TN Code § 56-36-104 (2021)
2021 Tennessee Code|Title 56 - Insurance|Chapter 36 - Standard Nonforfeiture Law for Individual Deferred Annuities|§ 56-36-104. Minimum Values

  Prior to July 1, 2006, a company may elect to comply with this subsection (a) or subsection (b). On and after July 1, 2006, all companies shall comply with subsection (b). The minimum values as specified in this chapter in §§ 56-36-105 — 56-36-108 and 56-36-110 of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section:    and increased by any existing additional amounts credited by the company to the contract.    With respect to contracts providing for flexible considerations issued prior to July 1, 2002, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at a rate of interest of three percent (3%) per annum of percentages of the net considerations, as defined in subdivision (a)(1)(B), prior to that time, decreased by the sum of:  Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of three percent (3%) per annum; and   The amount of any indebtedness to the company on the contract, including interest due and accrued;     With respect to contracts providing for flexible considerations issued on and after July 1, 2002, the minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest of one and one half percent (1.5%) per annum of percentages of the net considerations, as defined in subdivision (a)(1)(B), prior to such time, decreased by the sum of:  Any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest of one and one half percent (1.5%) per annum; and   The amount of any indebtedness to the company on the contract, including interest due and accrued;      and increased by any existing additional amounts credited by the company to the contract;    The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount not less than zero (0) and shall be equal to the corresponding gross considerations credited to the contract during that contract year, less an annual contract charge of thirty dollars ($30.00), and less a collection charge of one dollar and twenty-five cents ($1.25), per consideration credited to the contract during that contract year. The percentages of net considerations shall be sixty-five percent (65%) of the net consideration for the first contract year and eighty-seven and one half percent (87.5%) of the net considerations for the second and later contract years. Notwithstanding the preceding sentence, the percentage shall be sixty-five percent (65%) of the portion of the total net consideration for any renewal contract year that exceeds by not more than two (2) times the sum of those portions of the net considerations in all prior years for which the percentage was sixty-five percent (65%);     With respect to contracts providing for fixed scheduled considerations, minimum nonforfeiture amounts shall be calculated on the assumption that considerations are paid annually in advance and shall be defined as for contracts with flexible considerations that are paid annually with two (2) exceptions:  The portion of the net consideration for the first contract year to be accumulated shall be the sum of sixty-five percent (65%) of the net consideration for the first contract year plus twenty-two and one half percent (22.5%) of the excess of the net consideration for the first contract year over the lesser of the net considerations for the second and third contract years; and   The annual contract charge shall be the lesser of:   Thirty dollars ($30.00); or   Ten percent (10%) of the gross annual consideration; and       With respect to contracts providing for a single consideration, minimum nonforfeiture amounts shall be defined as for contracts with flexible considerations, except that the percentage of net consideration used to determine the minimum nonforfeiture amount shall be equal to ninety percent (90%) and the net consideration shall be the gross consideration less a contract charge of seventy-five dollars ($75.00).     The minimum values as specified in this chapter in §§ 56-36-105 — 56-36-108 and 56-36-110 of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this subsection (b).   The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in subdivision (b)(2) of the net considerations, as defined in this section, paid prior to such time, decreased by the sum of subdivisions (b)(1)(A)(i)-(iv):   Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in subdivision (b)(2);   An annual contract charge of fifty dollars ($50.00), accumulated at rates of interest as indicated in subdivision (b)(2);   Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in subdivision (b)(2); and   The amount of any indebtedness to the company on the contract, including interest due and accrued; and     The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one half percent (87.5%) of the gross considerations credited to the contract during that contract year.     The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of three percent (3%) per annum and the following, which shall be specified in the contract if the interest rate will be reset:  The five-year constant maturity treasury rate reported by the federal reserve as of a date, or average over a period, rounded to the nearest one-twentieth of one percent (0.05%), specified in the contract no longer than fifteen (15) months prior to the contract issue date or redetermination date under subdivision (b)(2)(D);   Reduced by one hundred twenty-five (125) basis points;   Where the resulting interest rate is not less than one percent (1%); and   The interest rate shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year constant maturity treasury rate to be used at each redetermination date.     During the period or term that a contract provides substantive participation in an equity indexed benefit, it may increase the reduction described in subdivision (b)(2)(B) by up to an additional one hundred (100) basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.   The commissioner may adopt rules and regulations, in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement subdivision (b)(3) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the commissioner determines adjustments are justified.