# Insurance (GIN)

## Title 16. Life Insurance and Annuities

### Subtitle 3. Maryland Standard Nonforfeiture Law for Life Insurance

#### Section 16-301

(a) This subtitle does not apply to:

  (1) reinsurance;

  (2) group life insurance;

  (3) a pure endowment;

  (4) an annuity contract or reversionary annuity contract;

  (5) a term policy of a uniform amount that:

    (i) does not provide guaranteed nonforfeiture or endowment benefits or provide for renewal;

    (ii) is for 20 years or less and expires before the insured's age 71; and

    (iii) requires uniform premiums, payable during the entire term of the policy;

  (6) a term policy of a decreasing amount:

    (i) that does not provide guaranteed nonforfeiture or endowment benefits; and

    (ii) on which the adjusted premium, calculated under the applicable provisions of Sec.Sec. 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:

      (1) does not provide guaranteed nonforfeiture or endowment benefits;

      (2) is issued at the same age and for the same initial amount of insurance;

      (3) is for 20 years or less and expires before the insured's age 71; and

      (4) requires uniform premiums, payable during the entire term of the policy; or

  (7) a policy that:

    (i) does not provide guaranteed nonforfeiture or endowment benefits; and

    (ii) 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 Sec.Sec. 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.

(b) 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.

#### Section 16-302

The operative date of this subtitle is:

(1) 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;

(2) a date from May 1, 1949, to January 1, 1950, both inclusive, if allowed by the Commissioner; or

(3) April 30, 1949.

#### Section 16-303

(a) Subject to Sec. 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:

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

  (2) 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 Sec. 16-312 of this subtitle.

(b)

  (1) 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:

    (i) 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

    (ii) 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.

  (2) 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.

(c) 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.

(d) 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:

  (1) 3 years for ordinary life insurance; or

  (2) 5 years for industrial life insurance.

(e) 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:

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

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

    (i) the third policy anniversary for ordinary life insurance; or

    (ii) the fifth policy anniversary for industrial life insurance.

(f)

  (1) 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.

  (2)

    (i) Each policy other than a policy described in paragraph (1) of this subsection shall contain:

      (1) 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

      (2) 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.

    (ii) Cash surrender values and paid-up nonforfeiture benefits shall be calculated on the assumption that:

      (1) there are no dividends or paid-up additions credited to the policy; and

      (2) there is no indebtedness to the insurer on the policy.

(g) Each policy shall contain:

  (1) 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;

  (2) 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;

  (3) 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

  (4) 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.

#### Section 16-304

(a) Any provision required under Sec. 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.

(b) 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.

#### Section 16-305

(a) 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 Sec. 16-303 of this subtitle, shall be at least:

  (1) 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

  (2) the sum of:

    (i) the present value of adjusted premiums, calculated as of that policy anniversary in accordance with the applicable provisions of Sec.Sec. 16-307 through 16-309 of this subtitle, corresponding to premiums that would have fallen due on or after the anniversary; and

    (ii) the amount of any indebtedness to the insurer on the policy.

(b)

  (1) This subsection applies only to a policy that:

    (i) 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

    (ii) is issued on or after the operative date of Sec. 16-309 of this subtitle.

  (2) 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:

    (i) the cash surrender value for an otherwise similar policy issued at the same age without the rider or supplemental policy provision; and

    (ii) 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.

(c)

  (1) This subsection applies only to a family policy that:

    (i) 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

    (ii) is issued on or after the operative date of Sec. 16-309 of this subtitle.

  (2) 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:

    (i) 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

    (ii) 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.

(d)

  (1) 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 Sec. 16-303 of this subtitle.

  (2) 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.

#### Section 16-306

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:

(1) shall at least equal the cash surrender value provided under the policy, calculated as of that policy anniversary; or

(2) 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.

#### Section 16-307

(a) This section does not apply to a policy of life insurance issued on or after the operative date of Sec. 16-309 of this subtitle.

(b)

  (1) 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.

  (2) 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:

    (i) the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;

    (ii) 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;

    (iii) subject to paragraph (3) of this subsection, 40% of the adjusted premium for the first policy year; and

    (iv) subject to paragraph (3) of this subsection, 25% of the lesser of:

      (1) the adjusted premium for the first policy year; or

      (2) 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.

  (3) 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.

(c)

  (1) 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:

    (i) contains the same endowment benefits;

    (ii) is issued at the same age and for the same term;

    (iii) has an amount of insurance that does not vary over the duration of the policy; and

    (iv) 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.

  (2) 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.

(d)

  (1) 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:

    (i) 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

    (ii) the adjusted premiums for the term insurance during the period for which premiums for the term insurance are payable.

  (2) 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.

#### Section 16-308

(a) This section does not apply to a policy of life insurance issued on or after the operative date of Sec. 16-309 of this subtitle.

(b)

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

  (2)

    (i) 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.

    (ii) Any differential based on sex shall reflect actuarial expectancies and is subject to the Commissioner's approval.

  (3) 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.

  (4) 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.

  (5) 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.

  (6) 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.

(c)

  (1) This subsection applies to policies of ordinary life insurance issued:

    (i) on or after January 1, 1966, but before the operative date of Sec. 16-309 of this subtitle; or

    (ii) 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.

  (2) 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.

  (3) 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:

    (i)

      (3) 5% per year for policies issued on or before June 30, 1978;

    (ii) 4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or

    (iii)

      (5) 5% per year for policies issued on or after July 1, 1980.

  (4) 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.

  (5) 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.

  (6) 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.

(d)

  (1) This subsection applies to policies of industrial life insurance issued:

    (i) on or after January 1, 1968, but before the operative date of Sec. 16-309 of this subtitle; or

    (ii) 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.

  (2) 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.

  (3) 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:

    (i)

      (3) 5% per year for policies issued on or before June 30, 1978;

    (ii) 4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or

    (iii)

      (5) 5% per year for policies issued on or after July 1, 1980.

  (4) 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.

  (5) 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.

#### Section 16-309

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Operative date of the valuation manual" has the meaning stated in Sec. 5-201.1(a) of this article.

  (3) "Valuation manual" has the meaning stated in Sec. 5-201.1(a) of this article.

(b) This section applies to policies of life insurance issued:

  (1) on or after January 1, 1989; or

  (2) 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.

(c)

  (1) 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.

  (2) 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:

    (i) the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;

    (ii) 1% of either:

      (1) the amount of insurance if the insurance is a uniform amount; or

      (2) the average amount of insurance at the beginning of each of the first 10 policy years; and

    (iii) subject to paragraphs (4) and (5) of this subsection, 125% of the nonforfeiture net level premium.

  (3) 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.

  (4) 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.

  (5) 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:

    (i) the amount of insurance if the insurance is a uniform amount; or

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

(d)

  (1) 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.

  (2) 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.

(e)

  (1) 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:

    (i) 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

    (ii) 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.

  (2) 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.

(f) The additional expense allowance, calculated as of the time of the change to the newly defined benefits or premiums, is the sum of:

  (1) 1% of the remainder, if positive, of:

    (i) the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change; less

    (ii) 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

  (2) 125% of the increase, if positive, in the nonforfeiture net level premium.

(g) The recalculated nonforfeiture net level premium equals the quotient of:

  (1) the sum of:

    (i) 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

    (ii) the present value of the increase in future guaranteed benefits provided by the policy; divided by

  (2) 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.

(h)

  (1) 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.

  (2) 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.

(i)

  (1)

    (i) For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on:

      (1) the Commissioners 1980 Standard Ordinary Mortality Table; or

      (2) 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.

    (ii) 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.

  (2) 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:

    (i) for that calendar year; or

    (ii) at the option of the insurer, for the immediately preceding calendar year.

(j)

  (1) Any cash surrender value available under a paid-up nonforfeiture benefit, including any paid-up dividend additions, regardless of whether required under Sec. 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.

  (2) 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.

  (3) 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:

    (i) for policies of ordinary life insurance, the Commissioners 1980 Extended Term Insurance Table; and

    (ii) for policies of industrial life insurance, the Commissioners 1961 Industrial Extended Term Insurance Table.

  (4) 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.

  (5)

    (i) 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.

    (ii)

      (1) 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:

      (A) the Commissioners 1980 Standard Ordinary Mortality Table, with or without 10-year select mortality factors; or

      (B) the Commissioners 1980 Extended Term Insurance Table.

      (2) 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.

  (6)

    (i) 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.

    (ii)

      (1) 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:

      (A) the Commissioners 1961 Standard Industrial Mortality Table; or

      (B) the Commissioners 1961 Industrial Extended Term Insurance Table.

      (2) 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.

(k)

  (1) 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:

    (i) 4%; or

    (ii) 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%.

  (2) 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.

(l) 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.

#### Section 16-310

(a) This section applies to a plan of life insurance:

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

  (2) the minimum values of which cannot be determined under the applicable provisions of Sec.Sec. 16-303 through 16-309 of this subtitle.

(b) The Commissioner must be satisfied that:

  (1) 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 Sec.Sec. 16-303 through 16-309 of this subtitle; and

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

(c) 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.

#### Section 16-311

(a) 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.

(b) Values referred to in Sec.Sec. 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.

(c) 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.

(d) Notwithstanding Sec. 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:

  (1) benefits payable for death by accident or accidental means;

  (2) benefits payable for dismemberment or loss of sight;

  (3) benefits payable for total and permanent disability;

  (4) benefits payable as a reversionary annuity or deferred reversionary annuity benefits;

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

  (6) 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;

  (7) 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:

    (i) expires before the child turns 26 years old;

    (ii) is a uniform amount after the child is 1 year old;

    (iii) has not become paid-up due to the death of a parent of the child; and

  (8) other policy benefits additional to life insurance or endowment benefits.

#### Section 16-312

(a) 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.

(b) 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:

  (1) the amount of insurance if the insurance is a uniform amount; or

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

(c) The basic cash value on any anniversary equals the remainder of:

  (1) 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

  (2) 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.

(d) The effects on the basic cash value of supplemental life insurance, annuity benefits, or family coverage as described under the applicable provisions of Sec.Sec. 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.

(e)

  (1) 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 Sec. 16-307, Sec. 16-308(b), or Sec. 16-309 of this subtitle.

  (2) 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:

    (i) the second policy anniversary; and

    (ii) the later of:

      (1) the fifth policy anniversary; or

      (2) 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.

  (3) 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.

  (4) 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 Sec. 16-307, Sec. 16-308(b), or Sec. 16-309 of this subtitle were substituted for the nonforfeiture factors in the calculation of the basic cash value.

(f) 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.

(g) Cash surrender values referred to in this section include endowment benefits provided by the policy.

(h)

  (1) 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 Sec.Sec. 16-303 through 16-306, Sec. 16-309, and Sec. 16-311 of this subtitle.

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

#### Section 16-313

This subtitle is the Maryland Standard Nonforfeiture Law for Life Insurance.

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Md. Code Ann., Ins. (as displayed at mgaleg.maryland.gov, October 16, 2026)