> <level label="c"> <level label="1"> <text>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:</text> <level label="i"> <text>except as provided in paragraph (2) of this subsection, has been in active operation in the State for at least 10 years before issuance of the special permit; and</text> </level> <level label="ii"> <text>has been granted exemption from federal income taxation under § 501 of the Internal Revenue Code.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <level label="i"> <text>Subject to paragraph (5) of this subsection, a special permit holder shall submit annually audited fiscal year–end financial statements to the Commissioner within 180 days after the end of the special permit holder’s fiscal year.</text> </level> <level label="ii"> <text>The financial statements required under subparagraph (i) of this paragraph shall be:</text> <level label="1"> <text>presented in conformity with generally accepted accounting principles; and</text> </level> <level label="2"> <text>audited by a certified public accountant.</text> </level> </level> </level> <level label="4"> <text>The audited fiscal year–end financial statements shall be treated as confidential by the Commissioner and are not available for public inspection.</text> </level> <level label="5"> <text>On application by the special permit holder, the Commissioner:</text> <level label="i"> <text>may waive the requirement of audited fiscal year–end financial statements; and</text> </level> <level label="ii"> <text>may require instead additional documents or information that the Commissioner considers necessary.</text> </level> </level> </level> <level label="e"> <text>A special permit issued under this section authorizes the special permit holder to receive gifts of money or other property conditional on, or in consideration of, the special permit holder’s agreement to pay an annuity to the donor or the donor’s nominee and to make and carry out agreements for annuity payments with donors.</text> </level> <level label="f"> <text>A special permit is in effect only as long as the special permit holder is exempt from federal income taxation under § 501 of the Internal Revenue Code.</text> </level> <level label="g"> <level label="1"> <text>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:</text> <level label="i"> <text>revoke or suspend the special permit; or</text> </level> <level label="ii"> <text>order the special permit holder to stop making new agreements for annuity payments with donors until the requirements have been satisfied.</text> </level> </level> <level label="2"> <text>In case of revocation or suspension, outstanding agreements for annuity payments with donors shall remain in force.</text> </level> <level label="3"> <text>The action of the Commissioner under this subsection is subject to judicial review under § 2–215 of this article.</text> </level> </level> <level label="h"> <level label="1"> <text>Except as otherwise provided in this section, a special permit holder is exempt from the provisions of this article with respect to issuing annuities.</text> </level> <level label="2"> <text>Special permit holders are not subject to a law enacted after June 1, 1957, unless they are expressly designated in the law.</text> </level> </level> <level label="i"> <level label="1"> <text>Other than by agreements for annuity payments with donors, an educational or religious organization, hospital, or community foundation may agree to:</text> <level label="i"> <text>accept conditional donations; and</text> </level> <level label="ii"> <text>pay to the donor or the donor’s nominee a specified return established with reference to the actual net earnings of the particular donation or with reference to the actual or estimated earnings of a specified fund of the donee organization.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="j"> <text>Notwithstanding the absence of express power in the charter of a domestic educational, religious, or hospital corporation or community foundation, the corporation or community foundation may make the agreements for annuity payments with donors or other agreements with respect to conditional donations that are expressly allowed by this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-115" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>A person who engages in the business of burial insurance is subject to and shall comply with all of the provisions of this article relating to the organization, qualification, and conduct of life insurers.</text> </level> <level label="b"> <text>This section does not limit or restrict the definitions of life insurance or life insurer in § 1-101 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-116" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>In this section, “public entity” means:</text> <level label="1"> <text>a political subdivision of the State;</text> </level> <level label="2"> <text>a unit of the State or a local government; or</text> </level> <level label="3"> <text>a nonprofit or nonstock corporation that:</text> <level label="i"> <text>receives 50% or more of its annual operating budget from the State or a local government; and</text> </level> <level label="ii"> <text>is exempt from taxation under § 501(c)(3) or (4) of the Internal Revenue Code.</text> </level> </level> </level> <level label="b"> <text>Public entities may pool together to purchase life insurance or to self-insure against life risks.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-117" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <text>In this section, “retained asset account” means any mechanism whereby the settlement of proceeds payable under a life insurance policy or an annuity contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into a checking or draft account, where those proceeds are retained by the insurer in accordance with a supplementary contract.</text> </level> <level label="b"> <text>An insurer may not offer a retained asset account as the mode of settlement of the proceeds payable under a life insurance policy or an annuity contract unless the insurer:</text> <level label="1"> <text>offers the beneficiary at least one other mode of settlement of proceeds; and</text> </level> <level label="2"> <text>complies with the provisions of subsections (c) and (d) of this section.</text> </level> </level> <level label="c"> <text>Except as provided in subsection (e) of this section, when a beneficiary files a claim for proceeds, if one of the settlement options is a retained asset account, the insurer shall disclose in writing to the beneficiary all the settlement options available under the policy or contract.</text> </level> <level label="d"> <level label="1"> <text>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:</text> <level label="i"> <text>a recommendation to consult a tax advisor, an investment advisor, or any other financial advisor regarding tax liability and investment options;</text> </level> <level label="ii"> <text>an explanation of the features of the retained asset account, including:</text> <level label="1"> <text>the method used to determine interest rates applied to the retained asset account, when and how interest rates may change, and any dividends and other gains that may be paid or distributed to the account holder;</text> </level> <level label="2"> <text>the custodian of the funds or assets of the retained asset account;</text> </level> <level label="3"> <text>whether the funds in the retained asset account are guaranteed by the Federal Deposit Insurance Corporation (FDIC) and the amount of the coverage, if any;</text> </level> <level label="4"> <text>the limitations, if any, on the numbers and amounts of withdrawals of funds from the retained asset account or investment, including any minimum or maximum withdrawal amounts;</text> </level> <level label="5"> <text>the services provided for a fee, including a list of the fees or the method of their calculation;</text> </level> <level label="6"> <text>the nature and frequency of statements of account;</text> </level> <level label="7"> <text>a statement that the obligation of the insurer to pay the total policy or contract proceeds is satisfied by depositing the total proceeds in the retained asset account;</text> </level> <level label="8"> <text>a statement that the entire proceeds are available to the account holder by the use of one check, draft, or other instrument;</text> </level> <level label="9"> <text>a statement that the insurer or a related party may derive income, in addition to any fees charged on the retained asset account, from the total gains received on the investment of the balance of funds in the retained asset account; and</text> </level> <level label="10"> <text>the telephone number, address, and other contact information, including Web site address, for obtaining additional information regarding the retained asset account; and</text> </level> </level> <level label="iii"> <text>the statement “For further information, please contact your state insurance department”.</text> </level> </level> <level label="2"> <text>The information required under paragraph (1) of this subsection shall be in easy to read language.</text> </level> </level> <level label="e"> <text>An insurer is not required to provide the disclosures or information specified in subsections (c) and (d) of this section if:</text> <level label="1"> <text>the insurer permits the beneficiary to file the claim over the telephone;</text> </level> <level label="2"> <text>the insurer does not require the beneficiary to file a death certificate or other paperwork to file the claim for proceeds; and</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="f"> <text>Failure to meet any requirement of this section is an unfair trade practice and a violation of Title 27 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-118" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Credit life insurance” has the meaning stated in § 13–101 of this article.</text> </level> <level label="3"> <text>“Death master file” means:</text> <level label="i"> <text>the Social Security Administration’s Death Master File; or</text> </level> <level label="ii"> <text>any other database or service that is at least as comprehensive as the Social Security Administration’s Death Master File for determining that an individual reportedly has died.</text> </level> </level> <level label="4"> <text>“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.</text> </level> <level label="5"> <text>“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.</text> </level> <level label="6"> <text>“Retained asset account” has the meaning stated in § 16–117(a) of this subtitle.</text> </level> </level> <level label="b"> <text>This section does not apply to:</text> <level label="1"> <text>an annuity contract that:</text> <level label="i"> <text>is used to fund an employment–based retirement plan or program; and</text> </level> <level label="ii"> <text>does not require the insurer under the annuity contract to pay death benefits to the beneficiaries of specific plan or program participants;</text> </level> </level> <level label="2"> <text>a policy or certificate of life insurance that provides a death benefit under:</text> <level label="i"> <text>an employee benefit plan subject to the federal Employee Retirement Income Security Act of 1974; or</text> </level> <level label="ii"> <text>any federal employee benefit program;</text> </level> </level> <level label="3"> <text>a pre–need insurance contract;</text> </level> <level label="4"> <text>a policy or certificate of credit life insurance; or</text> </level> <level label="5"> <text>a policy or certificate of accidental death and dismemberment insurance.</text> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>An insurer shall perform the comparison required under paragraph (1) of this subsection:</text> <level label="i"> <text>at regular intervals, on at least a semiannual basis; and</text> </level> <level label="ii"> <text>in good faith, using criteria reasonably designed to identify individuals whose death would require the payment of benefits by the insurer under a life insurance policy, annuity contract, or retained asset account.</text> </level> </level> <level label="3"> <text>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.</text> </level> </level> <level label="d"> <level label="1"> <text>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:</text> <level label="i"> <text>conduct a good faith effort to confirm the death of the insured, annuitant, or retained asset account holder using other available records and information;</text> </level> <level label="ii"> <text>determine whether benefits are due under the applicable life insurance policy, annuity contract, or retained asset account; and</text> </level> <level label="iii"> <text>if benefits are due under the policy, contract, or retained asset account:</text> <level label="1"> <text>use good faith efforts to locate the beneficiary; and</text> </level> <level label="2"> <text>provide to the beneficiary the appropriate claims forms and instructions necessary to make a claim.</text> </level> </level> </level> <level label="2"> <text>An insurer shall document the good faith efforts made to:</text> <level label="i"> <text>confirm the death of an insured, annuitant, or retained asset account holder under paragraph (1)(i) of this subsection; and</text> </level> <level label="ii"> <text>locate a beneficiary under paragraph (1)(iii)1 of this subsection.</text> </level> </level> <level label="3"> <text>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.</text> </level> </level> <level label="e"> <text>An insurer may not charge an insured, an annuitant, a retained asset account holder, a beneficiary, or any other person for any fees or costs incurred by the insurer in connection with complying with subsections (c) and (d) of this section.</text> </level> <level label="f"> <text>The Commissioner may adopt regulations to implement this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-119" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <level label="a"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>An application for a policy of life insurance on the life of a minor that is submitted for underwriting shall include:</text> <level label="i"> <text>the signature of the applicant; and</text> </level> <level label="ii"> <text>unless the minor is emancipated or married, the consent and signature of the parent or legal guardian with whom the minor resides.</text> </level> </level> <level label="3"> <text>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:</text> <text>“A person who feloniously and intentionally kills, conspires to kill, or procures the killing of the insured and who is a named beneficiary of a life insurance policy on the insured is not entitled to a benefit under the policy.”.</text> </level> </level> <level label="b"> <text>As part of the life insurer’s written standards and procedures for policy application and acceptance, the life insurer shall:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>document the applicant’s response on the application; and</text> </level> <level label="3"> <text>take reasonable steps to verify the amount of other life insurance in force or pending.</text> </level> </level> <level label="c"> <text>If an application for a life insurance policy on the life of a minor is for a policy that has a benefit of $50,000 or less and is issued without underwriting, the life insurer shall:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>document the applicant’s response on the application;</text> </level> <level label="3"> <text>take reasonable steps to verify the total amount of life insurance in force or pending; and</text> </level> <level label="4"> <text>document the steps taken on a particular application to verify the total amount of life insurance in force or pending.</text> </level> </level> <level label="d"> <level label="1"> <text>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:</text> <level label="i"> <text>the original signed application;</text> </level> <level label="ii"> <text>the life insurer’s underwriting analysis;</text> </level> <level label="iii"> <text>any correspondence with the applicant; and</text> </level> <level label="iv"> <text>any other documents pertinent to the decision to reject the application.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-120" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="1" subtitle_name="General Provisions"> <text>Except as otherwise provided in this title, an insurer shall maintain records of insurance transactions related to each individual or group policy of life insurance and each individual or group annuity for a period of at least 7 years after the policy or annuity is no longer in effect.</text> </section> <section article="gin" article_name="Insurance" number="16-201" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Except as otherwise provided in this section, a policy of life insurance may not be delivered or issued for delivery in the State unless it contains in substance each applicable provision required by §§ 16-202 through 16-213 of this subtitle.</text> </level> <level label="b"> <text>This section does not apply to:</text> <level label="1"> <text>group life insurance;</text> </level> <level label="2"> <text>pure endowments;</text> </level> <level label="3"> <text>annuity contracts; or</text> </level> <level label="4"> <text>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.</text> </level> </level> <level label="c"> <text>To the extent that a provision or part of a provision required by this subtitle does not apply to a single premium or term policy, the provision or part of the provision need not be included in the policy.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-202" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>The grace period shall be:</text> <level label="i"> <text>30 days;</text> </level> <level label="ii"> <text>at the option of the insurer, 1 month of not less than 30 days; or</text> </level> <level label="iii"> <text>4 weeks, for a policy of industrial life insurance with premiums payable more frequently than monthly.</text> </level> </level> </level> <level label="b"> <text>The policy continues in full force during the grace period.</text> </level> <level label="c"> <text>If a claim arises under the policy during the grace period, the amount of any premium due or overdue may be deducted from the policy proceeds.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-203" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Each policy of life insurance shall contain a provision that the policy is incontestable, except for nonpayment of premiums, after the policy has been in force during the lifetime of the insured for 2 years after its date of issue.</text> </level> <level label="b"> <text>The incontestability provision described in subsection (a) of this section does not apply to policy provisions that relate to disability benefits or to additional benefits for death by accident or accidental means.</text> </level> <level label="c"> <text>A provision in a policy of life insurance that provides that the policy is incontestable after a specified period:</text> <level label="1"> <text>precludes only a contest of the validity of the policy; and</text> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-204" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Each policy of life insurance shall contain a provision that the policy, or the policy and the application for the policy if a copy of the application is endorsed on or attached to the policy when issued, constitute the entire contract between the parties.</text> </level> <level label="b"> <text>If the application is made part of the policy, the policy shall contain a provision that the statements in the application, in the absence of fraud, are considered representations and not warranties.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-205" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Each policy of life insurance shall contain a provision that if the age of the insured or of any other individual whose age is considered in determining the premium or benefit has been misstated, the amount payable or benefit accruing under the policy shall be the amount or benefit that the premium would have purchased had the correct age been stated.</text> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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:</text> <level label="i"> <text>dividends paid in cash or used to pay premiums on the policy; and</text> </level> <level label="ii"> <text>any indebtedness to the insurer on the policy, including interest due and accrued.</text> </level> </level> <level label="3"> <text>The insurer may not exercise the option to void the policy more than 30 days after the correct age is established.</text> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-206" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <level label="1"> <text>Each participating ordinary life insurance policy shall contain a provision that:</text> <level label="i"> <text>each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and</text> </level> <level label="ii"> <text>the dividends arising from the apportionment shall be credited each year beginning not later than the end of the third policy year.</text> </level> </level> <level label="2"> <text>Each participating industrial life insurance policy shall contain a provision that:</text> <level label="i"> <text>each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and</text> </level> <level label="ii"> <text>the dividends arising from the apportionment shall be credited each year beginning not later than the end of the fifth policy year.</text> </level> </level> <level label="3"> <text>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.</text> </level> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>paid in cash;</text> </level> <level label="ii"> <text>applied to the payment of any premium then due;</text> </level> <level label="iii"> <text>applied to provide paid-up additions to the policy; or</text> </level> <level label="iv"> <text>left to accumulate at an interest rate not less than the rate specified in the policy.</text> </level> </level> <level label="2"> <text>A term policy need not provide the dividend options specified in paragraph (1)(iii) and (iv) of this subsection.</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="c"> <text>If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, the policy may provide that any divisible surplus apportioned while the insurance is in force under the nonforfeiture provision shall be applied in any manner specified in the policy.</text> </level> <level label="d"> <text>This section does not prohibit an insurer from granting to the party entitled to the dividends the right to elect another dividend option offered by the insurer in addition to the options required by this section, whether or not the additional option is specified in the policy.</text> </level> <level label="e"> <text>This section does not prohibit payment of additional dividends on default of payment of premiums or on termination of the policy.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-207" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>This section does not apply to:</text> <level label="1"> <text>term policies;</text> </level> <level label="2"> <text>term insurance benefits provided by rider or supplemental policy provisions; or</text> </level> <level label="3"> <text>industrial life insurance policies.</text> </level> </level> <level label="b"> <text>Each policy of life insurance shall contain a provision that, on proper assignment or pledge of the policy and on the sole security of the policy, the insurer shall advance an amount equal to, or at the option of the party entitled to the advance, an amount not exceeding the loan value of the policy:</text> <level label="1"> <text>after premiums have been paid for at least 3 years;</text> </level> <level label="2"> <text>after the policy has a cash surrender value; and</text> </level> <level label="3"> <text>while no premium is in default beyond the grace period.</text> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>In determining the cash surrender value of a policy, the insurer may deduct from the loan value or from the proceeds of the loan:</text> <level label="i"> <text>any existing indebtedness to the insurer not already deducted including any interest then accrued but not due;</text> </level> <level label="ii"> <text>any unpaid balance of the premium for the current policy year; and</text> </level> <level label="iii"> <text>interest on the loan to the end of the current policy year.</text> </level> </level> </level> <level label="e"> <text>Each policy may also contain a provision that:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>the policy terminates if:</text> <level label="i"> <text>the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy; and</text> </level> <level label="ii"> <text>at least 30 days before termination, the insurer mails notice to the last known address of the insured or policy owner and of any assignee of record at the home office of the insurer.</text> </level> </level> </level> <level label="f"> <text>Each policy shall allow the insurer to defer granting a loan, other than for the payment of a premium to the insurer, for 6 months after application for the loan.</text> </level> <level label="g"> <text>Except for those policies that require weekly premium payments, each policy shall provide for an automatic premium loan, subject to an election by the party entitled to elect.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-208" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Policy” includes:</text> <level label="i"> <text>a certificate issued by a fraternal benefit society that provides for policy loans; and</text> </level> <level label="ii"> <text>an annuity contract that provides for policy loans.</text> </level> </level> <level label="3"> <text>“Policyholder” includes:</text> <level label="i"> <text>the owner of a policy; and</text> </level> <level label="ii"> <text>the person designated to pay premiums as shown on the records of the life insurer.</text> </level> </level> <level label="4"> <text>“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.</text> </level> <level label="5"> <text>“Published monthly average” means:</text> <level label="i"> <text>Moody’s corporate bond yield average - monthly average corporates as published by Moody’s Investors Service, Inc. or its successor; or</text> </level> <level label="ii"> <text>if the Moody’s corporate bond yield average - monthly average corporates is not published, a substantially similar average that the Commissioner establishes by regulation.</text> </level> </level> </level> <level label="b"> <text>Each policy of life insurance issued on or after July 1, 1983, shall contain a provision that:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the published monthly average for the calendar month ending 2 months before the date the rate is determined; or</text> </level> <level label="ii"> <text>the annual rate used to calculate the cash surrender values under the policy during the applicable period plus 1%.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <text>For a policy with an adjustable policy loan interest rate, at the intervals specified in the policy:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>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%.</text> </level> </level> <level label="e"> <level label="1"> <text>This subsection applies only to a policy with an adjustable policy loan interest rate.</text> </level> <level label="2"> <text>When a cash loan is made, the life insurer shall notify the policyholder of the beginning annual interest rate on the loan.</text> </level> <level label="3"> <text>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.</text> </level> <level label="4"> <text>The life insurer shall give reasonable advance notice to policyholders with outstanding loans of any increase in interest rates.</text> </level> <level label="5"> <text>The notices required under this subsection shall include the substance of the relevant provisions of subsections (b) and (c)(2) of this section.</text> </level> </level> <level label="f"> <level label="1"> <text>This subsection applies only to a policy with an adjustable policy loan interest rate.</text> </level> <level label="2"> <text>The loan value of the policy shall be determined under Subtitle 3 of this title.</text> </level> <level label="3"> <text>A policy may not terminate during a policy year solely as the result of a change in the interest rate during the policy year.</text> </level> <level label="4"> <text>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.</text> </level> </level> <level label="g"> <text>Unless made specifically applicable to policy loan interest rates, other provisions of law do not apply to policy loan interest rates.</text> </level> <level label="h"> <text>On request, a life insurer shall notify the policyholder each year of the cash value of the policy for the current policy year.</text> </level> <level label="i"> <text>A life insurer that offers policies with an adjustable policy loan interest rate shall establish a written pricing or dividend policy that provides that the policyholders shall receive the benefits from increased earnings of the insurer that result from the use of an adjustable rate by receiving higher dividends, higher cash values, lower premiums, or a combination of benefits.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-209" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <text>If a policy of life insurance provides that the proceeds may be paid in installments or as an annuity, the policy shall contain a provision that so states and shall include a table that shows the amount and period of the installment or annuity if determinable when the policy is issued.</text> </section> <section article="gin" article_name="Insurance" number="16-210" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Each policy of life insurance shall contain a provision that, subject to subsection (b) of this section, a policy of industrial life insurance will be reinstated within 2 years and any other policy of life insurance will be reinstated within 3 years after the due date of the first premium in default on:</text> <level label="1"> <text>written application for reinstatement;</text> </level> <level label="2"> <text>the production of evidence of insurability satisfactory to the insurer; and</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="b"> <text>The policy shall provide that reinstatement is not allowed if:</text> <level label="1"> <text>the policy has been surrendered for its cash surrender value;</text> </level> <level label="2"> <text>the cash surrender value of the policy has been exhausted because of policy indebtedness; or</text> </level> <level label="3"> <text>any paid-up term insurance has expired.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-211" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Each policy of life insurance shall contain a provision that when benefits become payable because of the death of the insured, settlement shall be made on receipt of proof of death and, at the insurer’s option, on surrender of the policy, proof of the interest of the claimant, or both.</text> </level> <level label="b"> <text>The provision also shall state that benefits include the refund of premiums paid after the month in which death occurred.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-212" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>the estate of the insured;</text> </level> <level label="ii"> <text>any relative of the insured by blood, legal adoption, or connection by marriage; or</text> </level> <level label="iii"> <text>a person that appears to the insurer to be equitably entitled to the benefits because the person is a named beneficiary or has incurred expenses for the maintenance, medical attention, or burial of the insured.</text> </level> </level> <level label="2"> <text>The insurer may make a payment under paragraph (1) of this subsection only if:</text> <level label="i"> <text>within the period stated in the policy, which may not be less than 30 days after the death of the insured, the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with proof of death;</text> </level> <level label="ii"> <text>the beneficiary is the estate of the insured;</text> </level> <level label="iii"> <text>the beneficiary is a minor;</text> </level> <level label="iv"> <text>the beneficiary dies before the insured; or</text> </level> <level label="v"> <text>the beneficiary is not legally competent to give a valid release.</text> </level> </level> <level label="3"> <text>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.</text> </level> <level label="4"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-213" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>A policy of life insurance other than a policy of group life insurance may not be delivered or issued for delivery in the State unless the policy has a legible and brief description of the policy on the first page of the policy.</text> </level> <level label="b"> <text>The brief description shall include:</text> <level label="1"> <text>the title or type or plan of policy, including the term “industrial” or “wholesale” if applicable;</text> </level> <level label="2"> <text>how long premiums are to be paid;</text> </level> <level label="3"> <text>if and when the premium may change, except for a change because of a supplementary agreement;</text> </level> <level label="4"> <text>if the benefit is not level, the use of the term “graded benefit” or a similar term to so indicate;</text> </level> <level label="5"> <text>whether the policy is participating or nonparticipating;</text> </level> <level label="6"> <text>if the policy is written on a rated underwriting basis, the terms “substandard class” or “rated class” or a substantially similar term; and</text> </level> <level label="7"> <text>if the policy provides for the return of premiums as an additional benefit, the period during which the benefit is applicable.</text> </level> </level> <level label="c"> <text>Notwithstanding subsections (a) and (b) of this section, the brief description need not contain the items of information described in subsection (b) of this section, except for the items described in subsection (b)(1) and (5) of this section, if in the opinion of the Commissioner any of those items are:</text> <level label="1"> <text>already contained in and presented conspicuously in tabular form on the first page of the policy; or</text> </level> <level label="2"> <text>presented conspicuously elsewhere in the policy and referred to in the description on the first page of the policy.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-214" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <text>A policy of life insurance may include a rider or supplemental policy provision that offers an insured or certificate holder reimbursement or payment for long-term home health care or long-term care in a nursing home or other related institution:</text> <level label="1"> <text>instead of or in addition to benefits payable because of the death of the insured or certificate holder; or</text> </level> <level label="2"> <text>instead of all or part of the cash surrender or other nonforfeiture value of the policy.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-215" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Except as otherwise provided in this section, 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 caused in a specified manner or occurs while the insured has a specified status.</text> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>death as a direct or indirect result of:</text> <level label="1"> <text>a declared or undeclared war;</text> </level> <level label="2"> <text>action by military forces;</text> </level> <level label="3"> <text>an act or hazard of a declared or undeclared war or of an action by military forces;</text> </level> <level label="4"> <text>service in the military forces or in civilian forces auxiliary to the military forces; or</text> </level> <level label="5"> <text>any cause while the insured is a member of the military forces of any country at war, declared or undeclared, or of any country engaged in an action by military forces;</text> </level> </level> <level label="ii"> <text>death as a result of aviation or air travel;</text> </level> <level label="iii"> <text>death that occurs within 2 years after the date of issue of the policy as a result of a specified hazardous occupation or avocation;</text> </level> <level label="iv"> <text>death that occurs within 2 years after the date of issue of the policy while the insured resides outside of the continental United States and Canada; or</text> </level> <level label="v"> <text>death that occurs within 2 years after the date of issue of the policy as a result of suicide while sane or insane.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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:</text> <level label="i"> <text>the reserve calculated in accordance with the Commissioner’s reserve valuation method on the basis of the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits; or</text> </level> <level label="ii"> <text>if the policy does not provide nonforfeiture benefits, the reserve calculated in accordance with a mortality table and interest rate determined by the insurer and specified in the policy.</text> </level> </level> <level label="4"> <text>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.</text> </level> </level> <level label="c"> <text>This section does not apply to:</text> <level label="1"> <text>group life insurance;</text> </level> <level label="2"> <text>reinsurance; or</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="d"> <text>This section does not prohibit any policy provision that in the opinion of the Commissioner is more favorable to the policyholder than a provision allowed by this section.</text> </level> <level label="e"> <text>Notwithstanding any other provision of law, in any newly issued policy of life insurance, the 2-year exclusion for death as a result of suicide allowed in subsection (b)(1)(v) of this section is deemed to begin on the date on which the insurer first issued a life insurance policy to the insured except that:</text> <level label="1"> <text>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:</text> <level label="i"> <text>before the date of issue of the new policy; or</text> </level> <level label="ii"> <text>more than 12 months after the date of issue of the new policy;</text> </level> </level> <level label="2"> <text>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</text> </level> <level label="3"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-216" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <text>Subject to subsection (b) of this section, a policy of life insurance may not contain:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>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</text> </level> <level label="3"> <text>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.</text> </level> </level> <level label="b"> <text>Subsection (a)(2) of this section does not prohibit a policy provision that gives the insurer the right to declare the policy void if:</text> <level label="1"> <text>the insured has received institutional, hospital, medical, or surgical treatment or attention within 2 years before the policy was issued; and</text> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-217" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <text>A policy of wholesale life insurance may not be delivered or issued for delivery in the State unless:</text> <level label="1"> <text>the policy contains the provisions and conforms to the requirements that the Commissioner sets by regulation; and</text> </level> <level label="2"> <text>a copy of the form for the policy has been filed under § 12-203 of this article and approved by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-218" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <text>A policy of life insurance may include a rider or supplemental policy provision that operates to safeguard the contract from lapse in the event of involuntary unemployment. </text> </section> <section article="gin" article_name="Insurance" number="16-219" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="2" subtitle_name="Life Insurance Policy Provisions"> <level label="a"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>The notice shall state:</text> <level label="i"> <text>that the policyholder’s policy allows for a reduction of the face amount of the policy as an option to retain coverage;</text> </level> <level label="ii"> <text>the amount to be paid to prevent the policy from lapse; and</text> </level> <level label="iii"> <text>the insurer’s customer service telephone number.</text> </level> </level> </level> <level label="b"> <text>The notice shall be sent to a policyholder’s last known address:</text> <level label="1"> <text>at the beginning of the grace period under § 16–202 of this subtitle; and</text> </level> <level label="2"> <text>at least 30 days before termination of coverage.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-301" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>This subtitle does not apply to:</text> <level label="1"> <text>reinsurance;</text> </level> <level label="2"> <text>group life insurance;</text> </level> <level label="3"> <text>a pure endowment;</text> </level> <level label="4"> <text>an annuity contract or reversionary annuity contract;</text> </level> <level label="5"> <text>a term policy of a uniform amount that:</text> <level label="i"> <text>does not provide guaranteed nonforfeiture or endowment benefits or provide for renewal;</text> </level> <level label="ii"> <text>is for 20 years or less and expires before the insured’s age 71; and</text> </level> <level label="iii"> <text>requires uniform premiums, payable during the entire term of the policy;</text> </level> </level> <level label="6"> <text>a term policy of a decreasing amount:</text> <level label="i"> <text>that does not provide guaranteed nonforfeiture or endowment benefits; and</text> </level> <level label="ii"> <text>on which the adjusted premium, calculated under the applicable provisions of §§ 16-307 through 16-309 of this subtitle, is less than the adjusted premium on a policy or renewal of a policy of a uniform amount if the policy of the uniform amount:</text> <level label="1"> <text>does not provide guaranteed nonforfeiture or endowment benefits;</text> </level> <level label="2"> <text>is issued at the same age and for the same initial amount of insurance;</text> </level> <level label="3"> <text>is for 20 years or less and expires before the insured’s age 71; and</text> </level> <level label="4"> <text>requires uniform premiums, payable during the entire term of the policy; or</text> </level> </level> </level> <level label="7"> <text>a policy that:</text> <level label="i"> <text>does not provide guaranteed nonforfeiture or endowment benefits; and</text> </level> <level label="ii"> <text>has a cash surrender value or present value for any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated under the applicable provisions of §§ 16-305 through 16-309 of this subtitle, that does not exceed 1.5% of the amount of insurance at the beginning of the same policy year.</text> </level> </level> </level> <level label="b"> <text>For purposes of determining the applicability of this subtitle, the age at expiry for a joint term life insurance policy is the age at expiry of the oldest life.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-302" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <text>The operative date of this subtitle is:</text> <level label="1"> <text>a date from June 2, 1947, to April 29, 1949, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subtitle on a date before April 30, 1949;</text> </level> <level label="2"> <text>a date from May 1, 1949, to January 1, 1950, both inclusive, if allowed by the Commissioner; or</text> </level> <level label="3"> <text>April 30, 1949.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-303" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>Subject to § 16-304(a) of this subtitle, a policy of life insurance may not be delivered or issued for delivery in the State on or after the operative date of this subtitle unless the policy contains in substance:</text> <level label="1"> <text>each provision in subsections (b) through (g) of this section; or</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>a paid-up nonforfeiture benefit on a plan specified in the policy of the amount required by this subtitle, effective as of the due date of the premium in default; or</text> </level> <level label="ii"> <text>an actuarially equivalent paid-up nonforfeiture benefit that provides a greater amount or longer period of death benefits or a greater amount or earlier payment of any endowment benefits.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <text>Each policy shall contain a provision that unless a person entitled to elect another available option within 60 days after the due date of the premium in default makes the election, the specified paid-up nonforfeiture benefit becomes effective.</text> </level> <level label="d"> <text>Each policy shall contain a provision that on surrender of a policy within 60 days after the due date of a premium in default, instead of a paid-up nonforfeiture benefit, the insurer will pay a cash surrender value as specified in the policy of the amount required by this subtitle after premiums have been paid for at least:</text> <level label="1"> <text>3 years for ordinary life insurance; or</text> </level> <level label="2"> <text>5 years for industrial life insurance.</text> </level> </level> <level label="e"> <text>Each policy shall contain a provision that on surrender of a policy within 30 days after the policy anniversary, the insurer will pay a cash surrender value as specified in the policy of the amount required by this subtitle if the policy:</text> <level label="1"> <text>is paid-up by completion of all premium payments; or</text> </level> <level label="2"> <text>is continued under a paid-up nonforfeiture benefit that became effective on or after:</text> <level label="i"> <text>the third policy anniversary for ordinary life insurance; or</text> </level> <level label="ii"> <text>the fifth policy anniversary for industrial life insurance.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>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.</text> </level> <level label="2"> <level label="i"> <text>Each policy other than a policy described in paragraph (1) of this subsection shall contain:</text> <level label="1"> <text>a statement of the mortality table and interest rate used to calculate cash surrender values and paid-up nonforfeiture benefits available under the policy; and</text> </level> <level label="2"> <text>a table that shows any cash surrender value and any paid-up nonforfeiture benefit available under the policy on each policy anniversary during the first 20 years of the policy or, if shorter, the term of the policy.</text> </level> </level> <level label="ii"> <text>Cash surrender values and paid-up nonforfeiture benefits shall be calculated on the assumption that:</text> <level label="1"> <text>there are no dividends or paid-up additions credited to the policy; and</text> </level> <level label="2"> <text>there is no indebtedness to the insurer on the policy.</text> </level> </level> </level> </level> <level label="g"> <text>Each policy shall contain:</text> <level label="1"> <text>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;</text> </level> <level label="2"> <text>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;</text> </level> <level label="3"> <text>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</text> </level> <level label="4"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-304" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>Any provision required under § 16-303(b) through (g) of this subtitle may be omitted from a policy of life insurance to the extent that the provision does not apply under the insurance plan.</text> </level> <level label="b"> <text>The insurer shall reserve the right to defer the payment of any cash surrender value for up to 6 months after demand for payment with surrender of the policy.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-305" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>On default of a premium payment due on a policy anniversary, any cash surrender value available under the policy, regardless of whether the cash surrender value is required under § 16-303 of this subtitle, shall be at least:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>the sum of:</text> <level label="i"> <text>the present value of adjusted premiums, calculated as of that policy anniversary in accordance with the applicable provisions of §§ 16-307 through 16-309 of this subtitle, corresponding to premiums that would have fallen due on or after the anniversary; and</text> </level> <level label="ii"> <text>the amount of any indebtedness to the insurer on the policy.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>This subsection applies only to a policy that:</text> <level label="i"> <text>by rider or supplemental policy provision, provides supplemental life insurance or annuity benefits at the option of the insured for an identifiable additional premium; and</text> </level> <level label="ii"> <text>is issued on or after the operative date of § 16-309 of this subtitle.</text> </level> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the cash surrender value for an otherwise similar policy issued at the same age without the rider or supplemental policy provision; and</text> </level> <level label="ii"> <text>the cash surrender value calculated under subsection (a) of this section for a policy that provides only the benefits otherwise provided by the rider or supplemental policy provision.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>This subsection applies only to a family policy that:</text> <level label="i"> <text>defines a primary insured and provides term insurance on the life of the spouse of the primary insured that expires before the spouse’s age 71; and</text> </level> <level label="ii"> <text>is issued on or after the operative date of § 16-309 of this subtitle.</text> </level> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the cash surrender value calculated under subsection (a) of this section for an otherwise similar policy issued at the same age without term insurance on the life of the spouse; and</text> </level> <level label="ii"> <text>the cash surrender value calculated under subsection (a) of this section for a policy that provides only the benefits otherwise provided by term insurance on the life of the spouse.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-306" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <text>On default of a premium payment due on a policy anniversary, the present value of any paid-up nonforfeiture benefit available under the policy, calculated as of that policy anniversary:</text> <level label="1"> <text>shall at least equal the cash surrender value provided under the policy, calculated as of that policy anniversary; or</text> </level> <level label="2"> <text>if no cash surrender value is provided, shall equal the cash surrender value that would have been required under this subtitle absent a condition that premiums shall have been paid for at least a specified period.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-307" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>This section does not apply to a policy of life insurance issued on or after the operative date of § 16-309 of this subtitle.</text> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;</text> </level> <level label="ii"> <text>2% of the amount of insurance if the insurance is a uniform amount or of the equivalent uniform amount of insurance, calculated under subsection (c) of this section, if the amount of insurance varies with the duration of the policy;</text> </level> <level label="iii"> <text>subject to paragraph (3) of this subsection, 40% of the adjusted premium for the first policy year; and</text> </level> <level label="iv"> <text>subject to paragraph (3) of this subsection, 25% of the lesser of:</text> <level label="1"> <text>the adjusted premium for the first policy year; or</text> </level> <level label="2"> <text>the adjusted premium for a whole life policy of the same uniform amount or equivalent uniform amount with uniform premiums for the duration of the insured’s life, issued at the same age and for the same amount of insurance.</text> </level> </level> </level> <level label="3"> <text>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.</text> </level> </level> <level label="c"> <level label="1"> <text>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:</text> <level label="i"> <text>contains the same endowment benefits;</text> </level> <level label="ii"> <text>is issued at the same age and for the same term;</text> </level> <level label="iii"> <text>has an amount of insurance that does not vary over the duration of the policy; and</text> </level> <level label="iv"> <text>provides benefits that have the same present value at the date of issue as the benefits under the policy that has the variable amount of insurance.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <level label="1"> <text>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:</text> <level label="i"> <text>the adjusted premiums for an otherwise similar policy issued at the same age without the term insurance benefits during the period for which premiums for the term insurance benefits are payable; and</text> </level> <level label="ii"> <text>the adjusted premiums for the term insurance during the period for which premiums for the term insurance are payable.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-308" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>This section does not apply to a policy of life insurance issued on or after the operative date of § 16–309 of this subtitle.</text> </level> <level label="b"> <level label="1"> <text>This subsection does not apply to a policy governed by subsection (c) or (d) of this section.</text> </level> <level label="2"> <level label="i"> <text>For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1941 Standard Ordinary Mortality Table.</text> </level> <level label="ii"> <text>Any differential based on sex shall reflect actuarial expectancies and is subject to the Commissioner’s approval.</text> </level> </level> <level label="3"> <text>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.</text> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <text>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.</text> </level> <level label="6"> <text>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.</text> </level> </level> <level label="c"> <level label="1"> <text>This subsection applies to policies of ordinary life insurance issued:</text> <level label="i"> <text>on or after January 1, 1966, but before the operative date of § 16–309 of this subtitle; or</text> </level> <level label="ii"> <text>on an operative date from June 2, 1959, to December 31, 1965, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subsection on a date before January 1, 1966.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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:</text> <level label="i"> <level label="3"> <text>5% per year for policies issued on or before June 30, 1978;</text> </level> </level> <level label="ii"> <text>4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or</text> </level> <level label="iii"> <level label="5"> <text>5% per year for policies issued on or after July 1, 1980.</text> </level> </level> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <text>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.</text> </level> <level label="6"> <text>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.</text> </level> </level> <level label="d"> <level label="1"> <text>This subsection applies to policies of industrial life insurance issued:</text> <level label="i"> <text>on or after January 1, 1968, but before the operative date of § 16–309 of this subtitle; or</text> </level> <level label="ii"> <text>on an operative date from January 1, 1964, to December 31, 1967, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subsection on a date before January 1, 1968.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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:</text> <level label="i"> <level label="3"> <text>5% per year for policies issued on or before June 30, 1978;</text> </level> </level> <level label="ii"> <text>4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or</text> </level> <level label="iii"> <level label="5"> <text>5% per year for policies issued on or after July 1, 1980.</text> </level> </level> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-309" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Operative date of the valuation manual” has the meaning stated in § 5–201.1(a) of this article.</text> </level> <level label="3"> <text>“Valuation manual” has the meaning stated in § 5–201.1(a) of this article.</text> </level> </level> <level label="b"> <text>This section applies to policies of life insurance issued:</text> <level label="1"> <text>on or after January 1, 1989; or</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;</text> </level> <level label="ii"> <text>1% of either:</text> <level label="1"> <text>the amount of insurance if the insurance is a uniform amount; or</text> </level> <level label="2"> <text>the average amount of insurance at the beginning of each of the first 10 policy years; and</text> </level> </level> <level label="iii"> <text>subject to paragraphs (4) and (5) of this subsection, 125% of the nonforfeiture net level premium.</text> </level> </level> <level label="3"> <text>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.</text> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <text>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:</text> <level label="i"> <text>the amount of insurance if the insurance is a uniform amount; or</text> </level> <level label="ii"> <text>the average amount of insurance at the beginning of each of the first 10 policy years.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="e"> <level label="1"> <text>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:</text> <level label="i"> <text>the sum of the present value of the future guaranteed benefits, calculated as of the time of the change to the newly defined benefits or premiums, provided by the policy and any additional expense allowance; less</text> </level> <level label="ii"> <text>any cash surrender value or the present value of any paid–up nonforfeiture benefit under the policy, calculated as of the time of the change to the newly defined benefits or premiums.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="f"> <text>The additional expense allowance, calculated as of the time of the change to the newly defined benefits or premiums, is the sum of:</text> <level label="1"> <text>1% of the remainder, if positive, of:</text> <level label="i"> <text>the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change; less</text> </level> <level label="ii"> <text>the average amount of insurance before the change at the beginning of each of the first 10 policy years subsequent to the most recent previous change or, if there has not been a previous change, subsequent to the date of issue of the policy; and</text> </level> </level> <level label="2"> <text>125% of the increase, if positive, in the nonforfeiture net level premium.</text> </level> </level> <level label="g"> <text>The recalculated nonforfeiture net level premium equals the quotient of:</text> <level label="1"> <text>the sum of:</text> <level label="i"> <text>the nonforfeiture net level premium applicable before the change multiplied by the present value of an annuity of 1 per year payable on each anniversary of the policy on or subsequent to the date of change on which a premium would have been due had the change not occurred; and</text> </level> <level label="ii"> <text>the present value of the increase in future guaranteed benefits provided by the policy; divided by</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="h"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="i"> <level label="1"> <level label="i"> <text>For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on:</text> <level label="1"> <text>the Commissioners 1980 Standard Ordinary Mortality Table; or</text> </level> <level label="2"> <text>at the election of the insurer for one or more specified life insurance plans, the Commissioners 1980 Standard Ordinary Mortality Table with 10–year select mortality factors.</text> </level> </level> <level label="ii"> <text>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.</text> </level> </level> <level label="2"> <text>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:</text> <level label="i"> <text>for that calendar year; or</text> </level> <level label="ii"> <text>at the option of the insurer, for the immediately preceding calendar year.</text> </level> </level> </level> <level label="j"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>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:</text> <level label="i"> <text>for policies of ordinary life insurance, the Commissioners 1980 Extended Term Insurance Table; and</text> </level> <level label="ii"> <text>for policies of industrial life insurance, the Commissioners 1961 Industrial Extended Term Insurance Table.</text> </level> </level> <level label="4"> <text>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.</text> </level> <level label="5"> <level label="i"> <text>For policies issued before the operative date of the valuation manual, in determining the minimum nonforfeiture standard, an insurer may substitute any Commissioners standard ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulation of the Commissioner for the Commissioners 1980 Standard Ordinary Mortality Table, with or without 10–year select mortality factors or for the Commissioners 1980 Extended Term Insurance Table.</text> </level> <level label="ii"> <level label="1"> <text>Subject to subsubparagraph 2 of this subparagraph, for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for:</text> </level> <level label="A"> <text>the Commissioners 1980 Standard Ordinary Mortality Table, with or without 10–year select mortality factors; or</text> </level> <level label="B"> <text>the Commissioners 1980 Extended Term Insurance Table.</text> </level> <level label="2"> <text>If the Commissioner approves by regulation any Commissioners standard ordinary mortality table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, the minimum nonforfeiture standard approved by the Commissioner supersedes the minimum nonforfeiture standard provided by the valuation manual.</text> </level> </level> </level> <level label="6"> <level label="i"> <text>For policies issued before the operative date of the valuation manual, in determining the minimum nonforfeiture standard, an insurer may substitute any Commissioners standard industrial mortality table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulation of the Commissioner for the Commissioners 1961 Standard Industrial Mortality Table or for the Commissioners 1961 Industrial Extended Term Insurance Table.</text> </level> <level label="ii"> <level label="1"> <text>Subject to subsubparagraph 2 of this subparagraph, for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for:</text> </level> <level label="A"> <text>the Commissioners 1961 Standard Industrial Mortality Table; or</text> </level> <level label="B"> <text>the Commissioners 1961 Industrial Extended Term Insurance Table.</text> </level> <level label="2"> <text>If the Commissioner approves by regulation any Commissioners standard industrial mortality table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, the minimum nonforfeiture standard approved by the Commissioner supersedes the minimum nonforfeiture standard provided by the valuation manual.</text> </level> </level> </level> </level> <level label="k"> <level label="1"> <text>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:</text> <level label="i"> <text>4%; or</text> </level> <level label="ii"> <text>125% of the calendar year statutory valuation interest rate for the policy, in accordance with the standard valuation law, set forth in Title 5, Subtitle 3 of this article, rounded to the nearest 0.25%.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="l"> <text>Notwithstanding any other provision of this article, an insurer that refiles nonforfeiture values or refiles the method of calculating nonforfeiture values for a policy form that has been previously approved need not refile any other provision of the policy form if the refiling only involves a change in the interest rate or mortality table used to calculate nonforfeiture values.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-310" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>This section applies to a plan of life insurance:</text> <level label="1"> <text>that provides that the insurer will determine future premiums based on future experience estimates; or</text> </level> <level label="2"> <text>the minimum values of which cannot be determined under the applicable provisions of §§ 16-303 through 16-309 of this subtitle.</text> </level> </level> <level label="b"> <text>The Commissioner must be satisfied that:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>the benefits and the pattern of premiums under the plan do not mislead prospective policyholders or insureds.</text> </level> </level> <level label="c"> <text>The cash surrender values and paid-up nonforfeiture benefits provided by a plan subject to this section may not be less than the minimum values and benefits required for the plan calculated by a method consistent with the principles of this subtitle, as determined by regulations adopted by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-311" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>On default of a premium payment due on a policy of life insurance at a time other than the policy anniversary, any cash surrender value and paid-up nonforfeiture benefit available under the policy shall be calculated with an allowance for the lapse of time and the payment of any fractional premiums since the immediately preceding policy anniversary.</text> </level> <level label="b"> <text>Values referred to in §§ 16-305 through 16-309 of this subtitle may be calculated on the assumption that a death benefit is payable at the end of the policy year of death.</text> </level> <level label="c"> <text>The net value of any paid-up additions, other than paid-up term additions, may not be less than the amounts used to provide the additions.</text> </level> <level label="d"> <text>Notwithstanding § 16-305 of this subtitle, the following additional benefits and premiums for the benefits shall be disregarded when calculating cash surrender values and nonforfeiture benefits required under this subtitle and need not be included in any paid-up nonforfeiture benefits:</text> <level label="1"> <text>benefits payable for death by accident or accidental means;</text> </level> <level label="2"> <text>benefits payable for dismemberment or loss of sight;</text> </level> <level label="3"> <text>benefits payable for total and permanent disability;</text> </level> <level label="4"> <text>benefits payable as a reversionary annuity or deferred reversionary annuity benefits;</text> </level> <level label="5"> <text>benefits for long-term home health care and long-term care in a nursing home or similar institution;</text> </level> <level label="6"> <text>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;</text> </level> <level label="7"> <text>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:</text> <level label="i"> <text>expires before the child turns 26 years old;</text> </level> <level label="ii"> <text>is a uniform amount after the child is 1 year old;</text> </level> <level label="iii"> <text>has not become paid-up due to the death of a parent of the child; and</text> </level> </level> <level label="8"> <text>other policy benefits additional to life insurance or endowment benefits.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-312" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <level label="a"> <text>This section applies to policies of life insurance issued on or after January 1, 1986, and is in addition to any other applicable provisions of this subtitle.</text> </level> <level label="b"> <text>On default of a premium payment due on a policy anniversary, any cash surrender value available under the policy may not differ from the sum of the greater of the basic cash value calculated in accordance with subsection (c) of this section and zero and the present value of any existing paid-up additions less any indebtedness to the insurer on the policy by more than 0.2% of:</text> <level label="1"> <text>the amount of insurance if the insurance is a uniform amount; or</text> </level> <level label="2"> <text>the average amount of insurance at the beginning of each of the first 10 policy years.</text> </level> </level> <level label="c"> <text>The basic cash value on any anniversary equals the remainder of:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <text>The effects on the basic cash value of supplemental life insurance, annuity benefits, or family coverage as described under the applicable provisions of §§ 16–305, 16–307, 16–308(b), and 16–309 of this subtitle shall be the same as the effects on cash surrender values under those applicable provisions.</text> </level> <level label="e"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the second policy anniversary; and</text> </level> <level label="ii"> <text>the later of:</text> <level label="1"> <text>the fifth policy anniversary; or</text> </level> <level label="2"> <text>the first policy anniversary when there is a cash surrender value available under the policy, excluding any paid-up additions but including any indebtedness on the policy, of at least 0.2% of the amount of insurance if the insurance is a uniform amount or of the average amount of insurance at the beginning of each of the first 10 policy years.</text> </level> </level> </level> <level label="3"> <text>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.</text> </level> <level label="4"> <text>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.</text> </level> </level> <level label="f"> <text>Adjusted premiums and present values referred to in this section shall be calculated for each policy on the same mortality and interest bases that are used to demonstrate compliance of the policy with other applicable provisions of this subtitle.</text> </level> <level label="g"> <text>Cash surrender values referred to in this section include endowment benefits provided by the policy.</text> </level> <level label="h"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-313" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="3" subtitle_name="Maryland Standard Nonforfeiture Law for Life Insurance"> <text>This subtitle is the Maryland Standard Nonforfeiture Law for Life Insurance.</text> </section> <section article="gin" article_name="Insurance" number="16-401" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>Except as otherwise provided in this section, an annuity contract or pure endowment contract may not be delivered or issued for delivery in the State unless it contains in substance each applicable provision required by §§ 16-402 through 16-407 of this subtitle.</text> </level> <level label="b"> <text>This section does not apply to:</text> <level label="1"> <text>reversionary annuities or survivorship annuities;</text> </level> <level label="2"> <text>group annuities; or</text> </level> <level label="3"> <text>contracts for deferred annuities included in or on the lives of beneficiaries under policies of life insurance.</text> </level> </level> <level label="c"> <text>To the extent that a provision required by this subtitle does not apply to a single premium annuity contract or single premium pure endowment contract, the provision need not be included in the annuity contract or pure endowment contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-402" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>Each annuity contract and each pure endowment contract shall contain a provision that a grace period of not less than 30 days shall be allowed within which any stipulated payment to the insurer due after the first may be made.</text> </level> <level label="b"> <text>The annuity contract or pure endowment contract continues in full force during the grace period.</text> </level> <level label="c"> <text>The insurer may charge interest on a payment made during the grace period at a rate specified in the annuity contract or pure endowment contract, not exceeding 6% per year, for the number of days that elapse in the grace period before the payment.</text> </level> <level label="d"> <text>If a claim arises under the annuity contract or pure endowment contract due to death during the grace period before the overdue payment to the insurer or any deferred payments of the current contract year are made, the amount of the payments, with interest on any overdue payments, may be deducted from any amount payable under the annuity contract or pure endowment contract in settlement.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-403" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>Subject to § 16-405 of this subtitle, if a statement, other than a statement about age, sex, or identity, is required as a condition to issuing an annuity contract or pure endowment contract, each annuity contract and each pure endowment contract shall contain a provision that the contract is incontestable, except for nonpayment of stipulated payments to the insurer, after the contract has been in force during the lifetime of the individual or individuals as to whom the statements are required for 2 years after its date of issue.</text> </level> <level label="b"> <text>At the option of the insurer, the contract may also except from the incontestability provision described in subsection (a) of this section provisions that relate to disability benefits or to additional benefits for death by accident or accidental means.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-404" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <text>Each annuity contract and each pure endowment contract shall contain a provision that the contract, or the contract and the application for the contract if a copy of the application is endorsed on or attached to the contract when issued, constitute the entire contract between the parties.</text> </section> <section article="gin" article_name="Insurance" number="16-405" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>Each annuity contract and each pure endowment contract shall contain a provision that, if the age or sex of the individual or individuals on whose life or lives the contract is made, or of any of them, has been misstated, the amount payable or benefit accruing under the contract shall be the amount or benefit that the stipulated payment would have purchased had the correct age or sex been stated.</text> </level> <level label="b"> <text>Each contract also shall contain a provision that if the insurer makes or has made an overpayment because of a misstatement of age or sex, the amount of the overpayment, with interest at a rate specified in the contract but not exceeding 6% per year, may be charged against the current or next payment or payments to be made by the insurer under the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-406" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <level label="1"> <text>Each participating annuity contract and each participating pure endowment contract shall contain a provision that:</text> <level label="i"> <text>each year the insurer shall determine and apportion any divisible surplus under the contract that will accrue on the contract anniversary or other dividend date specified in the contract; and</text> </level> <level label="ii"> <text>the dividends arising from the apportionment shall be credited each year beginning not later than the end of the third contract year.</text> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <text>A deferred annuity contract need not provide for participation in surplus after annuity payments begin.</text> </level> <level label="d"> <text>This section does not prohibit an insurer from granting to the party entitled to the dividend the right to elect another dividend option offered by the insurer in addition to the options required by this section, whether or not the additional option is specified in the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-407" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>Each annuity contract and each pure endowment contract shall contain a provision that, unless the cash surrender value has been paid, the contract may be reinstated, within 1 year after default in making stipulated payments to the insurer, on the payment of all overdue stipulated payments and the payment or reinstatement of any other indebtedness to the insurer on the contract, with interest on the payments and other indebtedness at a rate specified in the contract not exceeding 6% per year.</text> </level> <level label="b"> <text>If applicable, the insurer may require evidence of insurability satisfactory to the insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-408" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <level label="a"> <text>A contract for a reversionary or survivorship annuity may not be delivered or issued for delivery in the State unless it contains in substance each provision required by this section.</text> </level> <level label="b"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <text>Each contract for a reversionary or survivorship annuity shall contain a provision that the contract may be reinstated within 3 years after the date of default in making stipulated payments to the insurer, on:</text> <level label="1"> <text>the production of evidence of insurability satisfactory to the insurer; and</text> </level> <level label="2"> <level label="i"> <text>the payment of all overdue payments and any indebtedness to the insurer on the contract with interest at a rate specified in the contract not exceeding 6% per year compounded annually; or</text> </level> <level label="ii"> <text>the reinstatement as indebtedness on the contract of the amount stated in item (i) of this item, if this amount is within the limits allowed by the then cash value of the contract.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>This section does not apply to group annuities or to annuities included in policies of life insurance.</text> </level> <level label="2"> <text>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.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-409" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="4" subtitle_name="Annuity and Pure Endowment Contract Provisions"> <text>An annuity contract may include a rider or supplemental contract provision that offers a contract holder reimbursement or payment for long–term home health care or long–term care in a nursing home or other related institution:</text> <level label="1"> <text>instead of or in addition to the annuity benefits payable under the contract; or</text> </level> <level label="2"> <text>instead of all or part of the cash surrender or other nonforfeiture value of the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-501" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <text>This subtitle does not apply to:</text> <level label="1"> <text>reinsurance;</text> </level> <level label="2"> <text>a group annuity purchased under a retirement plan or deferred compensation plan established or maintained by an employer, including a partnership or sole proprietorship, or employee organization, or by both, other than a plan that provides individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code;</text> </level> <level label="3"> <text>a premium deposit fund;</text> </level> <level label="4"> <text>a variable annuity;</text> </level> <level label="5"> <text>an investment annuity;</text> </level> <level label="6"> <text>an immediate annuity;</text> </level> <level label="7"> <text>a deferred annuity contract after annuity payments have begun;</text> </level> <level label="8"> <text>a reversionary annuity; or</text> </level> <level label="9"> <text>an annuity contract that is delivered outside the State through an insurance producer or other representative of the insurer issuing the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-502" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <text>The operative date of this subtitle is:</text> <level label="1"> <text>a date from July 2, 1980, to June 30, 1982, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subtitle on a date before July 1, 1982; or</text> </level> <level label="2"> <text>July 1, 1982.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-503" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>An annuity contract may not be delivered or issued for delivery in the State on or after the operative date of this subtitle unless the annuity contract contains:</text> <level label="1"> <text>each applicable provision of subsections (b) through (g) of this section; or</text> </level> <level label="2"> <text>corresponding provisions that the Commissioner believes are at least as favorable to the contract holder after payment of considerations under the annuity contract stops.</text> </level> </level> <level label="b"> <text>Each annuity contract shall contain a provision that when payment of considerations under the annuity contract stops or on the written request of the contract owner, the insurer will grant a paid-up annuity benefit on a plan stipulated in the annuity contract in compliance with §§ 16-505 through 16-509 of this subtitle.</text> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <level label="i"> <text>The annuity contract may state that the insurer shall reserve the right to defer the payment of the cash surrender value for up to 6 months after demand for payment with surrender of the annuity contract.</text> </level> <level label="ii"> <level label="1"> <text>Before making a deferment under subparagraph (i) of this paragraph, the insurer shall make a written request to the Commissioner to make the deferment under subparagraph (i) of this paragraph.</text> </level> <level label="2"> <text>The request under subsubparagraph 1 of this subparagraph shall address the necessity of the deferral and the equitability to all policyholders of the deferral.</text> </level> </level> <level label="iii"> <text>After receiving written approval from the Commissioner on the request made under subparagraph (ii)1 of this paragraph, the insurer may defer the payment of the cash surrender value.</text> </level> </level> </level> <level label="d"> <text>Each annuity contract shall contain a statement of any mortality table and interest rates used to calculate any minimum paid-up annuity, cash surrender, or death benefits, guaranteed by the annuity contract and shall provide sufficient information to determine the benefit amounts.</text> </level> <level label="e"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="f"> <text>If an annuity contract does not provide cash surrender benefits or does not provide death benefits that equal at least the minimum nonforfeiture amount before the start of annuity payments, the annuity contract shall contain a provision that so states in a prominent place in the annuity contract.</text> </level> <level label="g"> <level label="1"> <text>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:</text> <level label="i"> <text>no considerations have been received under the contract for 2 years; and</text> </level> <level label="ii"> <text>the part of the paid-up annuity benefit at maturity under the contract that is available from the considerations paid before termination would be less than $20 per month.</text> </level> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>A payment by an insurer under this section shall relieve the insurer of any further obligation under the deferred annuity contract.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-504" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>The minimum values specified under §§ 16–505 through 16–509 of this subtitle of any paid–up annuity, cash surrender, or death benefits under an annuity contract shall be based on minimum nonforfeiture amounts calculated under this section.</text> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>the accumulation until that time, of the net considerations paid prior to that time, at an interest rate determined under subsection (c) of this section; less</text> </level> <level label="ii"> <text>the sum of:</text> <level label="1"> <text>any withdrawal from or partial surrender of the contract accumulated at the interest rate determined under subsection (c) of this section;</text> </level> <level label="2"> <text>an annual contract charge of $50 accumulated at the interest rate determined under subsection (c) of this section;</text> </level> <level label="3"> <text>any premium tax actually paid by the company for the contract, not to include a premium tax credited back to the company, accumulated at the interest rate determined under subsection (c) of this section; and</text> </level> <level label="4"> <text>any indebtedness to the insurer on the contract, including interest due and accrued.</text> </level> </level> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <level label="1"> <text>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:</text> <level label="i"> <text>3% per year; or</text> </level> <level label="ii"> <text>the 5–year constant maturity treasury rate reported by the Federal Reserve Board.</text> </level> </level> <level label="2"> <text>The 5–year constant maturity treasury rate under paragraph (1)(ii) of this subsection shall be:</text> <level label="i"> <level label="1"> <text>as of a date not more than 15 months before either the contract issue date or redetermination date; or</text> </level> <level label="2"> <text>averaged over a period of not more than 15 months before the contract issue date or redetermination date; and</text> </level> </level> <level label="ii"> <text>rounded to the nearest one–twentieth of 1% and then reduced by 125 basis points.</text> </level> </level> <level label="3"> <text>The interest rate calculated under paragraphs (1) and (2) of this subsection may not be less than 0.15%.</text> </level> <level label="4"> <level label="i"> <text>The interest rate calculated under paragraphs (1) and (2) of this subsection:</text> <level label="1"> <text>shall apply to the initial contract period; and</text> </level> <level label="2"> <text>may be redetermined for additional periods.</text> </level> </level> <level label="ii"> <text>The contract shall state:</text> <level label="1"> <text>whether the interest rate will be redetermined; and</text> </level> <level label="2"> <text>the interest rate redetermination date, basis, and period, if any.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <level label="i"> <text>The Commissioner may require the insurer to demonstrate that the present value of the additional reduction does not exceed the market value of the equity index benefit.</text> </level> <level label="ii"> <text>If the Commissioner finds that the demonstration under subparagraph (i) of this paragraph is inadequate, the Commissioner may disallow or limit the additional reduction.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>The Commissioner may adopt regulations to implement the provisions of this section.</text> </level> <level label="2"> <text>The regulations under paragraph (1) of this subsection may provide for:</text> <level label="i"> <text>adjustments to the calculation of the minimum nonforfeiture amount for contracts that provide substantive participation in an equity index benefit; and</text> </level> <level label="ii"> <text>adjustments for other contracts as determined by the Commissioner.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-505" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>Any paid-up annuity benefit available under an annuity contract shall be:</text> <level label="1"> <text>the present value of the annuity benefit on the date annuity payments are to begin; and</text> </level> <level label="2"> <text>at least the minimum nonforfeiture amount on that date.</text> </level> </level> <level label="b"> <text>The present value shall be calculated using any mortality table and the interest rate specified in the annuity contract to determine minimum paid-up annuity benefits guaranteed in the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-506" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>This section applies only to annuity contracts that provide cash surrender benefits.</text> </level> <level label="b"> <text>Cash surrender benefits available before maturity under an annuity contract may not be less than the remainder of:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="c"> <text>The present value under subsection (b)(1) of this section shall be calculated using an interest rate not more than 1% higher than the interest rate specified in the contract for accumulating net considerations to determine the maturity value.</text> </level> <level label="d"> <level label="1"> <text>A cash surrender benefit may not be less than the minimum nonforfeiture amount at the time of surrender.</text> </level> <level label="2"> <text>A death benefit under a contract subject to this section shall equal at least the cash surrender benefit.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-507" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>This section applies only to annuity contracts that do not provide cash surrender benefits.</text> </level> <level label="b"> <text>The present value of a paid-up annuity benefit available as a nonforfeiture option before maturity may not be less than the sum of:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>any existing additional amount credited by the insurer to the contract.</text> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="d"> <text>The present value of a paid-up annuity benefit may not be less than the minimum nonforfeiture amount at the time of surrender.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-508" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>This section applies to a determination of the benefits calculated under § 16-506 or § 16-507 of this subtitle for an annuity contract that allows an election to have annuity payments begin at optional maturity dates.</text> </level> <level label="b"> <text>The maturity date of an annuity contract described in subsection (a) of this section shall be deemed to be the latest date for which an election is allowed under the contract, but may not be later than the later of the contract anniversary immediately following the annuitant’s 70th birthday or the tenth anniversary of the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-509" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <level label="a"> <text>Any paid-up annuity, cash surrender, or death benefits available at any time other than on a contract anniversary under an annuity contract with fixed scheduled considerations shall be calculated with an allowance for the lapse of time and the payment of any scheduled considerations after the start of the contract year in which payment of considerations stops.</text> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>the cash surrender benefits; or</text> </level> <level label="ii"> <text>a return of the gross considerations with interest.</text> </level> </level> <level label="2"> <text>The minimum nonforfeiture benefits shall:</text> <level label="i"> <text>be calculated separately as if the annuity benefits and life insurance benefits were provided under separate contracts; and</text> </level> <level label="ii"> <text>equal the sum of:</text> <level label="1"> <text>the minimum nonforfeiture benefits for the annuity part of the contract; and</text> </level> <level label="2"> <text>the minimum nonforfeiture benefits for the life insurance part of the contract.</text> </level> </level> </level> </level> <level label="c"> <text>Notwithstanding this section and §§ 16-505 through 16-508 of this subtitle, the following supplemental benefits and considerations for the benefits shall be disregarded when calculating the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits required under this subtitle:</text> <level label="1"> <text>benefits payable for total and permanent disability;</text> </level> <level label="2"> <text>benefits payable as reversionary annuity or deferred reversionary annuity benefits; or</text> </level> <level label="3"> <text>other policy benefits additional to life insurance, endowment, and annuity benefits.</text> </level> </level> <level label="d"> <text>Additional benefits under subsection (c) of this section need not be included in any paid-up benefits unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-510" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="5" subtitle_name="Maryland Standard Nonforfeiture Law for Individual Deferred Annuities"> <text>This subtitle is the Maryland Standard Nonforfeiture Law for Individual Deferred Annuities and shall be interpreted in a manner consistent with the Standard Nonforfeiture Model Law for Individual Deferred Annuities published by the National Association of Insurance Commissioners.</text> </section> <section article="gin" article_name="Insurance" number="16-601" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="6" subtitle_name="Variable Contracts"> <level label="a"> <level label="1"> <text>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:</text> <level label="i"> <text>is authorized to issue life insurance contracts in the State; and</text> </level> <level label="ii"> <text>is authorized by the Commissioner to issue individual and group variable life insurance contracts.</text> </level> </level> <level label="2"> <text>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:</text> <level label="i"> <text>is authorized to issue annuity contracts in the State; and</text> </level> <level label="ii"> <text>is authorized by the Commissioner to issue individual and group variable annuity contracts.</text> </level> </level> </level> <level label="b"> <text>To be authorized to issue variable contracts, a stock insurer or mutual insurer shall comply with regulations adopted by the Commissioner.</text> </level> <level label="c"> <text>The regulations of the Commissioner may include:</text> <level label="1"> <text>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</text> </level> <level label="2"> <text>other requirements that the Commissioner considers appropriate to safeguard the interests of variable contract holders, other policyholders, insurers, and the public.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="16-602" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="6" subtitle_name="Variable Contracts"> <level label="a"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>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.</text> </level> </level> <level label="b"> <text>The investments of a segregated asset account shall comply with the regulations of the Commissioner.</text> </level> <level label="c"> <text>To the extent provided under the applicable contracts, the part of the assets of a segregated asset account equal to the reserves and other contract liabilities with respect to the account may not be chargeable with liabilities arising out of any other business that the insurer may conduct.</text> </level> </section> <section article="gin" article_name="Insurance" number="16-603" title_number="16" title_name="Life Insurance and Annuities" subtitle_number="6" subtitle_name="Variable Contracts"> <level label="a"> <text>A variable life insurance policy or variable annuity contract may not be delivered or issued for delivery in the State until the form of the policy or annuity contract has been filed with and approved by the Commissioner.</text> </level> <level label="b"> <text>By regulation, the Commissioner shall determine the grace, reinstatement, and nonforfeiture provisions and other required policy provisions that are appropriate to variable life insurance contracts and variable annuity contracts.</text> </level> </section>