California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 10.2 - Annuity Nonforfeiture › Section 2523.4 - Nonforfeiture Rate and Minimum Nonforfeiture Amount

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) At any point in time, an annuity contract
				  (or certificate) without an equity-indexed benefit will have one nonforfeiture
				  rate and one nonforfeiture amount applicable to the entire contract that is
				  determined in compliance with Section
				  10168.25 of
				  the Insurance Code.
(b) For an
				  annuity contract (or certificate) in which equity-indexed benefits are
				  available the annuity contract (or certificate) may have more than one
				  nonforfeiture rate applicable to the contract (or certificate) subject to the
				  following:
(1) If the contract has a non
				  equity-indexed benefit, the nonforfeiture interest rate applicable to the non
				  equity-indexed benefit shall be determined in compliance with Subsection
				  10168.25(d)
				  of the Insurance Code.
(2) If an
				  additional reduction is elected for equity-indexed benefits, reduced
				  nonforfeiture interest rates may apply to each equity-indexed benefit for which
				  the additional reduction is elected in compliance with Subsection
				  10168.25(e)
				  of the Insurance Code and Section
				  2523.5 of this Article.
(3) The minimum nonforfeiture amount for the
				  contract is determined by calculating a nonforfeiture amount, without any
				  reduction for indebtedness to the company on the contract including interest
				  due and accrued on the indebtedness, for each equity-indexed and non
				  equity-indexed benefit using the nonforfeiture interest rates described in this
				  subsection, summing the results, and then deducting any indebtedness to the
				  company on the contract including interest due and accrued on the
				  indebtedness.
(4) When contract
				  value is transferred (see the example of transfer of minimum nonforfeiture
				  amount in Section
				  2523.6, Appendix B)
(A) From a benefit, the benefit's minimum
				  nonforfeiture amount is reduced by the benefit's minimum nonforfeiture amount
				  prior to the transfer multiplied by the proportion of the benefit's contract
				  value that is transferred;
(B) To a
				  benefit, the benefit's minimum nonforfeiture amount is increased by the sum of
				  all reductions in minimum nonforfeiture amounts determined under (A) multiplied
				  by the proportion of total contract value that is transferred to that
				  benefit;
(C) For purposes of the
				  calculations specified in (A) and (B) above, the contract value must first be
				  reduced by any fees associated with the transfer.
(5) In the case of a withdrawal from a
				  benefit in which the amount of withdrawal exceeds the benefit's nonforfeiture
				  amount, the insurer shall treat the excess withdrawal in a manner at least as
				  favorable to the contract holder as deducting the excess withdrawal from the
				  nonforfeiture amounts of other benefits in order from lowest to highest
				  nonforfeiture interest rate.
(6)
				  Any contract charge or premium taxes paid by the company must be allocated to a
				  benefit's minimum nonforfeiture amount based on the percentage of that
				  benefit's contract value to the total contract value.