Prior to the payment of any accelerated benefit, the insurer shall receive from any assignee or irrevocable beneficiary of the policy a signed acknowledgment of concurrence for the payment. For the purposes of this section, "totally and permanently disabled" means disabled continuously for a period, such period to be specified in any such provision, of not less than 60 days nor more than one year, except this provision shall not apply to and specifically excludes group life insurance. Such company may make insurance on the health of individuals, against accidental personal injury, disablement or death and against loss, liability or expense on account thereof. Such company so transacting such health and accident insurance business, or either kind, shall maintain statutory and separate reserves for such business, shall issue such contracts only in separate policies except as otherwise permitted herein and shall make separate reports to the commissioner of insurance of the premiums received and expenses and losses incurred in connection with such business, except that such reports will not be required for accelerated benefits incorporated in a life or annuity policy. Long-term care insurance meeting the applicable requirements of K.S.A. 40-2227 and 40-2228, and amendments thereto, may be incorporated in life insurance policies if approved by the commissioner.
The business of life insurance in this state shall not be in any way conducted or transacted by any company which in this state makes insurance on marine, fire, inland or any other like risks, except that, life, health and accident insurance on the group or industrial plan may be combined in one policy, which shall show the premium charged for life insurance and the premium charged for health and accident insurance, and the insured, at the insured's option, may discontinue either and by payment of the stated premium continue the other. The amount of capital stock of a company organized on the stock plan shall be not less than $600,000.
Companies organized on the mutual plan shall be required to have applications from at least 200 persons for insurance upon their lives, aggregating not less than $400,000, upon which one full annual premium in cash shall have been paid. No such company shall transact any business of insurance until, if a stock company, all the capital stock named in its charter has been paid in cash including all contributions to surplus to be made by the original purchasers of such stock. The surplus shall be at least $600,000, and at least $400,000 in securities authorized by this code shall have been deposited with the commissioner of insurance pursuant to K.S.A. 40-229a, and amendments thereto, and if a mutual company, a guaranty fund of at least $1,200,000, and at least $400,000 of which shall be in securities as authorized in this code and deposited with the commissioner of insurance pursuant to K.S.A. 40-229a and amendments thereto. The guaranty fund may be returned to the contributors with interest at 6% per annum whenever the surplus shall equal the amount of such guaranty fund and interest, and no company shall transact any business of insurance unless it shall maintain the capital or surplus or both required of a company commencing to transact business, or, if a mutual company, the required number and amount of applications for insurance have been received and the annual premiums collected in cash. The securities deposited pursuant to this section shall be held by the commissioner of insurance in trust for the benefit and protection of the policyholders or creditors, or both, of the company depositing the same and may be withdrawn only upon order of the commissioner of insurance.
History: L. 1927, ch. 231, 40-401; L. 1965, ch. 300, § 1; L. 1969, ch. 237, § 1; L. 1975, ch. 242, § 2; L. 1984, ch. 169, § 1; L. 1989, ch. 135, § 1; L. 1990, ch. 164, § 1; L. 1993, ch. 92, § 1; L. 1995, ch. 46, § 1; L. 1996, ch. 25, § 5; L. 2005, ch. 42, § 1; July 1.
History: L. 1927, ch. 231, 40-402; L. 1965, ch. 300, § 2; L. 1969, ch. 237, § 2; L. 1984, ch. 169, § 2; L. 1996, ch. 25, § 6; July 1.
History: L. 1927, ch. 231, 40-403; L. 1933, ch. 70, § 1 (Special Session); L. 1935, ch. 198, § 1; L. 1937, ch. 251, § 1; L. 1945, ch. 213, § 1; L. 1947, ch. 274, § 1; L. 1953, ch. 227, § 1; L. 1957, ch. 277, § 1; L. 1959, ch. 211, § 1; L. 1961, ch. 233, § 1; Repealed, L. 1968, ch. 374, § 3; July 1.
History: L. 1935, ch. 198, § 2; Repealed, L. 1968, ch. 374, § 3; July 1.
History: L. 1947, ch. 283, § 1; April 12.
History: L. 1968, ch. 374, § 1; L. 1971, ch. 165, § 1; Repealed, L. 1972, ch. 179, § 21; July 1.
History: L. 1927, ch. 231, 40-404; L. 1937, ch. 252, § 1; L. 1939, ch. 208, § 1; L. 1953, ch. 228, § 1; L. 1957, ch. 278, § 1; L. 1971, ch. 185, § 13; L. 1986, ch. 177, § 1; L. 1987, ch. 162, § 1; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1933, ch. 201, § 1; L. 1935, ch. 199, § 1; L. 1937, ch. 252, § 2; L. 1947, ch. 275, § 1; L. 1971, ch. 166, § 1; L. 1986, ch. 177, § 2; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1933, ch. 201, § 2; Repealed, L. 1937, ch. 252, § 4; March 9.
History: L. 1987, ch. 162, § 2; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1927, ch. 231, 40-405; L. 1945, ch. 214, § 1; L. 1947, ch. 276, § 1; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1927, ch. 231, 40-406; Repealed, L. 1996, ch. 25, § 17; July 1.
History: L. 1927, ch. 231, 40-407; L. 1937, ch. 252, § 3; L. 1957, ch. 279, § 1; L. 1959, ch. 212, § 1; L. 1965, ch. 301, § 1; Repealed, L. 1972, ch. 180, § 1; July 1.
History: L. 1927, ch. 231, 40-408; Repealed, L. 1972, ch. 180, § 1; July 1.
Any such company which at any time shall have adopted any standards of valuation producing greater aggregate reserves than those calculated according to the minimum standards hereinafter provided may, with the approval of the commissioner of insurance, adopt any lower standard of valuation, but not lower than the minimum herein provided.
(b) This subsection shall become operative for the year ending December 31, 1995, and each subsequent calendar year.
(1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner shall adopt an administrative regulation defining the specific application, scope and content of this opinion.
(2) Except as otherwise provided by law or rules and regulations of the commissioner, every life insurance company shall also annually include in the opinion required by subsection (1), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, making adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts.
(3) The commissioner may provide for a transition period for establishing any higher reserves which the qualified actuary deems necessary in order to render the opinion required by this section.
(4) Each opinion required by subsection (2) shall comply with the following provisions:
(A) A memorandum, in form and substance acceptable to or prescribed by the commissioner shall be prepared to support each actuarial opinion.
(B) If the insurance company fails to provide a supporting memorandum within a period specified or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the prescribed standards or is otherwise unacceptable to the commissioner, the commissioner is authorized to employ an actuary whose compensation and expenses shall be paid by the company whose policies, additions, unpaid dividends or other outstanding policy or contractual obligations are valued upon a certificate by the commissioner showing the compensation and expenses due therefor.
(5) Every opinion of the actuary shall comply with the following provisions:
(A) The opinion shall be submitted with the annual statement required by K.S.A. 40-225 and amendments thereto reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1995.
(B) The opinion shall apply to all business in force including individual and group health insurance plans.
(C) The opinion shall be based on standards adopted from time to time by the actuarial standards board of the American academy of actuaries and on such additional standards as the commissioner prescribes.
(D) In the case of an opinion required to be submitted by an insurance company not domiciled in this state, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.
(E) For the purposes of this section, "qualified actuary" means a member in good standing of the American academy of actuaries.
(F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion required by this act.
(G) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection with the opinion, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by rules and regulations adopted pursuant to this section. Notwithstanding the provisions of this subpart (G), the memorandum or other material may be released by the commissioner: (i) With the written consent of the company, or (ii) to the American academy of actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.
(c) This subsection shall apply to only those policies and contracts issued prior to the operative date of K.S.A. 40-428, and amendments thereto, (the standard nonforfeiture law), except as provided in subsection (d) of this section.
For the purpose of such valuations and for making special examinations of the condition of life insurance companies, as provided by the laws of this state, and for valuing all outstanding policies of every life insurance company, the method and basis of valuation shall be the same as prescribed by the insurance code of this state in the valuation of such contracts before June 1, 1927. The legal minimum standard for the valuation of life insurance contracts issued on or after June 1, 1927, shall be the one-year preliminary-term method of valuation, except as hereinafter modified, on the basis of the American experience table of mortality with interest at 4% per annum. If the premium charged for term insurance under limited-payment life preliminary-term policy providing for the payment of all premiums thereon in less than 20 years from the date of policy, or under an endowment preliminary-term policy, exceeds that charged for life insurance under twenty-payment life preliminary-term policy of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a twenty-payment life preliminary-term policy issued in the same year and at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium-payment period, equal to the difference between the value at the end of such period of such a twenty-payment life preliminary-term policy and the full net level premium reserve at such time of such a limited-payment life or endowment policy. The premium-payment period is the period during which premiums are concurrently payable, under such twenty-payment life preliminary-term policy and such limited-payment life or endowment policy. Policies issued on the preliminary-term method shall contain a clause specifying that the reserve thereof shall be computed in accordance with the modified preliminary-term method of valuation provided therein. Except as otherwise provided for group annuity and pure endowment contracts in paragraphs (1-a) and (1-b) of subsection (d) of this section, the legal minimum standard for the valuation of annuities shall be McClintock's "table of mortality among annuitants," with interest at 4% per annum, but annuities deferred 10 or more years and written in connection with life insurance shall be valued on the same basis as that used in computing the consideration or premiums therefor, or upon any higher standard at the option of the company. The commissioner of insurance may, in the commissioner's discretion, vary the above standard of interest and mortality in cases of companies organized under the laws of a foreign country and in particular cases of invalid lives or other extra hazards.
Reserves for all such policies and contracts may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this subsection.
(d) Standard valuation law. This subsection shall apply to only those policies and contracts issued on or after the operative date of K.S.A. 40-428, and amendments thereto, (the standard nonforfeiture law), except as otherwise provided in paragraphs (1-a) and (1-b) of this subsection for group annuity and pure endowment contracts issued prior to such operative date, and except as provided in subsection (e) of this section.
(1) Except as otherwise provided in paragraphs (1-a) and (1-b) of this subsection, the minimum standard for the valuation of all such policies and contracts shall be the commissioners' reserve valuation methods defined in paragraphs (2), (2-a) and (5) of this subsection, 3 ½% interest or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after July 1, 1973, 4% interest for such policies issued prior to July 1, 1978, 5 ½% interest for single premium life insurance policies and 4 ½% interest for all other such policies issued on or after July 1, 1978, and the following specified tables:
(i) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies--the commissioners' 1941 standard ordinary mortality table for such policies issued prior to the operative date of K.S.A. 40-428 (d-1), and amendments thereto, the commissioners' 1958 standard ordinary mortality table and the commissioners' 1958 extended term insurance table, as applicable, for such policies issued on or after the operative date of K.S.A. 40-428 (d-1), and amendments thereto, and prior to the operative date of K.S.A. 40-428 (d-3), and amendments thereto, provided that for any category of such policies issued on female risks, the modified net premiums and present values, referred to in subsection (d)(2) of this section, may be calculated, according to an age not more than six years younger than the actual age of the insured; and for such policies issued on or after the operative date of K.S.A. 40-428 (d-3), and amendments thereto: (i) The commissioners' 1980 standard ordinary mortality table; or (ii) at the election of the company for any one or more specified plans of life insurance, the commissioners' 1980 standard ordinary mortality table with ten-year select mortality factors; or (iii) any ordinary mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such policies.
(ii) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies--the 1941 standard industrial mortality table for such policies issued prior to the operative date of K.S.A. 40-428 (d-2), and amendments thereto, and for such policies issued on or after such operative date the commissioners' 1961 standard industrial mortality table or any industrial mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such policies.
(iii) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, and excluding annuities involving life contingencies provided or available under optional modes of settlement in life insurance policies or annuity contracts--the 1937 standard annuity mortality table, or, at the option of the company, the annuity mortality table for 1949, ultimate, or any modification of either of these tables approved by the commissioner.
(iv) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies--the group annuity mortality table for 1951, any modification of such table approved by the commissioner, or at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.
(v) For total and permanent disability benefits in or supplementary to ordinary policies or contracts--for policies or contracts issued on or after January 1, 1961, either the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with due regard to the type of benefit, any tables of disablement rates and termination rates, adopted after 1980 by the national association of insurance commissioners, that are approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such policies, or, at the option of the company, the class (3) disability table (1926); and for policies issued prior to January 1, 1961, the class (3) disability table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserve for life insurance policies.
(vi) For accidental death benefits in or supplementary to policies--for policies issued on or after January 1, 1961, either the 1959 accidental death benefits table, any accidental death benefits table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such policies, or, at the option of the company, the inter-company double indemnity mortality table; and for policies issued prior to January 1, 1961, the inter-company double indemnity mortality table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.
(vii) For group life insurance, life insurance issued on the substandard basis, annuities involving life contingencies provided or available under optional modes of settlement in life insurance policies or annuity contracts and other special benefits--such tables as may be approved by the commissioner of insurance.
(viii) For all credit life insurance having initial terms of 10 years or less, excluding any disability and accidental death benefits in such policies, the 1980 commissioners' extended term mortality table or any later version as established in rules and regulations adopted by the commissioner of insurance.
(1-a) Except as provided in paragraph (1-b), the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph (1-a), as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, shall be the commissioners' reserve valuation methods defined in paragraphs (2) and (2-a) and the following tables and interest rates:
(i) For individual annuity and pure endowment contracts issued prior to July 1, 1978, excluding any disability and accidental death benefits in such contracts--the 1971 individual annuity mortality table, or any modification of this table approved by the commissioner of insurance, and 6% interest for single premium immediate annuity contracts, and 4% interest for all other individual annuity and pure endowment contracts.
(ii) For individual single premium immediate annuity contracts issued on or after July 1, 1978, excluding any disability and accidental death benefits in such contracts--the 1971 individual annuity mortality table, or any individual annuity mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and 7 ½% interest.
(iii) For individual annuity and pure endowment contracts issued on or after July 1, 1978, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts--the 1971 individual annuity mortality table, or any individual annuity mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and 5 ½% interest for single premium deferred annuity and pure endowment contracts and 4 ½% interest for all other such individual annuity and pure endowment contracts.
(iv) For all annuities and pure endowments purchased prior to July 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts--the 1971 group annuity mortality table, or any modification of this table approved by the commissioner of insurance, and 6% interest.
(v) For all annuities and pure endowments purchased on or after July 1, 1978, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts--the 1971 group annuity mortality table, or any group annuity mortality table, adopted after 1980 by the national association of insurance commissioners, that is approved by regulation promulgated by the commissioner for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the commissioner, and 7 ½% interest.
After July 1, 1973, any company may file with the commissioner of insurance a written notice of its election to comply with the provisions of this paragraph after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such company. A company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of this paragraph for such company shall be January 1, 1979.
(1-b) (A) Applicability of this paragraph:
(1) The interest rates used in determining the minimum standard for the valuation of:
(a) All life insurance policies issued in a particular calendar year, on or after the operative date of K.S.A. 40-428(d-3), and amendments thereto;
(b) all individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1983;
(c) all annuities and pure endowments purchased in a particular calendar year on or after January 1, 1983, under group annuity and pure endowment contracts; and
(d) the net increase, if any, in a particular calendar year after January 1, 1983, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates as defined in this paragraph (1-b).
(B) Calendar year statutory valuation interest rates:
(1) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer 1/4%:
(a) For life insurance,
(b) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,
R is the reference interest rate defined in this paragraph and W is the weighting factor defined in this paragraph.
(c) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in (b) above, the formula for life insurance stated in (a) above shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years and the formula for single premium immediate annuities stated in (b) above shall apply to annuities and guaranteed interest contracts with guarantee duration of 10 years or less.
(d) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in (b) above shall apply.
(e) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in (b) above shall apply.
(2) However, if the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this sentence differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than ½%, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the immediately preceding sentence, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined for 1979) and shall be determined for each subsequent calendar year regardless of when K.S.A. 40-428(d-3), and amendments thereto, becomes operative.
(C) Weighting factors:
(1) The weighting factors referred to in the formulas stated above are given in the following tables:
(a) Weighting factors for life insurance:
Guarantee Duration (Years)
Weighting Factors
10 or less..................50
More than 10, but not more than 20..................45
More than 20..................35
For life insurance, the guarantee duration is the maximum number of years
the life insurance can remain in force on a basis guaranteed in the policy
or under options to convert to plans of life insurance with premium rates
or nonforfeiture values, or both, which are guaranteed in the original policy;
(b) Weighting factor for single premium immediate annuities and for annuity
benefits involving life contingencies arising from other annuities with
cash settlement options and guaranteed interest contracts with cash settlement
options:
(c) Weighting factors for other annuities and for guaranteed interest
contracts, except as stated in (b) above, shall be as specified in tables
(i), (ii) and (iii) below, according to the rules and definitions in (iv),
(v) and (vi) below:
(i) For annuities and guaranteed interest contracts valued on an issue year
basis:
Guarantee Duration (Years)
for Plan Type
A B C
5 or less..................80 .60 .50
More than five, but not more than 10..................75 .60 .50
More than 10, but not more than 20..................65 .50 .45
More than 20..................45 .35 .35
(ii)
Plan Type
A B C
For annuities and guaranteed interest contracts valued on a change in fund
basis, the factors shown in (i) above increased by..................15 .25 .05
(iii)
Plan Type
A B C
For annuities and guaranteed interest contracts valued on an issue year
basis (other than those with no cash settlement options) which do not guarantee
interest on considerations received more than one year after issue or purchase
and for annuities and guaranteed interest contracts valued on a change in
fund basis which do not guarantee interest rates on considerations received
more than 12 months beyond the valuation date, the factors shown in (i)
or derived in (ii) increased by..................05 .05 .05
(iv) For other annuities with cash settlement options and guaranteed
interest
contracts with cash settlement options, the guarantee duration is the number
of years for which the contract guarantees interest rates in excess of the
calendar year statutory valuation interest rate for life insurance policies
with guarantee duration in excess of 20 years. For other annuities with
no cash settlement options and for guaranteed interest contracts with no
cash settlement options, the guarantee duration is the number of years from
the date of issue or date of purchase to the date annuity benefits are
scheduled to commence.
(v) Plan type as used in the above tables is defined as follows:
Plan type A: At any time policyholder may withdraw funds only: (1) With
an adjustment to reflect changes in interest rates or asset values since
receipt of the funds by the insurer; or (2) without such adjustment but
in installments over five years or more; or (3) as an immediate life
annuity; or (4) no withdrawal permitted.
Plan type B: Before expiration of the interest rate guarantee, policyholder
may withdraw funds only: (1) With an adjustment to reflect changes in interest
rates or asset values since receipt of the funds by the insurer; or (2)
without such adjustment but in installments over five years or more; or
(3) no withdrawal permitted. At the end of interest rate guarantee, funds
may be withdrawn without such adjustment in a single sum or installments
over less than five years.
Plan type C: Policyholder may withdraw funds before expiration of interest
rate guarantee in a single sum or installments over less than five years
either: (1) Without adjustment to reflect changes in interest rates or asset
values since receipt of the funds by the insurance company; or (2) subject
only to a fixed surrender charge stipulated in the contract as a percentage of
the fund.
(vi) A company may elect to value guaranteed interest contracts with cash
settlement options and annuities with cash settlement options on either
an issue year basis or on a change in fund basis. Guaranteed interest
contracts
with no cash settlement options and other annuities with no cash settlement
options must be valued on an issue year basis. As used in this paragraph
(1-b), an issue year basis of valuation refers to a valuation basis under
which the interest rate used to determine the minimum valuation standard
for the entire duration of the annuity or guaranteed interest contract is
the calendar year valuation interest rate for the year of issue or year
of purchase of the annuity or guaranteed interest contract, and the change
in fund basis of valuation refers to a valuation basis under which the interest
rate used to determine the minimum valuation standard applicable to each
change in the fund held under the annuity or guaranteed interest contract
is the calendar year valuation interest rate for the year of the change in the
fund.
(D) Reference interest rate:
(1) The reference interest rate referred to in paragraph (B) of this
paragraph
(1-b) shall be defined as follows:
(a) For all life insurance, the lesser of the average over a period of
36 months and the average over a period of 12 months, ending on June 30
of the calendar year next preceding the year of issue, of Moody's corporate
bond yield average--monthly average corporates, as published by Moody's
investors service, inc.
(b) For single premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with cash settlement
options and guaranteed interest contracts with cash settlement options,
the average over a period of 12 months, ending on June 30 of the calendar
year of issue or year of purchase, of Moody's corporate bond yield
average--monthly average corporates, as published by Moody's investors
service, inc.
(c) For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a year of issue
basis, except as stated in (b) above, with guarantee duration in excess
of 10 years, the lesser of the average over a period of 36 months and the
average over a period of 12 months, ending on June 30 of the calendar year
of issue or purchase, of Moody's corporate bond yield average--monthly
average corporates, as published by Moody's investors service, inc.
(d) For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a year of issue
basis, except as stated in (b) above, with guaranteed duration of 10 years
or less, the average over a period of 12 months, ending on June 30 of the
calendar year of issue or purchase, of Moody's corporate bond yield
average--monthly average corporates, as published by Moody's investors
service, inc.
(e) For other annuities with no cash settlement options and for guaranteed
interest contracts with no cash settlement options, the average over a period
of 12 months, ending on June 30 of the calendar year of issue or purchase,
of Moody's corporate bond yield average--monthly average corporates, as
published by Moody's investors service, inc.
(f) For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a change in fund basis,
except as stated in (b) above, the average over a period of 12 months, ending
on June 30 of the calendar year of the change in the fund, of Moody's
corporate bond yield average--monthly average corporates, as published
by Moody's investors service, inc.
(E) Alternative method for determining reference interest rates:
(1) In the event that Moody's corporate bond yield average--monthly
average corporates is no longer published by Moody's investors service,
inc., or in the event that the national association of insurance commissioners
determines that Moody's corporate bond yield average--monthly average
corporates as published by Moody's investors service, inc., is no longer
appropriate for the determination of the reference interest rate, then an
alternative method for determination of the reference interest rate, which
is adopted by the national association of insurance commissioners and approved
by regulation promulgated by the commissioner, may be substituted.
(2) Commissioners' reserve valuation method. Except as
otherwise provided in paragraphs (2-a) and (5) of this subsection,
reserves according to the commissioners' reserve valuation method, for
the life insurance and endowment benefits of policies providing for a
uniform amount of insurance and requiring the payment of uniform
premiums, shall be the excess, if any, of the present value, at the date
of valuation, of such future guaranteed benefits provided for by such
policies, over the then present value of any future modified net
premiums therefor.
The modified net premiums for any such policy shall be such uniform
percentage of the respective contract premiums for such benefits that
the present value, at the date of issue of the policy, of all such
modified net premiums shall be equal to the sum of the then present
value of such benefits provided for by the policy and the excess of (A)
over (B), as follows:
(A) A net level annual premium equal to the present value, at the
date of issue, of such benefits provided for after the first policy
year, divided by the present value, at the date of issue, of an annuity
of one per annum payable on the first and each subsequent anniversary of
such policy on which a premium falls due. Such net level annual premium
shall not exceed the net level annual premium on the
nineteen-year premium whole life plan for insurance of the same amount at
an age one year higher than the age at issue of such policy.
(B) A net one-year term premium for such benefits provided for in the
first policy year.
Except for any life insurance policy issued on or after January 1, 1985,
for which the contract premium in the first policy year exceeds that of
the second year and for which no comparable additional benefit is provided
in the first year for such excess and which provides an endowment benefit
or a cash surrender value or a combination thereof in an amount greater
than such excess premium, the reserve according to the commissioners' reserve
valuation method as of any policy anniversary occurring on or before the
assumed ending date defined herein as the first policy anniversary on which
the sum of any endowment benefit and any cash surrender value then available
is greater than such excess premium shall, except as otherwise provided
in paragraph (5), be the greater of the reserve as of such policy anniversary
calculated as described in this paragraph and the reserve as of such policy
anniversary calculated as described in this paragraph, but with: (i) The
value defined in subparagraph (A) of this paragraph being reduced by 15%
of the amount of such excess first-year premium; (ii) all present values
of benefits and premiums being determined without reference to premiums
or benefits provided for by the policy after the assumed ending date; (iii)
the policy being assumed to mature on such date as an endowment; and (iv)
the cash surrender value provided on such date being considered as an endowment
benefit. In making the above comparison the mortality and interest bases
stated in paragraphs (1) and (1-b) shall be used.
Reserves according to the commissioners' reserve valuation method for:
(i) Life insurance policies providing for a varying amount of insurance
or requiring the payment of varying premiums; (ii) group annuity and
pure endowment contracts purchased under a retirement plan or plan of
deferred compensation, established or maintained by an employer
(including a partnership or sole proprietorship) or by an employee
organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under section 408
of the internal revenue code, as now or hereafter amended; (iii)
disability and accidental death benefits in all policies and contracts;
and (iv) all other benefits, except life insurance and endowment
benefits in life insurance policies and benefits provided by all other
annuity and pure endowment contracts, shall be calculated by a method
consistent with the principles of this paragraph (2).
Reserves according to the commissioners' reserve valuation method for
universal life contracts issued after December 31, 2006 providing for death
benefits that are guaranteed to remain in effect if specified conditions, as
defined in the universal life insurance contract are met by the contract owner,
shall calculate the value of the guarantee by a method consistent with the
principles of this paragraph (2). The use of anticipated lapse rates in such
calculations shall not exceed 2% per annum.
(2-a) This section shall apply to all annuity and pure endowment
contracts other than group annuity and pure endowment contracts
purchased under a retirement plan or plan of deferred compensation,
established or maintained by an employer (including a partnership or
sole proprietorship) or by an employee organization, or by both, other
than a plan providing individual retirement accounts or individual
retirement annuities under section 408 of the internal revenue code, as
now or hereafter amended.
Reserves according to the commissioners' annuity reserve method for
benefits under annuity or pure endowment contracts, excluding any
disability and accidental death benefits in such contracts, shall be the
greatest of the respective excesses of the present values, at the date
of valuation, of the future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by such contracts at the end of
each respective contract year, over the present value, at the date of
valuation, of any future valuation considerations derived from future
gross considerations, required by the terms of such contract, that
become payable prior to the end of such respective contract year. The
future guaranteed benefits shall be determined by using the mortality
table, if any, and the interest rate, or rates, specified in such
contracts for determining guaranteed benefits. The valuation
considerations are the portions of the respective gross considerations
applied under the terms of such contracts to determine nonforfeiture
values.
(3) In no event shall a company's aggregate reserves for all life
insurance policies, excluding disability and accidental death benefits,
be less than the aggregate reserves calculated in accordance with the
methods set forth in paragraphs (2), (2-a), (5) and (6)
and the mortality
table or tables and rate or rates of interest used in calculating
nonforfeiture benefits for such policies.
(3-a) In no event shall the aggregate reserves for all policies, contracts
and benefits be less than the aggregate reserves determined by the qualified
actuary rendering the opinion required by subsection (b).
(4) Reserves for any category of policies, contracts or benefits as
established by the commissioner of insurance may be calculated at the
option of the company, according to any standards which produce greater
aggregate reserves for such category than those calculated according to
the minimum standard herein provided, but the rate or rates of interest
used for policies and contracts, other than annuity and pure endowment
contracts, shall not be higher than the corresponding rate or rates of
interest used in calculating any nonforfeiture benefits provided for
therein.
(5) If in any contract year the gross premium charged by any life
insurance company on any policy or contract is less than the valuation
net premium for the policy or contract calculated by the method used in
calculating the reserve thereon but using the minimum valuation
standards of mortality and rate of interest, the minimum reserve
required for such policy or contract shall be the greater of either the
reserve calculated according to the mortality table, rate of interest,
and method actually used for such policy or contract, or the reserve
calculated by the method actually used for such policy or contract but
using the minimum valuation standards of mortality and rate of interest and
replacing the valuation net premium by the actual gross premium in each
contract year for which the valuation net premium exceeds the actual
gross premium.
The minimum valuation standards of mortality and rate of interest referred
to in this section are those standards stated in paragraphs (1) and (1-b).
Except for any life insurance policy issued on or after January 1,
1988, for which the gross premium in the first policy year exceeds that of
the
second year and for which no comparable additional benefit is provided
in the first year for such excess and which provides an endowment benefit
or a cash surrender value or a combination thereof in an amount greater
than such excess premium, the foregoing provisions of this paragraph (5)
shall be applied as if the method actually used in calculating the reserve
for such policy were the method described in paragraph (2), ignoring the
third paragraph of paragraph (2). The minimum reserve at each policy
anniversary
of such a policy shall be the greater of the minimum reserve calculated
in accordance with paragraph (2), including the third paragraph of paragraph
(2), and the minimum reserve calculated in accordance with this paragraph (5).
(6) In the case of any plan of life insurance which provides for future
premium determination, the amounts of which are to be determined by the
insurance company based on then estimates of future experience, or in the
case of any plan of life insurance or annuity which is of such a nature
that the minimum reserves cannot be determined by the methods described
in paragraphs (2), (2-a) and (5), the reserves which are held under any such
plan must:
(a) Be appropriate in relation to the benefits and the pattern of premiums
for that plan, and
(b) be computed by a method which is consistent with the principles
of this standard valuation law, as determined by regulations promulgated
by the commissioner.
(e) Any company organized under the laws of this state, which
shall desire to do business in any other states wherein it is not permitted to
issue or deliver policies valued as provided in subsection (d) of
this section, may value its policies issued and delivered in such other
states as provided in subsection (c) of this section.
(f) The commissioner shall adopt rules and regulations establishing the
minimum standards applicable to the valuation of accident and sickness
insurance and may adopt other rules and regulations necessary to administer the
provisions of this act.
History: L. 1927, ch. 231, 40-409; L. 1947, ch. 277, § 1; L.
1957, ch. 280, § 1; L. 1959, ch. 213, § 1; L. 1965, ch. 302, § 1; L.
1973, ch. 193, § 1; L. 1978, ch. 175, § 1; L. 1980, ch. 129, §
2; L. 1982, ch. 202, § 1;
L. 1994, ch. 101, § 1;
L. 2004, ch. 128, § 1;
L. 2007, ch. 105, § 1; July 1.
History: L. 1927, ch. 231, 40-410; L. 1959, ch. 214, § 1; June 30.
History: L. 1927, ch. 231, 40-411; L. 1959, ch. 214, § 2; June 30.
History: L. 1927, ch. 231, 40-412; June 1.
History: L. 1927, ch. 231, 40-413; June 1.
(1) The claims of the insured or the insured's creditors and representatives;
(2) the claims of any policyholder or the
policyholder's creditors and representatives,
subject to the provisions of subsection (b);
(3) all taxes, subject to the provisions of subsection (d); and
(4) the
claims and judgments of the creditors and representatives of any person
named as beneficiary in the policy of insurance.
(b) The nonforfeiture value of a life insurance policy shall not be exempt
from:
(1) Claims of the creditors of a policyholder who
files a bankruptcy petition under 11 U.S.C. § 101 et seq. on or
within one year after the date the policy is issued; or
(2) the claim of any creditor of a policyholder if
execution on judgment for the claim is issued on or within one year after
the date that the policy is issued.
(c) Nothing in this section shall be construed as restricting the
right of the insured to change the beneficiary
if the policy reserves that right to the insured.
(d) Nothing in this section shall be construed as exempting from
taxation any real estate which may at
any time be carried by any life insurance company as a part of its legal
reserve.
(e) The provisions of subsection (b) shall apply only to life insurance
policies purchased on or after July 1, 1988.
(f) The provisions of subsection (b) shall not
apply to that portion of the nonforfeiture value of a life insurance policy, issued on or
within one year of the filing of a bankruptcy petition under 11 U.S.C. §
101 et seq. or an execution on judgment for the claim of the creditor, which
is derived from the surrender of a life insurance policy issued more than
one year prior to such bankruptcy petition or such execution.
History: L. 1927, ch. 231, 40-414; L. 1933, ch. 71, § 1 (Special
Session); L. 1984, ch. 170, § 1;
L. 1988, ch. 217, § 1; July 1.
History: L. 1933, ch. 204, § 1; June 5.
History: L. 1927, ch. 231, 40-415; June 1.
History: L. 1927, ch. 231, 40-416; June 1.
History: L. 1927, ch. 231, 40-417; June 1.
History: L. 1927, ch. 231, 40-418; June 1.
History: L. 1927, ch. 231, 40-419; June 1.
History: L. 1991, ch. 131, § 1; July 1.
(1) A provision that all premiums after the first shall be payable
in advance, either at the home office of the company or to an agent of
the company, and that the insured is entitled to a grace period of not
less than 30 days within which time the payment of any premium after
the first may be made, during which period of grace the policy shall
continue in full force. In case the policy becomes a claim during the
grace period, the amount of any overdue premium and any remaining unpaid
installments of the annual premium for the policy year of death may be
deducted in any settlement under the policy.
(2) A provision that, except as otherwise expressly provided by law,
the policy together with the application, if a copy thereof be endorsed
upon or attached to the policy, shall constitute the entire contract
between the parties and shall be incontestable after it has been in
force during the lifetime of the insured for a period of not more than
two years from its date, except for nonpayment of premiums and except
for violations of the conditions, if any, relating to naval or military
service, or to aeronautics and, except also at the option of the
company, with respect to provisions relative to benefits in the event of
total and permanent disability and provisions which grant additional
insurance specifically against death by accident or by accidental means;
that all statements made by the insured shall, in the absence of fraud,
be deemed representations and not warranties; and that no such statement
or statements shall be used in defense of a claim under the policy
unless contained in a written application, and unless a copy of such
statement or statements be endorsed upon or attached to the policy when
issued.
(3) A provision that if it shall be found at any time before final
settlement under the policy, that the age of the insured or the age of
any other person considered in determining the premium has been
misstated, the amount payable under the policy shall be such as the
premium would have purchased at the correct age or ages, according to
the company's published rate at date of issue.
(4) A provision that the policy shall participate in the surplus of
the company, and any policy containing provision for the payment of a
dividend at the end of the first or second policy year, and annually
thereafter, may also provide that the dividends payable at the end of
the first and second policy year shall be paid subject to the payment of
the premiums for the next ensuing year; and the insured under any annual
dividend policy shall have the right each year to have the dividend
arising from such participation paid in cash, and if the policy shall
provide other dividend options, it shall further provide which of the
options shall be effective if the insured shall not elect any such other
option on or before the expiration of the period of grace allowed for
the payment of the premium. This provision shall not apply to any form
of paid-up insurance, temporary insurance or pure endowment insurance,
issued or granted in exchange for lapsed or surrendered policies, or to
nonparticipating policies.
(5) Except as provided in K.S.A. 40-420a through 40-420d, inclusive,
and amendments thereto, a provision that after the premium shall have been
paid for
three years, the company at any time, while the policy is in force, will
advance, on proper assignment or pledge of the policy and on the sole
security thereof, at a specified rate of interest not to exceed 8% per annum,
a sum equal to, or at the option of the insured
less than, the amount required by K.S.A. 40-429, and amendments thereto,
under the conditions
specified thereby; and that the company will deduct from such loan value
any existing indebtedness on the policy not already deducted in
determining such value and any unpaid balance of the premium for the
current policy year, and may collect interest in advance on the loan to
the end of the current policy year. This provision shall not be required
in term insurance, nor shall it apply to temporary insurance or pure
endowment insurance, issued or granted in exchange for lapsed or
surrendered policies. The policy may further provide that if the
interest on the loan is not paid when due, it shall be added to the
existing loan, and shall bear interest at the same rate.
(6) A provision for nonforfeiture benefits and cash surrender values
in accordance with the requirements of subsection (a) of K.S.A. 40-427,
or K.S.A. 40-428, and amendments thereto.
(7) A provision specifying the options to which the policyholder is
entitled in the event of default in a premium payment.
(8) A table showing in figures the loan values and the options
available under the policy each year upon default in premium payments
during at least the first 20 years of the policy, or during the
premium-paying period if less than 20 years.
(9) A provision that if in event of default in premium payments the
value of the policy shall have been applied to the purchase of other
insurance as provided in this section, and if such insurance shall be in
force and the original policy shall not have been surrendered to the
company and canceled, the policy may be reinstated within three years
from such default, upon evidence of insurability satisfactory to the
company and payment of arrears of premiums and the payment or
reinstatement of any other indebtedness to the company upon its policy,
with interest on its premium at the rate of not
exceeding 6% per annum payable annually and with interest on the indebtedness
at a rate as provided in K.S.A. 40-420a through 40-420d, inclusive,
and amendments thereto, and that such
reinstated policy shall be contestable only on account of fraud or
misrepresentation of material facts pertaining to the reinstatement; for
the same period of time after reinstatement as provided in the policy
with respect to original issue.
(10) A provision that when a policy shall become a claim by the
death of the insured, settlement shall be made upon receipt of due proof
of death.
(11) A table showing the amount of installments, if any, in which
the policy may provide its proceeds may be payable.
(12) Title on the face and on the back of the policy, briefly
describing its form.
(13) A provision with respect to the company's obligation to refund
unearned premiums upon cancellation of a term life insurance policy as defined
in
accordance with the requirements of K.S.A. 40-419a, and amendments
thereto, except this provision is
required to be
printed only in term life insurance policies with an original issue date after
the effective date of this act.
Any of the foregoing provisions or portions thereof not applicable to
single-premium or nonparticipating or term policies shall to that extent
not be incorporated therein; and any such policy may be issued or
delivered in this state which in the opinion of the insurance
commissioner contains provisions on any one or more of the several
foregoing requirements more favorable to the policyholder than
hereinbefore required. The provisions of this section shall not apply to
policies of reinsurance, or to policies issued or granted in exchange
for lapsed or surrendered policies, or to policies of group insurance.
History: L. 1927, ch. 231, 40-420; L. 1939, ch. 209, § 1; L. 1947,
ch. 277, §
2; L. 1978, ch. 176, § 1; L. 1982, ch. 203, § 5;
L. 1991, ch. 131, § 2; July 1.
History: L. 1982, ch. 203, § 1; July 1.
(a) Moody's corporate bond yield average--monthly average corporates
as published by Moody's investors service, inc., or any successor thereto; or
(b) in the event that Moody's corporate bond yield average--monthly
average corporates is no longer published, a substantially similar average,
established by regulation issued by the commissioner.
History: L. 1982, ch. 203, § 2; July 1.
(i) A provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate established
from time to time by the life insurer as permitted by law.
(b) The rate of interest charged on a policy loan made under paragraph
(ii) of subsection (a) shall not exceed the higher of the following:
(i) The published monthly average for the calendar month ending two months
before the date on which the rate is determined; or
(ii) the rate used to compute the cash surrender values under the policy
during the applicable period plus 1% per annum.
(c) If the maximum rate of interest is determined pursuant to paragraph
(ii) of subsection (a), the policy shall contain a provision setting forth
the frequency at which the rate is to be determined for that policy.
(d) The maximum rate for each policy must be determined at regular intervals
at least once every 12 months, but not more frequently than once in any
three-month period. At the intervals specified in the policy:
(i) The rate being charged may be increased whenever such increase as
determined under subsection (b) would increase that rate by 1/2% or more per annum;
(ii) the rate being charged must be reduced whenever such reduction as
determined under subsection (b) would decrease that rate 1/2% or more per annum.
(e) The life insurer shall:
(i) Notify the policyholder at the time a cash loan is made of the initial
rate of interest on the loan;
(ii) notify the policyholder with respect to premium loans of the initial
rate of interest on the loan as soon as it is reasonably practical to do
so after making the initial loan. Notice need not be given to the policyholder
when a further premium loan is added, except as provided in paragraph (iii)
of this subsection;
(iii) send to policyholders with loans reasonable advance notice of any
increase in the rate; and
(iv) include in the notices required above the substance of the pertinent
provisions of subsections (a) and (c).
(f) The loan value of the policy shall be determined in accordance with
the provisions of K.S.A. 40-429 and 40-2611 and K.S.A. 40-420,
and amendments thereto, but no policy shall terminate in a policy year as
the sole result of change in the interest rate during that policy year,
and the life insurer shall maintain coverage during that policy year until
the time at which it would otherwise have terminated if there had been no
change during that policy year.
(g) The substance of the pertinent provisions of subsections (a) and (c)
shall be set forth in the policies to which they apply.
(h) For purposes of this section:
(i) The rate of interest on policy loans permitted under this section
includes the interest rate charged on reinstatement of policy loans for
the period during and after any lapse of a policy.
(ii) The term "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 they fell due.
(iii) The term "policyholder" includes the owner of the policy or the
person designated to pay premiums as shown on the records of the life insurer.
(iv) The term "policy" includes certificates issued by a fraternal benefit
society and annuity contracts which provide for policy loans.
(i) No other provision of law shall apply to policy loan interest rates
unless made specifically applicable to such rates.
History: L. 1982, ch. 203, § 3; July 1.
History: L. 1982, ch. 203, § 4; July 1.
(1) A provision by which the policy shall purport to be issued or take
effect more than six months before the original application for the
insurance was made.
(2) A provision for any mode of settlement at maturity after the
expiration of the contestable period of the policy of less value than the
amount insured on the face of the policy plus dividend additions, if any,
less any indebtedness to the company on or secured by the policy, and less
any premium that may by the terms of the policy be deducted. This paragraph
shall not apply to any nonforfeiture provision which employs the method
provided by subsection 6 of section 40-420 of this code less indebtedness,
if any, to purchase automatic paid-up or extended insurance, nor to
readjustment because of misstatement of age, nor to any liability in event
of violation of the conditions described in paragraph (2) section 40-420.
(3) A provision for forfeiture of the policy for failure to repay any
loan on the policy, or to pay interest on such loan, while the total
indebtedness on the policy, including interest, is less than the loan value
thereof.
(4) A provision to the effect that the agent soliciting the insurance is
the agent of the person insured under said policy, or making the acts or
representations of such agent binding upon the person so insured under said
policy.
(5) A provision to the effect that payment of dividends on any form of
participating policies shall be deferred for more than five years.
History: L. 1927, ch. 231, 40-421; L. 1939, ch. 210, § 1; June 30.
History: L. 1941, ch. 258, § 1; June 30.
(1) A provision that the insured is entitled to a grace period of
four weeks within which the payment of any premium after the first may
be made, during which period of grace the policy shall continue in full
force, but in case the policy becomes a claim during said grace period
before the overdue premiums are paid, the amount of overdue premiums may
be deducted in any settlement under the policy.
(2) A provision that all premiums shall be payable in advance,
either at the office of the company or to a duly authorized agent of the
company.
(3) A provision that, except as otherwise expressly provided by law,
the policy together with the application, if a copy thereof be endorsed
thereupon or attached to the policy, shall constitute the entire
contract between the parties.
(4) A provision that the policy shall be incontestable after it has
been in force during the lifetime of the insured for a period of not
more than two years from its date, except for nonpayment of premiums and
except for violations of conditions, if any, relating to naval or
military service in time of war or to aeronautics and, except also at
the option of the company, with respect to provisions relative to
benefits in the event of total and permanent disability and provisions
which grant additional insurance specifically against death by accident
or accidental means.
(5) A provision that if it shall be found at any time before final
settlement under the policy, that the age of the insured or the age of
any other person considered in determining the premium has been
misstated, the amount payable under the policy shall be such as the
premium would have purchased at the correct age or ages, according to
the company's published rate at date of issue.
(6) If a participating policy, a provision indicating the conditions
under which the company shall annually ascertain and apportion any
divisible surplus accruing on the policy.
(7) A provision for nonforfeiture benefits (which may be a
stipulated form of insurance) in accordance with the requirements of
subsection (b) of K.S.A. 40-427 or 40-428.
(8) If more than one option is provided, a provision as to which of
such options shall apply in the event of the insured's failure to notify
the company of his selection of an option.
(9) A provision for cash surrender values in accordance with the
requirements of subsection (b) of K.S.A. 40-427 or
40-428.
(10) A table showing in figures the nonforfeiture options available
under the policy every year upon default in payment of premiums during
at least the first twenty years of the policy, or during the
premium-paying period if less than twenty years, and a provision that
the company will furnish upon request an extension of such table beyond
the years shown in the policy.
(11) A provision that if in event of default in premium payments the
value of the policy shall have been applied to the purchase of other
insurance as provided in this section, and if such insurance shall be in
force and the original policy shall not have been surrendered to the
company and canceled, the policy may be reinstated within two years from
such default, upon evidence of insurability satisfactory to the company
and payment of arrears of premiums and the payment or reinstatement of
any other indebtedness to the company upon said policy, with interest on
said premiums and indebtedness at a rate of not exceeding six percentum
per annum payable annually, and that such reinstated policy may be
contestable on account of fraud or misrepresentations of material facts
pertaining to the reinstatement only for the same period of time after
reinstatement as provided in the policy with respect to original issue.
(12) A provision that when a policy shall become a claim by the
death of the insured, settlement shall be made upon receipt of due proof
of death.
(13) A title on the face and on the back of the policy, briefly
describing its form.
Any of the foregoing provisions or portions thereof, not applicable
to single-premium or nonparticipating or term policies, shall to that
extent not be incorporated therein. The provisions of this section shall
not apply to policies issued or granted in exchange for lapsed or
surrendered policies: Provided, That any stipulated form of
insurance provided for under subsection (7) of this section, may be
surrendered for a cash surrender value, in an amount and under the
conditions specified in subsection (b) of K.S.A. 40-427 or
40-428 (the standard nonforfeiture law).
History: L. 1941, ch. 258, § 2; L. 1947, ch. 277, § 6; July 1.
The policy may provide in substance that any payment thereunder may be
made or any nonforfeiture benefit may be granted to the insured or to the
insured's estate or to any relative by blood or connection by marriage of
the insured, or, to the extent of such portion of any payment under the
policy as may reasonably appear to the company to be due to such person, to
any other person equitably entitled thereto by reason of having incurred
expense occasioned by the maintenance or illness or burial of the insured.
If the policy shall be in force at the death of the insured, the proceeds
thereof shall be payable to the named beneficiary if living, but unless
proof of claim in the manner and form required by the policy, accompanied
by delivery of the policy for surrender, has been made by such beneficiary
within fifteen days after the death of the insured, then upon the
expiration of said fifteen days, or if the beneficiary is the estate of the
insured, or is a minor, or is not legally qualified to give a valid release
or dies before the insured, the company may pay to any person permitted by
the policy.
History: L. 1941, ch. 258, § 3; June 30.
History: L. 1941, ch. 258, § 4; L. 1947, ch. 277, § 7; July 1.
History: L. 1941, ch. 258, § 5; June 30.
The nonforfeiture benefits referred to in subsection (6) of K.S.A.
40-420, shall be
available to the insured in event of default in premium payments, after
premiums shall have been paid for three years, and shall be a stipulated
form of insurance, effective from the due date of the defaulted premium,
the net value of which shall be at least equal to the reserve at the
date of default on the policy and on dividend additions thereto, if any,
exclusive of the reserve on account of return premium insurance and on
total and permanent disability and additional accidental death benefits
(the policy to specify the mortality table and rate of interest adopted
for computing such reserves), less a percentage (not more than two and
one-half) of the amount insured by the policy and of existing dividend
additions thereto, if any, and less any existing indebtedness to the
company on or secured by the policy: Provided, That the policy may
be surrendered to the company at its home office within one month of the
due date of defaulted premium for a specific cash value at least equal
to the sum which would otherwise be available for the purchase of
insurance as aforesaid: Provided further, That the company may
defer payment for not more than six months after the application
therefor is made. This subsection shall not apply to term insurance of
twenty years or less. The policy may also specify that in event of
default in a premium payment before the options become available the
reserve on any dividend additions then in force may at the option of the
company be paid in cash or applied as a net premium to the purchase of
paid-up term insurance for any amount not in excess of the face of the
original policy.
(b) This subsection shall apply only to policies of industrial life
insurance issued prior to the operative date of K.S.A. 40-428 (the
standard nonforfeiture law).
The nonforfeiture benefits referred to in section (7) of K.S.A.
40-423, shall be
available in event of default in premium payments after premiums shall
have been paid for five full years and shall be a stipulated form of
insurance effective from the due date of the defaulted premium, the net
value of which shall not be less than the reserve on the policy at the
end of the last completed quarter of the policy year for which premiums
have been paid, and all dividend additions thereto, if any, exclusive of
any reserve on total and permanent disability and additional accidental
death benefits (the policy to specify the mortality table, rate of
interest, and method of valuation adopted for computing such reserve),
less a maximum percentage (not more than two and one-half percentum) of
the amount insured by the policy and of existing dividend additions
thereto, if any, and less any existing indebtedness to the company on or
secured by the policy. The policy shall also specify said percentage, or
other rule of calculation so as to permit determination of the values,
to be specified for each year for which required values are not included
in the policy. The cash surrender value referred to in subsection (9) of
K.S.A. 40-423,
shall be available upon surrender of the policy to the company at its
home office within the period of grace after the due date of the
defaulted premium and shall be equal to the net value of the stipulated
form of insurance otherwise available: Provided, That the company
may defer payment for not more than six months after the application
therefor is made. After premiums have been paid for five full years the
cash surrender value at any time of any stipulated form of insurance
shall be the full reserve at the date of surrender.
History: L. 1947, ch. 277, § 3; July 1.
(i) In the event of default in any premium payment, the
company will grant, upon proper request not later than
60 days after the due date of the premium in default, a paid-up nonforfeiture
benefit on a plan stipulated in the policy, effective as of such due
date, of such amount as may be hereinafter specified.
In lieu of such stipulated paid-up nonforfeiture benefit, the company may
substitute, upon proper request not later than 60 days after the due date
of the premium in default, an actuarially equivalent alternative paid-up
nonforfeiture benefit which provides a greater amount or longer period of
death benefits or, if applicable, a greater amount or earlier payment of
endowment benefits.
(ii) Upon surrender of the policy within 60 days after
the due date of any premium payment in default after premiums have been
paid for at least three full years in the case of ordinary insurance
or five full years in the case of industrial insurance, the company
will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender
value of such amount as may be hereinafter specified.
(iii) A specified paid-up nonforfeiture benefit shall become
effective as specified in the policy unless the person entitled to make
such election elects another available option not later than
60 days after the due date of the premium in default.
(iv) If the policy shall have become paid-up by completion of
all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or after the third
policy anniversary in the case of ordinary insurance or the fifth policy
anniversary in the case of industrial insurance, the company will pay,
upon surrender of the policy within 30 days after any policy anniversary,
a cash surrender value of such amount as may be hereinafter
specified.
(v) In the case of policies which cause on a basis guaranteed in the policy
unscheduled changes in benefits or premiums, or which provide an option
for changes in benefits or premiums other than a change to a new policy,
a statement of the mortality table, interest rate, and method used
in calculating cash surrender values and the paid-up nonforfeiture benefits
available under the policy. In the case of all other policies, a statement
of the mortality table and interest rate used in
calculating the cash surrender values and the paid-up nonforfeiture
benefits available under the policy, together with a table showing the
cash surrender value, if any, and paid-up nonforfeiture benefit, if any,
available under the policy on each policy anniversary either during the
first 20 policy years or during the term of the policy,
whichever is shorter, such values and benefits to be calculated upon the
assumption that there are no dividends or paid-up additions credited to
the policy and that there is no indebtedness to the company on the
policy.
(vi) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to any statute of
the state in which the policy is delivered; and an explanation of the
manner in which the cash surrender values and the paid-up nonforfeiture
benefits are altered by the existence of any paid-up additions credited
to the policy or any indebtedness to the company on the policy; if a
detailed statement of the method of computation of the values and
benefits shown in the policy is not stated therein, a statement that
such method of computation has been filed with the insurance supervisory
official of the state in which the policy is delivered; and, a statement
of the method to be used in calculating the cash surrender value and
paid-up nonforfeiture benefit available under the policy on any policy
anniversary beyond the last anniversary for which such values and
benefits are consecutively shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by
reason of the plan of insurance may, to the extent inapplicable, be
omitted from the policy with the consent of the insurance commissioner.
The company shall reserve the right to defer the payment of any cash
surrender value for a period of six months after demand therefor
with surrender of the policy.
During such period of deferment, any interest or dividends that would
accrue in the absence of a surrender of the policy shall continue to
accrue until such surrender value is paid.
(b) Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary, whether
or not required by subsection (a), shall be an amount not less than the
excess, if any, of the present value, on such anniversary, of the future
guaranteed benefits which would have been provided for by the policy,
including any existing paid-up additions, if there had been no default,
over the sum of: (i) The then present value of the adjusted premiums as
defined in subsections (d), (d-1), (d-2) and (d-3), corresponding to premiums
which would have fallen due on and after such anniversary; and (ii) the
amount of any indebtedness to the company on the policy.
For any policy issued on or after the operative date of subsection (d-3)
as defined therein, which provides supplemental life insurance or annuity
benefits at the option of the insured and for an identifiable additional
premium by rider or supplemental policy provision, the cash surrender value
referred to in the first paragraph of this subsection shall be an amount
not less than the sum of the cash surrender value as defined in such paragraph
for an otherwise similar policy issued at the same age without such rider
or supplemental policy provision and the cash surrender value as defined
in such paragraph for a policy which provides only the benefits otherwise
provided by such rider or supplemental policy provision.
For any family policy issued on or after the operative date of subsection
(d-3) as defined therein, which defines a primary insured and provides term
insurance on the life of the spouse of the primary insured expiring before
the spouse's age 71, the cash surrender value referred to in the first
paragraph
of this subsection shall be an amount not less than the sum of the cash
surrender value as defined in such paragraph for an otherwise similar policy
issued at the same age without such term insurance on the life of the spouse
and the cash surrender value as defined in such paragraph for a policy which
provides only the benefits otherwise provided by such term insurance on
the life of the spouse.
Any cash surrender value available within 30 days after any policy
anniversary under any policy paid-up by completion of all premium
payments or any policy continued under any paid-up nonforfeiture
benefit, whether or not required by subsection (a), shall be an amount
not less than the present value, on such anniversary, of the future
guaranteed benefits provided for by the policy, including any existing
paid-up additions, decreased by any indebtedness to the company on the
policy.
(c) Any paid-up nonforfeiture benefit available under the policy in
the event of default in a premium payment due on any policy anniversary
shall be such that its present value as of such anniversary shall be at
least equal to the cash surrender value then provided for by the policy,
or, if none is provided for, that cash surrender value which would have
been required by this section in the absence of the condition that
premiums shall have been paid for at least a specified period.
(d) This subsection (d) shall not apply to policies issued on and after
the operative date of subsection (d-3), as defined therein. Except as provided
in the third paragraph of this subsection, the adjusted premiums for any
policy shall be calculated on an annual basis and shall be such uniform
percentage of the respective premiums
specified in the policy for each policy year, excluding amounts stated
in the policy as extra premiums to cover impairments or special hazards,
that the present value, at the date of issue of the policy, of all such
adjusted premiums shall be equal to the sum of: (i) The then present
value of the future guaranteed benefits provided for by the policy; (ii)
two percent of the amount of insurance, if the insurance be uniform
in amount, or of the equivalent uniform amount, as hereinafter defined,
if the amount of insurance varies with duration of the policy; (iii)
forty percent of the adjusted premium for the first policy year;
(iv) twenty-five percent of either the adjusted premium for the
first policy year or the adjusted premium for a whole life policy of the
same uniform or equivalent uniform amount with uniform premiums for the
whole life issued at the same age for the same amount of insurance,
whichever is less. In applying the percentages specified in (iii) and
(iv) above, no adjusted premium shall be deemed to exceed 4% of the amount
of insurance or uniform amount equivalent thereto.
The date of issue of a policy for the purpose of this subsection shall
be the date as of which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with
duration of the policy, the equivalent uniform amount thereof for the
purpose of this subsection shall be deemed to be the uniform amount of
insurance provided by an otherwise similar policy, containing the same
endowment benefit or benefits, if any, issued at the same age and for
the same term, the amount of which does not vary with duration and the
benefits under which have the same present value at the date of issue as
the benefits under the policy. In the case of a policy issued at an age
less than 10 years the equivalent uniform amount of insurance may be based
upon the amount of insurance after age 10.
The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (a)
the adjusted premiums for an otherwise similar policy issued at the same
age without such term insurance benefits, increased, during the period
for which premiums for such term insurance benefits are payable, by (b)
the adjusted premiums for such term insurance, the foregoing items (a)
and (b) being calculated separately and as specified in the first two
paragraphs of this subsection except that, for the purposes of (ii),
(iii) and (iv) of the first such paragraph, the amount of insurance or
equivalent uniform amount of insurance used in the calculation of the
adjusted premiums referred to in (b) shall be equal to the excess of the
corresponding amount determined for the entire policy over the amount
used in the calculation of the adjusted premiums in (a).
Except as otherwise provided in subsections (d-1) and (d-2), all
adjusted premiums and present values referred to in this section shall
for all policies of ordinary insurance be calculated on the basis of the
commissioners' 1941 standard ordinary mortality table. For any category
of ordinary insurance issued on female risks, adjusted premiums and
present values may be calculated, according to an age not more than
three years younger than the actual age of the insured. Such
calculations for all policies of industrial insurance shall be made on
the basis of the 1941 standard industrial mortality table. All
calculations shall be made on the basis of the rate of interest, not
exceeding 3 1/2% per annum, specified in the policy for calculating cash
surrender values and paid-up
nonforfeiture benefits. In calculating the present value of any paid-up
term insurance with accompanying pure endowment, if any, offered as a
nonforfeiture benefit, the rates of mortality assumed may be not more
than 130% of the rates of mortality according to such applicable table.
If the rate of mortality used
exceeds 100% the rate shall be stated in the
policy. For insurance issued on a substandard basis, the calculation of
any such adjusted premiums and present values may be based on such other
table of mortality as may be specified by the company and approved by
the commissioner of insurance.
(d-1) This subsection (d-1) shall not apply to ordinary policies issued
on or after the operative date of subsection (d-3), as defined therein.
In the case of ordinary policies issued on or after the
operative date of this subsection (d-1) as defined herein, all adjusted
premiums, as defined in subsection (d), and present values referred to
in this section shall be calculated on the basis of 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. Such rate of interest shall not exceed
3 1/2%
per annum, except that a rate of interest not exceeding 4% per annum may
be used for policies issued on or after July 1, 1973, and prior to July 1,
1978, and
a rate of interest not exceeding
5 1/2% per annum may be used for policies issued on or after July 1, 1978,
except that for any single premium whole life or endowment insurance policy a
rate of interest not exceeding
6 1/2% per annum may be used. For any category of ordinary insurance issued
on
female risks, adjusted premiums and present values may be calculated
according to an age not more than six years younger than the actual
age of the insured. In calculating the present value of any paid-up term
insurance with accompanying pure endowment, if any, offered as a
nonforfeiture benefit, the rates of mortality assumed may be not more
than those shown in the commissioners' 1958 extended term insurance
table. For insurance issued on a substandard basis, the calculation of
any such adjusted premiums and present values may be based on such other
table of mortality as may be specified by the company and approved by
the commissioner.
After the effective date of this subsection (d-1), any company may
file with the commissioner a written notice of its election to comply
with the provisions of this subsection after a specified date. After the
filing of such notice, then upon such specified date (which shall be the
operative date of this subsection for such company), this subsection
shall become operative with respect to the ordinary policies thereafter
issued by such company. Any company, having filed such notice of
election to comply with this subsection, and desiring to withdraw from
such election as to future policies may file with the commissioner of
insurance a written notice of such withdrawal after a specified date,
and of its intention to value all its future policies in accordance with
the provisions of law applicable to the basis used prior to such
election and to provide nonforfeiture benefits and cash surrender values
in future policies as required for the basis used prior to such
election.
(d-2) This subsection (d-2) shall not apply to industrial policies issued
on or after the operative date of subsection (d-3), as defined therein.
In the case of industrial policies issued on or after the
operative date of this subsection (d-2) as defined herein, all adjusted
premiums and present values referred to in this section shall be
calculated on the basis of 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.
Such rate of interest shall not exceed 3 1/2% per annum, except that a
rate of interest not
exceeding 4% per annum may be used for policies issued on or after July
1, 1973, and prior to July 1, 1978, and a rate of interest not exceeding
5 1/2% per annum may be used for policies issued on or after July 1, 1978,
except that for any single premium
whole life or endowment insurance policy a rate of interest not
exceeding 6 1/2% per annum may be used. In calculating the present value
of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the
commissioners' 1961 industrial extended term insurance table. For
insurance issued on a substandard basis, the calculations of such
adjusted premiums and present values may be based on such other table of
mortality as may be specified by the company and approved by the
commissioner.
After the effective date of this subsection (d-2), any company may
file with the commissioner a written notice of its election to comply
with the provisions of this subsection after a specified date. After the
filing of such notice, then upon such specified date (which shall be the
operative date of this subsection for such company), this subsection
shall become operative with respect to the industrial policies
thereafter issued by such company. Any company having filed such notice
of election to comply with this subsection, and desiring to withdraw
from such election as to future policies may file with the commissioner
of insurance a written notice of such withdrawal after a specified date,
and of its intention to value all its future policies in accordance with
provisions of law applicable to the basis used prior to such elections
and to provide nonforfeiture benefits and cash surrender values in
future policies as required for the basis used prior to such election.
(d-3) (1) This subsection shall apply to all policies issued on or after
the operative date of this subsection (d-3), as defined herein. Except as
provided in the seventh paragraph of this subsection, the adjusted premiums
for any policy shall be calculated on an annual basis and shall be such
uniform percentage of the respective premiums specified in the policy for
each policy year, excluding amounts payable as extra premiums to cover
impairments
or special hazards and also excluding any uniform annual contract charge
or policy fee specified in the policy in a statement of the method to be
used in calculating the cash surrender values and paid-up nonforfeiture
benefits, that the present value, at the date of issue of the policy, of
all adjusted premiums shall be equal to the sum of: (i) The then present
value of the future guaranteed benefits provided for by the policy; (ii)
one percent of either the amount of insurance, if the insurance be uniform
in amount, or the average amount of insurance at the beginning of each of
the first 10 policy years; and (iii) one hundred twenty-five percent of
the nonforfeiture net level premium as hereinafter defined. In applying
the percentage specified in (iii) above,
no nonforfeiture net level premium shall be deemed to exceed 4% of either
the amount of insurance, if the insurance be uniform in amount, or the average
amount of insurance at the beginning of each of the first 10 policy years.
The date of issue of a policy for the purpose of this subsection shall be
the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present
value, at the date of issue of the policy, of the guaranteed benefits provided
for by the policy divided by the present value, at the date of issue of
the policy, of an annuity of one per annum payable on the date of issue
of the policy and on each anniversary of such policy on which a premium falls
due.
(3) In the case of policies which cause on a basis guaranteed in the policy
unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, the adjusted premiums and present values shall initially be calculated
on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of the policy. At the time of any such change
in the benefits or premiums the future adjusted premiums, nonforfeiture net
level premiums and present values shall be recalculated on the assumption
that future benefits and premiums do not change from those stipulated by
the policy immediately after the change.
(4) Except as otherwise provided in the seventh paragraph of this subsection,
the recalculated future adjusted premiums for any such policy shall be such
uniform percentage of the respective future premiums specified in the policy
for each policy year, excluding amounts payable as extra premiums to cover
impairments and special hazards, and also excluding any uniform annual contract
charge or policy fee specified in the policy in a statement of the method
to be used in calculating the cash surrender values and paid-up nonforfeiture
benefits, that the present value, at the time of change to the newly defined
benefits or premiums, of all such future adjusted premiums shall be equal
to the excess of (A) the sum of (i) the then present value of the then future
guaranteed benefits provided for by the policy and (ii) the additional expense
allowance, if any, over (B) the then cash surrender value, if any, or present
value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the
newly defined benefits or premiums, shall be the sum of: (i) One percent
of the excess, if positive, of the average amount of insurance at the beginning
of each of the first 10 policy years subsequent to the change over the average
amount of insurance prior to the change at the beginning of each of the
first 10 policy years subsequent to the time of the most recent previous
change, or, if there has been no previous change, the date of issue of the
policy; and (ii) one hundred twenty-five percent of the increase, if positive,
in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to
the result obtained by dividing (A) by (B) where (A) equals the sum of:
(i) The nonforfeiture net level premium applicable prior to the change times
the present value of an annuity of one per annum payable on each anniversary
of the policy on or subsequent to the date of the change on which a premium
would have fallen due had the change not occurred; and (ii) the present
value of the increase in future guaranteed benefits provided for by the policy, and
(B) Equals the present value of an annuity of one per annum payable on
each anniversary of the policy on or subsequent to the date of change on
which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the
contrary, in the case of a policy issued on a substandard basis which provides
reduced graded amounts of insurance so that, in each policy year, such policy
has the same tabular mortality cost as an otherwise similar policy issued
on the standard basis which provides higher uniform amounts of insurance,
adjusted premiums and present values for such substandard policy may be
calculated as if it were issued to provide such higher uniform amounts of
insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section
shall for all policies of ordinary insurance be calculated on the basis
of: (i) The commissioners' 1980 standard ordinary mortality table; or (ii)
at the election of the company for any one or more specified plans of life
insurance, the commissioners' 1980 standard ordinary mortality table with
ten-year select mortality factors; shall for all policies of industrial
insurance be calculated on the basis of the commissioners' 1961 standard
industrial mortality table; and shall for all policies issued in a particular
calendar year be calculated on the basis of a rate of interest not exceeding
the nonforfeiture interest rate as defined in this subsection for policies
issued in that calendar year. Except:
(A) At the option of the company, calculations for all policies issued
in a particular calendar year may be made on the basis of a rate of interest
not exceeding the nonforfeiture interest rate, as defined in this subsection,
for policies issued in the immediately preceding calendar year.
(B) Under any paid-up nonforfeiture benefit, including any paid-up dividend
additions, any cash surrender value available, whether or not required by
subsection (a), shall be calculated on the basis of the mortality table
and rate of interest used in determining the amount of such paid-up
nonforfeiture
benefit and paid-up dividend additions, if any.
(C) A company may calculate the amount of any guaranteed paid-up nonforfeiture
benefit including any paid-up additions under the policy on the basis of
an interest rate no lower than that specified in the policy for calculating
cash surrender values.
(D) In calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the commissioners'
1980 extended term insurance table for policies of ordinary insurance and
not more than the commissioners' 1961 industrial extended term insurance
table for policies of industrial insurance.
(E) For insurance issued on a substandard basis, the calculation of any
such adjusted premiums and present values may be based on appropriate modifications
of the aforementioned tables.
(F) Any ordinary mortality tables, adopted after 1980 by the national
association of insurance commissioners, that are approved by regulation
promulgated by the commissioner for use in determining the minimum
nonforfeiture
standard may be substituted for the commissioners' 1980 standard ordinary
mortality table with or without ten-year select mortality factors or for
the commissioners' 1980 extended term insurance table.
(G) Any industrial mortality tables, adopted after 1980 by the national
association of insurance commissioners, that are approved by regulation
promulgated by the commissioner for use in determining the minimum
nonforfeiture
standard may be substituted for the commissioners' 1961 standard industrial
mortality table or the commissioners' 1961 industrial extended term insurance
table.
(9) The nonforfeiture interest rate per annum for any policy issued in
a particular calendar year shall be equal to 125% of the calendar year
statutory valuation interest rate for such policy as defined in the standard
valuation law, rounded to the nearer 1/4%.
(10) Notwithstanding any other provision of this code to the contrary,
any refiling of nonforfeiture values or their methods of computation for
any previously approved policy form which involves only a change in the
interest rate or mortality table used to compute nonforfeiture values shall
not require refiling of any other provisions of that policy form.
(11) After the effective date of this subsection (d-3), any company may
file with the commissioner a written notice of its election to comply with
the provisions of this subsection after a specified date before January
1, 1989, which shall be the operative date of this subsection for such company.
If a company makes no such election, the operative date of this subsection
for such company shall be January 1, 1989.
(e) In the case of any plan of life insurance which provides for future
premium determination, the amounts of which are to be determined by the
insurance company based on then estimates of future experience, or in the
case of any plan of life insurance which is of such a nature that minimum
values cannot be determined by the methods described in subsections (a),
(b), (c), (d), (d-1), (d-2) or (d-3) herein, then:
(1) The commissioner must be satisfied that the benefits provided under
the plan are substantially as favorable to policyholders and insureds as
the minimum benefits otherwise required by subsections (a), (b), (c), (d),
(d-1), (d-2) or (d-3) herein;
(2) the commissioner must be satisfied that the benefits and the pattern
of premiums of that plan are not such as to mislead prospective policyholders
or insureds;
(3) the cash surrender values and paid-up nonforfeiture benefits provided
by such plan must not be less than the minimum values and benefits required
for the plan computed by a method consistent with the principles of this
standard nonforfeiture law, as determined by regulations promulgated by
the commissioner.
(f) Any cash surrender value and any paid-up nonforfeiture
benefit, available under any such policy in the event of default in the payment
of any premium due at any time other than on the policy anniversary,
shall be calculated with allowance for the lapse of time and the payment
of fractional premiums beyond the beginning of the policy year in which
the default occurs. All values referred to in subsections (b), (c), (d),
(d-1), (d-2) and (d-3) may be calculated upon the assumption that any death
benefit is payable at the end of the policy year of death. The net value
of any paid-up additions, other than paid-up term additions, shall be
not less than the amounts used to provide such additions.
Notwithstanding the provisions of subsection (b), additional benefits
payable: (i) In the event of death or dismemberment by accident or
accidental means; (ii) in the event of total and permanent disability;
(iii) as reversionary annuity or deferred reversionary annuity benefits;
(iv) as term insurance benefits provided by a rider or supplemental
policy provision to which, if issued as a separate policy, this section
would not apply; (v) as term insurance on the life of a child or on the
lives of children provided in a policy on the life of a parent of a
child, if such term insurance expires before the child's age is 26, is uniform
in amount after the child's age is one, and has not become paid-up by reason
of the death of a parent of the
child; and (vi) as other policy benefits additional to life insurance
and endowment benefits, and premiums for all such additional benefits,
shall be disregarded in ascertaining cash surrender values and
nonforfeiture benefits required by this section, and no such additional
benefits shall be required to be included in any paid-up nonforfeiture
benefits.
(g) This subsection, in addition to all other applicable subsections of
this section, shall apply to all policies issued on or after January 1,
1986. Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary shall be in
an amount which does not differ by more than .2% of either the amount of
insurance, if the insurance be uniform in amount, or the average amount
of insurance at the beginning of each of the first 10 policy years, from
the sum of: (a) The greater of zero and the basic cash value hereinafter
specified; and (b) the present value of any existing paid-up additions less
the amount of any indebtedness to the company under the policy.
The basic cash value shall be equal to the present value, on such anniversary,
of the future guaranteed benefits which would have been provided for by
the policy, excluding any existing paid-up additions and before deduction
of any indebtedness to the company, if there had been no default, less the
then present value of the nonforfeiture factors, as hereinafter defined,
corresponding to premiums which would have fallen due on and after such
anniversary. The effects on the basic cash value of supplemental life insurance
or annuity benefits or of family coverage, as described in subsection (b)
or (d), whichever is applicable, shall be the same as are the effects specified
in subsection (b) or (d), whichever is applicable on the cash surrender
values defined in that subsection.
The nonforfeiture factor for each policy year shall be an amount equal
to a percentage of the adjusted premium for the policy year, as defined
in subsection (d) or (d-3), whichever is applicable. Except as is required
by the next succeeding sentence of this paragraph, such percentage:
(a) Must be the same percentage for each policy year between the second
policy anniversary and the later of: (i) The fifth policy anniversary; and
(ii) the first policy anniversary at which there is available under the
policy a cash surrender value in an amount, before including any paid-up
additions and before deducting any indebtedness, of at least .2% of either
the amount of insurance, if the insurance be uniform in amount, or the average
amount of insurance at the beginning of each of the first 10 policy years; and
(b) must be such that no percentage after the later of the two policy
anniversaries specified in the preceding item (a) may apply to fewer than
five consecutive policy years.
No basic cash value may be less than the value which would be obtained
if the adjusted premiums for the policy, as defined in subsection (d) or
(d-3), whichever is applicable, were substituted for the nonforfeiture factors
in the calculation of the basic cash value.
All adjusted premiums and present values referred to in this subsection
shall for a particular policy be calculated on the same mortality and interest
bases as are used in demonstrating the policy's compliance with the other
sections of this act. The cash surrender values referred to in this subsection
shall include any endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in
a premium payment due on a policy anniversary, and the amount of any paid-up
nonforfeiture benefit available under the policy in the event of default
in a premium payment shall be determined in manners consistent with the
manners specified for determining the analogous minimum amounts in subsections
(a), (b), (c), (d-3), and (f). The amounts of any cash surrender values
and of any paid-up nonforfeiture benefits granted in connection with additional
benefits such as those listed as items (i) through (vi) in subsection (f)
shall conform with the principles of this subsection (g).
(h) This section shall not apply to any of the following: (1) Reinsurance;
(2) group
insurance; (3) pure endowment; (4) annuity or reversionary annuity contract;
(5) term policy of uniform amount, which provides no guaranteed nonforfeiture
or endowment benefits, or renewal thereof, of 20 years or less expiring before
age 71,
for which uniform premiums are payable during the entire term of the
policy; (6) term policy of decreasing amount, which provides no guaranteed
nonforfeiture or endowment benefits, on which each adjusted premium
calculated as specified in subsections (d), (d-1), (d-2) and (d-3), is less
than the adjusted premium so calculated, on a term policy of uniform amount,
or renewal thereof, which provides no guaranteed nonforfeiture or endowment
benefits, issued at the same age and for the same initial amount of insurance
and for a term of 20 years or less expiring before age 71, for which uniform
premiums are payable during the entire term of the policy; (7) policy, which
provides no guaranteed nonforfeiture or endowment benefits, for which no
cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at
the beginning of any policy
year, calculated as specified in subsections (b), (c), (d), (d-1), (d-2)
and (d-3), exceeds 2 1/2% of the amount of insurance at the beginning
of the same policy year; nor (8) policy which shall be delivered outside
this state through an agent or other representative of the company issuing the
policy.
For purposes of determining the applicability of this section, the age
at expiry for a joint term life insurance policy shall be the age at expiry
of the oldest life.
(i) After the effective date of this act, any company may file with the
commissioner of insurance a written notice of its election to comply
with the provisions of this section other than as provided in
subsections (d-1), (d-2), (d-3), (e) and (g) after a specified date. After the
filing of
such notice, then upon such specified date (which shall be the operative
date for such company) such provisions shall become operative with
respect to all policies thereafter issued by such company.
(j) Any company, having filed written notices as provided in the
preceding subsection (i), and desiring to withdraw from such election as
to future policies may file with the commissioner of insurance a written
notice of such withdrawal after a specified date, and of its intention
to value all its future policies in accordance with the provisions of
subsection (b) of K.S.A. 40-409, and amendments thereto, and to provide
nonforfeiture benefits and cash surrender values in future policies in
accordance
with K.S.A. 40-427. After the filing of such withdrawal notice, then upon
such specified date, subsection (b) of K.S.A. 40-409, and amendments thereto,
and K.S.A. 40-427 shall become operative with respect to all policies
thereafter
issued by such company in this state.
History: L. 1947, ch. 277, § 4; L. 1957, ch. 280, § 2;
L. 1959,
ch. 213, § 2; L. 1965, ch. 302, § 2; L. 1973, ch. 193, §
2; L.
1978, ch. 175, § 2; L. 1982, ch. 202, § 2;
L. 2008, ch. 134, § 1; July 1.
History: L. 1978, ch. 175, § 4;
L. 2002, ch. 158, § 20;
Repealed, L. 2004, ch. 18, § 14; July 1, 2006.
(b) In the case of policies issued on or after the operative date of
K.S.A. 40-428 (the standard nonforfeiture law) the loan
value referred to in subsection (5) of K.S.A. 40-420, shall be the cash surrender
value at the end of the current policy year as required by K.S.A.
40-428. The company shall reserve the right to defer such
loan, except when made to pay premiums, for six months after application
therefor is made.
History: L. 1947, ch. 277, § 5; July 1.
History: L. 1947, ch. 277, § 8; Repealed, L. 1963, ch. 262, §
1; June 30.
History: L. 1947, ch. 277, § 9; July 1.
History: L. 1947, ch. 277, § 10; July 1.
(1) A policy issued by an insurance company organized under the laws
of the state of Kansas on its employees and agents, which agents for the
purpose of this act only shall be deemed employees, the beneficiaries
under such policies to be persons designated by each insured, or a
policy issued to an employer, or to the trustees of a fund established
by an employer, which employer or trustees shall be deemed the
policyholder, to insure employees of the employer for the benefit of
persons other than the employer, both subject to the following
requirements: (a) The employees eligible for insurance under the policy
shall be all of the employees of the employer, or all of any class or
classes thereof determined by conditions pertaining to their employment.
The policy may provide that the term "employees" shall include the
employees of one or more subsidiary corporations, and the employees,
individual proprietors, and partners of one or more affiliated
corporations, proprietors or partnerships if the business of the
employer and of such affiliated corporations, proprietors or
partnerships is under common control through stock ownership, contract
or otherwise. The policy may provide that the term "employees" shall
include the individual proprietor or partners if the employer is an
individual proprietor or a partnership. The policy may provide that the
term "employees" shall include retired employees. No director of a
corporate employer shall be eligible for insurance under the policy
unless such person is otherwise eligible as a bona fide employee of the
corporation by performing services other than the usual duties of a
director. No individual proprietor or partner shall be eligible for
insurance under the policy unless the proprietor or
partner is actively engaged in and
devotes a substantial part of their time to the conduct
of the business of the proprietor or partnership. A policy issued to
insure the employees of a public body may provide that the term "employees"
shall include elected or appointed officials. (b) The premium for the
policy shall be paid by the policyholder, either wholly from the
employer's funds or funds contributed by the employer,
or partly from such
funds and partly from funds contributed by the insured employees. No
policy shall be issued on which the entire premium is to be derived from
funds contributed by the insured employees. A policy on which part of
the premium is to be derived from funds contributed by the insured
employees may be placed in force only if at least 75% of the then eligible
employees, excluding any as to whom evidence
of individual insurability is not satisfactory to the insurer, elect to
make the required contribution. A policy on which no part of the premium
is to be derived from funds contributed by the insured employees
shall insure all eligible employees, or all except any as to whom evidence of
individual insurability is not satisfactory to the insurer. (c) The
policy shall cover at least two employees at
date of issue. (d) The
amounts of insurance under the policy shall be based upon some plan,
precluding individual selection either by the employees or by the
employer or trustees.
(2) A policy issued to a creditor, who shall be deemed the
policyholder, to insure debtors of the creditor, subject to the
following requirements: (a) The debtors eligible for insurance under the
policy shall be all of the debtors of the creditor whose indebtedness is
repayable in installments, or all of any class or classes thereof
determined by conditions pertaining to the indebtedness or to the
purchase giving rise to the indebtedness. (b) The premium for the policy
shall be paid by the policyholder, either from the creditor's funds or
from charges collected from the insured debtors, or from both. A policy
on which part or all of the premium is to be derived from the collection
from the insured debtors of identifiable charges not required of
uninsured debtors shall not include, in the class or classes of debtors
eligible for insurance, debtors under obligations outstanding at its
date of issue without evidence of individual insurability unless at
least 75% of the then eligible debtors elect to
pay the required charges. A policy on which no part of the premium is to
be derived from the collection of such identifiable charges shall insure
all eligible debtors, or all except any as to whom evidence of
individual insurability is not satisfactory to the insurer. (c) The
policy may be issued only if the group of eligible debtors is then
receiving new entrants at the rate of at least 100 persons
yearly, or may reasonably be expected to receive at least 100 new entrants
during the first policy year, and only if the policy
reserves to the insurer the right to require evidence of individual
insurability if less than 75% of the new entrants
become insured. (d) The amount of insurance on the life of any debtor
shall at no time exceed the amount owed
by that debtor which is repayable in installments to the creditor. (e) The
insurance shall
be payable to the policyholder. Such payment shall reduce or extinguish
the unpaid indebtedness of the debtor to the extent of such payment.
(3) A policy issued to a labor union, which shall be deemed the
policyholder, to insure members of such union for the benefit of persons
other than the union or any of its officials, representatives or agents,
subject to the following requirements: (a) The members eligible for
insurance under the policy shall be all of the members of the union, or
all of any class or classes thereof determined by conditions pertaining
to their employment, or to membership in the union, or both.
(b) The premium for the policy shall be paid by the policyholder,
either wholly from the union's funds, or partly from such funds and
partly from funds contributed by the insured members specifically for
their insurance. No policy shall be issued on which the entire premium is
to be derived from funds contributed by the insured members specifically
for their insurance. A policy on which part of the premium is to be
derived from funds contributed by the insured members specifically for
their insurance may be placed in force only if at least 75% of the then
eligible members excluding any as to whom
evidence of individual insurability is not satisfactory to the insurer,
elect to make the required contributions. A policy on which no part of
the premium is to be derived from funds contributed by the insured
members specifically for their insurance shall insure all eligible
members, or all except any as to whom evidence of individual
insurability is not satisfactory to the insurer.
(c) The policy shall cover at least
25 members at date
of issue.
(d) The amounts of insurance under the policy shall be based upon
some plan precluding individual selection either by the members or by
the union.
(4) A policy issued to the trustees of a fund established in this
state by two or more employers if a majority of the employees to be
insured of each employer are located within the state, or to the
trustees of a fund established by one or more labor unions, or by one or
more employers and one or more labor unions, which trustees shall be
deemed the policyholder, to insure employees of the employers or members
of the unions for the benefit of persons other than the employers or the
unions, subject to the following requirements: (a) The persons eligible
for insurance shall be all of the employees of the employers or all of
the members of the unions, or all of any class or classes thereof
determined by conditions pertaining to their employment, or to
membership in the unions, or to both. The policy may provide that the
term "employees" shall include retired employees and the individual
proprietor or partners if any employer is an individual proprietor or a
partnership. No director of a corporate employer shall be eligible for
insurance under the policy unless such person is otherwise eligible as a
bona fide employee of the corporation by performing services other than
the usual duties of a director. No individual proprietor or partner
shall be eligible for insurance under the policy unless the
proprietor or partner is actively engaged in and devotes a substantial
part of their time to
the conduct of the business of the proprietor or partnership. The policy
may provide that the term "employees" shall include the trustees or
their employees, or both, if their duties are principally connected with
such trusteeship. (b) The premium for the policy shall be paid by the
trustees either wholly from funds contributed by the employer or
employers of the insured persons, or by the union or unions, or by both,
or partly from such funds and partly from funds contributed by the
insured employees. No policy shall be issued on which the entire premium
is to be derived from funds contributed by the insured persons. The
policy shall insure all eligible persons, or all except any as to whom
evidence of individual insurability is not satisfactory to the insurer.
(c) The policy shall cover at date of issue at least 100 persons
and not less than an average of five persons per employer
unit. (d) The amounts of
insurance under the policy shall be based upon some plan precluding
individual selection either by the insured persons or by the
policyholder, employers, or union.
(e) The requirements of paragraphs (b) and (d) of this subsection
governing
employer contributions and amounts of insurance shall not apply to a
voluntary term life insurance policy issued on a group basis.
(5) A policy issued to an association which has been organized and
is maintained for purposes other than that of obtaining insurance,
insuring at least 25 members, employees, or employees of
members of the association for the benefit of persons other than the
association or its officers. The term "employees" as used herein shall
be deemed to include retired employees. The premiums for the policies shall be
paid
by the policyholder, either wholly from association funds, or funds
contributed by the members of such association or by employees of such
members or any combination thereof. The amounts of insurance under the
policy shall be based upon some plan precluding individual selection
either by the insured person or by the association or by the member.
(6) Any policy issued pursuant to this section may be extended to
insure the employees against loss due to the death of their spouses, their
children, their grandchildren, their spouse's
children, their spouse's grandchildren, their parents, their spouse's
parents, or any class or classes thereof, subject to
the
following requirements:
(a) The premium for the insurance shall be paid by the policyholder,
either from the employer's funds or from funds contributed by the
insured employees, or from both. If any part of the premium is to be
derived from funds contributed by the insured employees, the insurance
with respect to spouses, their children, their
grandchildren, their spouse's children, their spouse's grandchildren, their
parents and their spouse's parents may be placed in force only if at
least 75% of the then eligible employees,
excluding any as to whose family members' evidence of insurability is not
satisfactory to the insurer, elect to make the required contribution. If
no part of the premium is to be derived from funds contributed by the
employees, all eligible employees, excluding any as to whose family members'
evidence of insurability is not satisfactory to the insurer, shall be
insured with respect to their spouses, their children, their
grandchildren, their spouse's children, their spouse's grandchildren, their
parents, their spouse's parents.
(b) The amounts of insurance shall be based upon some plan precluding
individual selection either by the employees or by the policyholder, or
employer and shall not exceed with respect to any spouse, child
or parent 50%
of the insurance on the life of such insured
employee.
(c) Upon termination of the insurance with respect to the spouse of
an employee by reason of the employee's termination of employment or
death, the spouse insured pursuant to this section shall have the same
conversion rights as to the insurance on such spouse's
life as is provided
for the employee under K.S.A. 40-434 and amendments thereto.
(d) Notwithstanding the provisions of K.S.A. 40-434 and amendments
thereto only one certificate need be issued for delivery to an insured person
if a
statement concerning any dependent's coverage is included in such
certificate.
(e) The requirements of paragraphs (a) and (b) of this subsection
governing
participation, contribution by an employer and amounts of insurance for
dependents shall not apply to a voluntary term life insurance policy issued on
a group basis.
(7) A policy may be issued to any other group which the commissioner
of insurance finds is the proper subject of a group life insurance
policy or contract. Any such group shall be subject to any appropriate
conditions or provisions relating thereto which the commissioner may
establish or require, consistent with the provisions of this act, and
such conditions and provisions shall be included in the policy or
contract.
History: L. 1951, ch. 301, § 1; L. 1955, ch. 241, § 1; L.
1957, ch. 281, § 1; L. 1965, ch. 308, § 1; L. 1967, ch. 260, § 1; L.
1969, ch. 233, § 1; L. 1972, ch. 181, § 1; L. 1975, ch. 244, § 1; L.
1977, ch. 159, § 1; L. 1980, ch. 134, § 1;
L. 1987, ch. 163, § 1;
L. 1988, ch. 153, § 1;
L. 1989, ch. 136, § 1;
L. 1993, ch. 190, § 3;
L. 1994, ch. 67, § 1;
L. 1997, ch. 50, § 1;
L. 2004, ch. 128, § 16;
L. 2006, ch. 122, § 3;
L. 2008, ch. 134, § 6; July 1.
History: L. 1969, ch. 234, § 2; July 1.
(1) A provision that the policyholder is entitled to a grace period of
thirty-one (31) days for the payment of any premium due except the first,
during which grace period the death benefit coverage shall continue in
force, unless the policyholder shall have given the insurer written notice
of discontinuance in advance of the date of discontinuance and in
accordance with the terms of the policy. The policy may provide that the
policyholder shall be liable to the insurer for the payment of a pro rata
premium for the time the policy was in force during such grace period.
(2) A provision that the validity of the policy shall not be contested,
except for nonpayment of premiums, after it has been in force for two (2)
years from its date of issue; and that no statement made by any person
insured under the policy relating to his insurability shall be used in
contesting the validity of the insurance with respect to which such
statement was made after such insurance has been in force prior to the
contest for a period of two (2) years during such person's lifetime nor
unless it is contained in a written instrument signed by him.
(3) A provision that a copy of the application, if any, of the
policyholder shall be attached to the policy when issued, that all
statements made by the policyholder or by the persons insured shall be
deemed representations and not warranties, and that no statement made by
any person insured shall be used in any contest unless a copy of the
instrument containing the statement is or has been furnished to such person
or to his beneficiary.
(4) A provision setting forth the conditions, if any, under which the
insurer reserves the right to require a person eligible for insurance to
furnish evidence of individual insurability satisfactory to the insurer as
a condition to part or all of his coverage.
(5) A provision specifying an equitable adjustment of premiums or of
benefits or of both to be made in the event the age of a person insured has
been misstated, such provision to contain a clear statement of the method
of adjustment to be used.
(6) A provision that any sum becoming due by reason of the death of the
person insured shall be payable to the beneficiary designated by the person
insured, subject to the provisions of the policy in the event there is no
designated beneficiary as to all or any part of such sum living at the
death of the person insured, and subject to any right reserved by the
insurer in the policy and set forth in the certificate to pay at its option
a part of such sum not exceeding two hundred fifty dollars ($250) to any
person appearing to the insurer to be equitably entitled thereto by reason
of having incurred funeral or other expenses incident to the last illness
or death of the person insured.
(7) A provision that the insurer will issue to the policyholder for
delivery to each person insured an individual certificate setting forth a
statement as to the insurance protection to which he is entitled, to whom
the insurance benefits are payable, and the rights and conditions set forth
in (8), (9) and (10) following.
(8) A provision that if the insurance, or any portion of it, on a person
covered under the policy ceases because of termination of employment or of
membership in the class or classes eligible for coverage under the policy,
such person shall be entitled to have issued to him by the insurer, without
evidence of insurability, an individual policy of life insurance without
disability or other supplementary benefits: Provided, Application for
the individual policy shall be made, and the first premium paid to the
insurer, within thirty-one (31) days after such termination: And provided
further, That, (a) the individual policy shall, at the option of such
person, be on any one of the forms except term insurance, then customarily
issued by the insurer at the age and for the amount applied for; (b) the
individual policy shall be in an amount not in excess of the amount of life
insurance which ceases because of such termination less, in the case of a
person whose membership in the class or classes eligible for coverage
terminates but who continues in employment in another class, the amount of
any life insurance for which such person is or becomes eligible under any
other group policy within thirty-one (31) days after such termination:
Provided, That any amount of insurance which shall have matured on or
before the date of such termination as an endowment payable to the person
insured, whether in one sum or in installments or in the form of an
annuity, shall not, for the purposes of this provision, be included in the
amount which is considered to cease because of such termination; and (c)
the premium on the individual policy shall be at the insurer's then
customary rate applicable to the form and amount of the individual policy,
to the class of risk to which such person then belongs, and to his age
attained on the effective date of the individual policy.
(9) A provision that if the group policy terminates or is amended so as
to terminate the insurance of any class of insured persons, every person
insured thereunder at the date of such termination whose insurance
terminates and who has been so insured for at least five (5) years prior to
such termination date shall be entitled to have issued to him by the
insurer an individual policy of life insurance, subject to the same
conditions and limitations as are provided by (8) above, except that the
group policy may provide that the amount of such individual policy shall
not exceed the smaller of (a) the amount of the person's life insurance
protection ceasing because of the termination or amendment of the group
policy, less the amount of any life insurance for which he is or becomes
eligible under any group policy issued or reinstated by the same or another
insurer within thirty-one (31) days after such termination, and (b) two
thousand dollars ($2,000).
(10) A provision that if a person insured under the group policy dies
during the period within which he would have been entitled to have an
individual policy issued to him in accordance with (8) or (9) above and
before such an individual policy shall have become effective, the amount of
life insurance which he would have been entitled to have issued to him
under such individual policy shall be payable as a claim under the group
policy, whether or not application for the individual policy or the payment
of the first premium therefor has been made.
(11) In the case of a policy issued to a creditor to insure debtors of
such creditor, a provision that the insurer will furnish to the
policyholder for delivery to each debtor insured under the policy a form
which shall contain the name and home office address of the insurer; the
name or names of the debtor; the premium paid or the premium payable and
method of computation thereof, or other amount of payment, if any is
required of the debtor; a statement specifying when the debtor's insurance
becomes effective and when and under what conditions it shall terminate, or
in lieu thereof, the month, day and year the insurance begins and
terminates; any exceptions, limitations, or restrictions; and a statement
that the life of the debtor is insured under the policy and that any death
benefit paid thereunder by reason of his death shall be applied first to
reduce or extinguish the indebtedness.
History: L. 1951, ch. 301, § 2; L. 1969, ch. 234, § 1; July 1.
History: L. 1951, ch. 301, § 3;
L. 1994, ch. 17, § 1; March 17.
(b) The amounts allocated to each such account and accumulations thereon
may be invested and reinvested in any class of investments which may be
authorized in the contracts without regard to any requirements or
limitations prescribed by the laws of this state governing the investments
of life insurance companies. To the
extent that the
company's reserve liability with regard to (1) benefits guaranteed as to
amount and duration, and (2) funds guaranteed as to principal amount or
stated rate of interest is maintained in any separate account, a portion of
the assets of such separate account at least equal to such reserve
liability shall be invested in accordance with the laws of this state
governing the investments of life insurance companies. The investments in
such separate account or accounts shall not be taken into account in
applying the investment limitations applicable to other investments of the
company.
(c) The income, if any, and gains and losses, realized or unrealized, on
each account shall be credited to or charged against the amounts allocated
to the account in accordance with the contracts, without regard to other
income, gains or losses of the company.
(d) Assets allocated to a separate account shall be valued at their
market value on the date of valuation, or if there is no readily available
market, then in accordance with the terms of the contracts. The portion
of the assets of such separate account at least
equal to
the company's reserve liability with regard to the guaranteed benefits and
funds referred to in subsection (b) hereof, if any, shall be valued in
accordance with the rules otherwise applicable to the company's assets.
(e) Amounts allocated to a separate account in the exercise of the power
granted by this act shall be owned by the company, and the company shall
not be, nor hold itself out to be, a trustee with respect to such amounts.
If and to the extent so provided under the applicable contracts, that
portion of the assets of any such separate account equal to the reserves
and other contract liabilities with respect to such account shall not be
chargeable with liability arising out of any other business the company may
conduct.
(f) The company shall maintain in each such separate account assets with
a value at least equal to the reserves and other contract liabilities with
respect to such account, except as may otherwise be approved by the
commissioner of insurance. No sale, exchange or other transfer of assets
may be made by a company between any of its separate accounts or between
any other investment account and one or more of its separate accounts
unless, in case of a transfer into a separate account, such transfer is
made solely to establish the account or to support the operation of the
contracts with respect to the separate account to which the transfer is
made, and unless such transfer, whether into or from a separate account, is
made (1) by a transfer of cash, or (2) by a transfer of securities having a
readily determinable market value, provided that such transfer of
securities is approved by the commissioner. The commissioner may approve
other transfers among such accounts if, in his opinion, such transfers
would not be inequitable.
(g) If any contract provides for payment of benefits in variable
amounts, it shall contain a statement of the essential features of the
procedure to be followed by the company in determining the dollar amount of
such variable benefits. Any such contract, including a group contract, and
any certificate issued thereunder shall state that such dollar amount may
decrease or increase and shall contain on its first page a statement that
the benefits thereunder are on a variable basis.
(h) A foreign or alien life insurance company authorized to do business
in this state may be authorized to issue or deliver contracts in this state
providing for payments which vary directly according to investment
experience only if authorized to issue such contracts under the laws of its
domicile.
(i) No domestic life insurance company shall be authorized to issue such
contracts, and no foreign or alien life insurance company shall be
authorized to issue or deliver such contracts in this state, until such
company has satisfied the commissioner that its condition and methods of
operation in connection with the issuance of such contracts will not be
such as to render its operation hazardous to the public or to its
policyholders in this state. In determining the qualification of a company
to issue or deliver such contracts in this state, the commissioner shall
consider, among other things, the history and financial condition of the
company; the character, responsibility, and general fitness of the officers
and directors of the company; and in the case of a foreign or alien
company, whether the regulation provided by the laws of its domicile
provides a degree of protection to policyholders and the public
substantially equal to that provided by this section and the rules and
regulations issued by the commissioner pursuant thereto. The state of entry
of an alien company shall be deemed its place of domicile for this purpose.
(j) Every life insurance company which issues or delivers such contracts
in this state shall file with the commissioner, in addition to the annual
statement required by K.S.A. 40-225, and amendments thereto, such other
periodic or special reports
as the commissioner may prescribe.
(k) Any domestic life insurance company which establishes one or more
separate accounts pursuant to this section, may amend its charter or bylaws
to provide for special voting rights and procedures for the owners of
contracts under such separate account relating to investment policy,
investment advisory services and selection of independent public
accountants, in relation to the administration of the assets in any such
separate account and such other matters as the company deems necessary in
the management of the assets in any such separate account. This provision
shall not in any way affect existing laws pertaining to the voting rights
of the company's policyholders.
(l) The commissioner shall have the sole and exclusive jurisdiction and
authority to regulate the issuance and sale of such contracts and to
promulgate such reasonable rules and regulations as may be necessary to
carry out the purposes and provisions of this act, and such contracts, the
companies which issue them, and the agents or other persons who sell them,
shall not be subject to the provisions of article 12 of chapter 17 of the
Kansas Statutes Annotated, and amendments thereto, nor to the
jurisdiction of the securities
commissioner of this state.
History: L. 1967, ch. 259, § 1; L. 1968, ch. 382, § 1;
L. 1972, ch. 182, § 1;
L. 2005, ch. 42, § 2; July 1.
History: L. 1967, ch. 259, § 2; L. 1968, ch. 382, § 2; L. 1972,
ch. 182, § 2; L. 1978, ch. 175, § 3; July 1.
History: L. 1967, ch. 259, § 3; July 1.
History: L. 1969, ch. 239, § 1; July 1.
History: L. 1969, ch. 239, § 2; July 1.
History: L. 1970, ch. 178, § 1; July 1.
History: L. 1971, ch. 155, § 1; July 1.
History: L. 1971, ch. 155, § 2; July 1.
History: L. 1971, ch. 155, § 3; L. 1988, ch. 356, § 77; July 1, 1989.
History: L. 1971, ch. 155, § 4; L. 1988, ch. 356, § 78; July 1, 1989.
History: L. 1971, ch. 155, § 5; Repealed, L. 1986, ch. 318, § 146; July 1.
(b) Nothing in this section shall be construed to allow any insurer admitted
to transact life insurance in this state to withhold payment of money payable
under a life insurance policy to any beneficiary for a period longer than
reasonably necessary to transmit such payment.
(c) In any case in which interest on the proceeds of, or payments under,
any policy of life insurance becomes payable pursuant to subsection (a),
the insurer shall notify the named beneficiary or beneficiaries at their
last known address that interest will be paid on the proceeds of, or payments
under, such policy from the date of receipt of due proof of death of
the named insured. Such notice
shall specify the rate of interest to be paid.
(d) This section shall not require the payment of interest in any case
in which the beneficiary elects in writing delivered to the insurer to receive
the proceeds of, or payments under, the policy by any means other than a
lump sum payment thereof.
(e) The commissioner of insurance may adopt such rules and regulations
necessary to provide for the enforcement and administration of this act.
History: L. 1977, ch. 155, § 1;
L. 1987, ch. 164, § 1; July 1.
(b) Upon approving any such transfer, the commissioner of insurance
shall file with the secretary of state, in accordance with subsections (c)
and (d) of K.S.A. 17-6003 and amendments thereto a certificate stating that
the commissioner of insurance has approved transfer of the company's
domicile to another state and the state to which the company will transfer
its domicile. One hundred and eighty days after the filing of such
certificate, or on such earlier date as may be communicated in writing by
the president and secretary of the transferring company to the secretary of
state, the secretary of state shall issue a certificate that the company
has transferred its domicile to the state designated by the commissioner of
insurance, and thereupon the existence of the corporation as a domestic
corporation shall terminate, if the certificate of the secretary of state shall
be recorded in the office of the register of deeds of the county in which the
corporation maintained its registered office in this state in compliance with
the requirements of subsection (d) of K.S.A. 17-6003 and amendments thereto.
(c) At the discretion of the commissioner of insurance, the certificate
of authority, agents' appointments and certificates, rates, forms and other
documents required as a precedent to the holding of a Kansas certificate of
authority, which are in existence at the time any insurer transfers its
domicile to any other state pursuant to subsections (a) and (b), shall
continue in full force and effect upon such transfer if such insurer
remains duly qualified to transact the business of insurance in this state.
All in force policies of any transferring insurer shall remain in full
force and effect and shall be endorsed as necessary to display the new name
and location of the company.
(d) The transferring company shall not be treated as discontinuing its
business for purposes of K.S.A. 40-248 or any other provision of chapter 40
of the Kansas Statutes Annotated and amendments thereto. The transferring
company shall not be treated as uniting, merging or consolidating with any
other company for purposes of K.S.A. 40-309 or any other provision of
chapter 40 of the Kansas Statutes Annotated and amendments thereto. The
transfer shall not be treated as a merger or acquisition of control for
purposes of K.S.A. 40-3304 or any other provision of chapter 40 of the
Kansas Statutes Annotated and amendments thereto.
(e) The commissioner of insurance of this state may promulgate rules and
regulations to carry out the purposes of this act.
History: L. 1990, ch. 155, § 1; July 1.
History: L. 1990, ch. 156, § 1; July 1.
(b) A charitable, benevolent, educational and religious institution
qualified
under section 501(c) of the internal revenue code
shall be deemed to have an insurable interest in the life of an individual
insured who has executed a written consent to the assignment of the insurance
contract to such institution if such institutional assignee is named as the
irrevocable beneficiary thereof.
(c) If the beneficiary, assignee or other payee under any contract made in
violation of this section receives from the insurer any benefits thereunder
accruing upon the death of the person insured, the personal representative of
the insured may maintain an action to recover such benefits from the person so
receiving the benefits.
(d) Life insurance contracts may be entered into in which the person paying
the consideration has no insurable interest in the life of the person insured
if a charitable, benevolent, educational or religious institution qualified
under section 501(c) of the internal revenue code is
irrevocably designated as the beneficiary. In making such contracts the person
paying the premium shall make and sign the application therefor as owner.
The application must also be signed by the person whose life is to be insured.
Such a contract shall be valid and binding among the parties thereto
notwithstanding the absence otherwise of an insurable interest in the life of
the person insured.
(e) The provisions of this section shall apply to all insurance contracts in
force on and after the effective date of this act and to the procurement,
assignment and designation of beneficiaries thereof whenever made.
History: L. 1991, ch. 123, § 1; April 25.
(b) When an application for an individual life insurance policy and an
initial premium therefor has been received, the receipt for the premium shall
be in writing and may:
(1) Exclude coverage if the proposed insured commits suicide;
(2) void coverage if the application contains material misrepresentation or
is fraudulently completed;
(3) limit the coverage otherwise provided by subsection (a) by specifying
for each proposed insured the amount and type of temporary coverage granted;
and
(4) void coverage if a check or draft received in payment of the premium is
not honored for payment when presented.
(c) When an application for an individual life insurance policy and an
initial premium therefor has been received, the receipt for the premium shall
be in writing and provide for a refund of any unearned premium pursuant to
K.S.A. 40-2,112 and amendments thereto.
History: L. 1992, ch. 236, § 1; July 1.
(b) The consent requirement of subsection (a) shall be deemed to be
satisfied if: (1) The employee, director or retired employee is provided with a
written notice that the employer or trust intends to obtain life insurance
coverage with respect to such person's life; and (2) the employee, director or
retired employee fails to provide written notification to the employer or
trust, within 30 days from the date that the notice was transmitted, that such
person does not consent to the employer obtaining life insurance coverage on
such person's life. It shall be unlawful for the employer or trust to retaliate
against any person for refusing to consent to the issuance of life insurance on
such person's life.
(c) The extent of the employer's or trust's insurable interest in
nonmanagement and retired employees shall be limited to an amount commensurate
with the aggregate projected liabilities to such employees under all employee
welfare benefit plans, as defined in 29 U.S.C. 1002(1), calculated in
accordance with generally accepted actuarial principles.
(d) For purposes of this section, "employer", means any individual, sole
proprietorship, partnership, limited liability company, corporation or any
other entity that is legally doing business in this state; the term shall also
include all entities or persons which are controlled by or affiliated with any
of the foregoing. The determination of whether any entity or person is
controlled by or affiliated with another shall be made by applying the
principles set forth in subsections (b) or (c) of section 414 of the internal
revenue code of 1986, as in effect on January l, 1993, except that all
references
therein to "80%" shall be changed
to 51%.
(e) This section shall not be interpreted to define all instances in which
an insurable interest exists.
(f) The provisions of this section shall apply to all insurance contracts in
force on or after the effective date of this section.
History: L. 1993, ch. 190, § 1; April 22.
(b) Notwithstanding the provisions of subsection (a), an employer's or a
trust's insurable interest in any employee, director or previous employee
cannot
be terminated by such employee, director or previous employee with respect to
employee benefit plans described in 29 U.S.C. 1002(3).
History: L. 1993, ch. 190, § 2; April 22.
(b) "Dependents" include a payee's spouse and minor children and all other
persons for whom the
payee is legally obligated to provide support, including alimony.
(c) "Discounted present value" means the present value of future payments
determined by
discounting such payments to the present using the most recently published
applicable federal rate
for determining the present value of an annuity, as issued by the United States
internal revenue
service.
(d) "Gross advance amount" means the sum payable to the payee or for the
payee's account as
consideration for a transfer of structured settlement payment rights before any
reductions for transfer
expenses or other deductions to be made from such consideration.
(e) "Independent professional advice" means advice of an attorney, certified
public accountant,
actuary or other licensed professional adviser.
(f) "Interested parties" means, with respect to any structured settlement,
the payee, any beneficiary
irrevocably designated under the annuity contract to receive payments following
the payee's death,
the annuity issuer, the structured settlement obligor and any other party that
has continuing rights
or obligations under such structured settlement.
(g) "Net advance amount" means the gross advance amount less the aggregate
amount of the actual
and estimated transfer expenses required to be disclosed under subsection (e)
of
K.S.A. 2009 Supp.
40-462 and amendments thereto.
(h) "Payee" means an individual who receives tax free payments under a
structured settlement and
proposes to make a transfer of payment rights thereunder.
(i) "Periodic payments" include both recurring payments and scheduled
future lump sum payments.
(j) "Qualified assignment agreement" means an agreement providing for a
qualified assignment
within the meaning of section 130 of the United States internal revenue code.
(k) "Responsible administrative authority" means, with respect to a
structured settlement, any
government authority vested by law with exclusive jurisdiction over the settled
claim resolved by
such structured settlement.
(l) "Settled claim" means the original tort claim
resolved by a
structured settlement.
(m) "Structured settlement" means an arrangement for periodic payment of
damages for personal
injuries or sickness established by settlement or judgment in resolution of a
tort claim.
(n) "Structured settlement agreement" means the agreement, judgment,
stipulation or release
embodying the terms of a structured settlement.
(o) "Structured settlement obligor" means, with respect to any structured
settlement, the party that
has the continuing obligation to make periodic payments to the payee under a
structured settlement
agreement or a qualified assignment agreement.
(p) "Structured settlement payment rights" means rights to receive periodic
payments under a
structured settlement, whether from the structured settlement obligor or the
annuity issuer, where:
(1) The payee is domiciled in this state or the domicile or principal
place of business of the structured settlement obligor or the annuity issuer is
located in this state;
(2) the structured settlement agreement was approved by a court or
responsible administrative
authority in this state; or
(3) the structured settlement agreement is expressly governed by the laws of
this state.
(q) "Terms of the structured settlement" include the terms of the structured
settlement agreement,
the annuity contract, any qualified assignment agreement and any order or other
approval of any
court or responsible administrative authority or other government authority
that authorized or
approved such structured settlement.
(r) "Transfer" means any sale, assignment, pledge, hypothecation or other
alienation or
encumbrance of structured settlement payment rights made by a payee for
consideration. Transfer
does not include the creation or perfection of a security interest in
structured settlement payment
rights under a blanket security agreement entered into with an insured
depository institution, in the
absence of any action to redirect the structured settlement payments to such
insured depository
institution, or an agent or successor in interest thereof, or otherwise to
enforce such blanket security
interest against the structured settlement payment rights.
(s) "Transfer agreement" means the agreement providing for a transfer of
structured settlement
payment rights.
(t) "Transfer expenses" means all expenses of a transfer that are required
under the transfer
agreement to be paid by the payee or deducted from the gross advance amount,
including, without
limitation, court filing fees, attorneys fees, escrow fees, lien recordation
fees, judgment and lien
search fees, finders' fees, commissions and other payments to a broker or
other intermediary.
Transfer expenses do not include any preexisting obligations of the payee
payable for the payee's
account from the proceeds of a transfer.
(u) "Transferee" means a party acquiring or proposing to acquire structured
settlement payment
rights through a transfer.
History: L. 2005, ch. 57, § 1; July 1.
(a) The amounts and due dates of the structured settlement payments to be
transferred.
(b) The aggregate amount of such payments.
(c) The discounted present value of the payments to be transferred, which
shall be identified as
the calculation of current value of the transferred structured settlement
payments under federal
standards for valuing annuities, and the amount of the applicable federal rate
used in calculating
such discounted present value.
(d) The gross advance amount.
(e) An itemized listing of all applicable transfer expenses, other than
attorneys' fees and related
disbursements payable in connection with the transferee's application for
approval of the
transfer, and the transferee's best estimate of the amount of any such fees and
disbursements.
(f) The net advance amount.
(g) The amount of any penalties or liquidated damages payable by the payee in
the event of any
breach of the transfer agreement by the payee.
(h) A statement that the payee has the right to cancel the transfer
agreement, without penalty or
further obligation, not later than the third business day after the date the
agreement is signed by
the payee.
History: L. 2005, ch. 57, § 2; July 1.
(1) Transfer is in the best interest of the payee, taking into account
the welfare and
support of the payee's dependents;
(2) payee has been advised in writing by the transferee to seek independent
professional
advice regarding the transfer and has either received such advice or knowingly
waived such
advice in writing; and
(3) transfer does not contravene any applicable statute or the order of any
court or other
government authority.
History: L. 2005, ch. 57, § 3; July 1.
(b) The transferee shall be liable to the structured settlement obligor and
the annuity issuer:
(1) If the transfer contravenes the terms of the structured settlement, for
any taxes incurred
by such parties as a consequence of the transfer; and
(2) for any other liabilities or costs, including reasonable costs and
attorneys' fees, arising
from compliance by such parties with the order of the court or responsible
administrative authority
or arising as a consequence of the transferee's failure to comply with this
act.
(c) Neither the annuity issuer nor the structured settlement obligor may be
required to divide any
periodic payment between the payee and any transferee or assignee or between
two or more
transferees or assignees.
(d) Any further transfer of structured settlement payment rights by the payee
may be made only after
compliance with all of the requirements of this act.
History: L. 2005, ch. 57, § 4; July 1.
(1) The county in which the payee resides;
(2) the county in which the structured settlement obligor or the annuity
issuer maintains its
principal place of business; or
(3) any court or before any responsible administrative authority which
approved the
structured settlement agreement.
(b) The transferee shall file with the court or responsible administrative
authority and serve on all
interested parties a notice of the proposed transfer and the application for
its authorization not less
than 20 days prior to the scheduled hearing on any application for approval of
a transfer of structured
settlement payment rights under
K.S.A. 2009 Supp.
40-463 and amendments
thereto. Such notice
shall include:
(1) A copy of the transferee's application;
(2) a copy of the transfer agreement;
(3) a copy of the disclosure statement required under
K.S.A. 2009 Supp.
40-462 and
amendments thereto;
(4) a listing of each of the payee's dependents, together with each
dependent's age;
(5) notification that any interested party is entitled to support, oppose
or otherwise respond to the transferee's application, either in person or by
counsel, by submitting written
comments to the court or responsible administrative authority or by
participating in the
hearing; and
(6) notification of the time and place of the hearing and notification of
the manner in which
and the time, which shall not be less than 15 days after service of the
transferee's notice,
by which written responses to the application must be filed in order to be
considered by the
court or responsible administrative authority.
History: L. 2005, ch. 57, § 5; July 1.
(b) Any transfer agreement entered into by a payee who resides in this state
on or after the effective
date of this act shall provide that disputes under such transfer agreement,
including any claim that
the payee has breached the agreement, shall be determined in and under the laws
of this state. No
such transfer agreement shall authorize the transferee or any other party to
confess judgment or
consent to entry of judgment against the payee.
(c) No transfer of structured settlement payment rights shall extend to any
payments that are
life-contingent unless, prior to the date on which the payee signs the transfer
agreement, the
transferee has established and has agreed to maintain procedures reasonably
satisfactory to the
annuity issuer and the structured settlement obligor for:
(1) Periodically confirming the payee's survival; and
(2) giving the annuity issuer and the structured settlement obligor
prompt written notice in
the event of the payee's death.
(d) No payee who proposes to make a transfer of structured settlement payment
rights shall incur any
penalty, forfeit any application fee or other payment, or otherwise incur any
liability to the proposed
transferee or any assignee based on any failure of such transfer to satisfy the
conditions of this act.
(e) No provision of this act shall be construed to authorize any transfer of
structured settlement
payment rights in contravention of any law or to imply the validity of any
transfer under a
transfer agreement entered into prior to the effective date of this act.
(f) Compliance with the requirements of
K.S.A. 2009 Supp.
40-462, and
amendments thereto,
and fulfillment of the
conditions of
K.S.A. 2009 Supp.
40-463, and amendments thereto, shall be solely
the
responsibility of the transferee
in any transfer of structured settlement payment rights. Neither the structured
settlement obligor nor
the annuity issuer shall bear any responsibility for, or any liability arising
from, non-compliance with
such requirements or failure to fulfill such conditions.
History: L. 2005, ch. 57, § 6; July 1.
(b) No provision of this act shall apply to any settlement of any claim for
or award of workers compensation.
History: L. 2005, ch. 57, § 7; July 1.
(b) For the purposes of this act, the term "commissioner" shall mean the
commissioner of
insurance.
History: L. 2004, ch. 18, § 1; July 1.
History: L. 2004, ch. 18, § 2; July 1.
(1) That upon cessation of payment of considerations under an annuity
contract, or upon
the written request of the owner of an annuity contract, the company shall
grant
a paid-up annuity
benefit on a plan stipulated in the contract of such value as is specified in
K.S.A. 2009 Supp.
40-4,105, 40-4,106, 40-4,107, 40-4,108 and 40-4,110, and
amendments thereto;
(2) if an annuity contract provides for a lump sum settlement at maturity, or
at any other
time, that upon surrender of such annuity contract at or prior to the
commencement of any
annuity payments, the company shall pay in lieu of a paid-up annuity benefit a
cash surrender
benefit of such amount as is specified in
K.S.A. 2009 Supp.
40-4,105, 40-4,106,
40-4,108 and 40-4,110 and
amendments thereto. The
company may reserve the right to defer the payment of the cash surrender
benefit for a period not
to exceed six months after demand therefor with surrender of the annuity
contract after making a
written request to and receiving written approval from the commissioner. The request shall
address the necessity and equitability to all policyholders of the deferral;
(3) a statement of the mortality table, if any, and interest rates used in calculating any
minimum paid-up annuity, cash surrender or death benefits that are guaranteed
under the annuity
contract, together with sufficient information to determine the amounts of the
benefits; and
(4) a statement that any paid-up annuity, cash surrender or death benefits
that may be
available under the annuity contract are not less than the minimum benefits
required by any
statute of the state in which the annuity contract is delivered and an
explanation of the manner in
which the benefits are altered by the existence of any additional amounts
credited by the
company to the annuity contract, any indebtedness to the company on the annuity
contract or any
prior withdrawals from or partial surrenders of the annuity contract.
(b) Notwithstanding the requirements of this section, a deferred annuity
contract may
provide that if no considerations have been received under a contract for a
period of two full
years and the portion of the paid-up annuity benefit at maturity on the plan
stipulated in the annuity contract arising from prior consideration paid would
be less than $20 monthly, the company may, at its option, terminate the annuity
contract by payment in cash of the then present value of the portion of the
paid-up annuity benefit, calculated on the basis
on the mortality
table, if any, and interest rate specified in the annuity contract for
determining the paid-up
annuity benefit, and by this payment shall be relieved of any further
obligation under the annuity contract.
History: L. 2004, ch. 18, § 3; July 1.
(a) (1) 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 subsection (b) of the net considerations, as hereinafter defined,
paid prior to such
time, decreased by the sum of subparagraphs (A) through (D) below:
(A) Any prior withdrawals from or partial surrenders of the contract
accumulated at rates
of interest as indicated in subsection (b).
(B) An annual contract charge of $50, accumulated at rates of interest as
indicated in
subsection (b).
(C) Any premium tax paid by the company for the contract, accumulated at
rates of
interest as indicated in subsection (b).
(D) The amount of any indebtedness to the company on the contract, including
interest
due and accrued.
(2) The net considerations for a given contract year used to define the
minimum
nonforfeiture amount shall be an amount equal to 87.5% of the gross
considerations credited to
the annuity contract during that contract year.
(b) The interest rate used in determining minimum nonforfeiture amounts shall be an
annual rate of interest determined as the lesser of three percent per annum and the following,
which shall be specified in the annuity contract if the interest rate will be reset:
(1) 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
(2) reduced by 125 basis points;
(3) where the resulting interest rate is not less than one percent; and
(4) 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
annuity 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.
(c) During the period or term that an annuity contract provides substantive
participation in
an equity indexed benefit, such annuity contract may increase the reduction
described in
paragraph (2) of subsection (b) above by up to an additional 100 basis points
to reflect the value
of the equity index benefit. The present value at the issue date of such
annuity contract, 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.
(d) The commissioner may adopt rules and regulations to implement the
provisions of
subsection (c) of this section, and amendments thereto, and to provide for
further
adjustments to the calculation of minimum nonforfeiture amounts for annuity
contracts that provide substantive
participation in an equity index benefit and for such other annuity contracts
that the
commissioner determines adjustments are justified.
History: L. 2004, ch. 18, § 4; July 1.
History: L. 2004, ch. 18, § 5; July 1.
History: L. 2004, ch. 18, § 6; July 1.
History: L. 2004, ch. 18, § 7; July 1.
History: L. 2004, ch. 18, § 8; July 1.
History: L. 2004, ch. 18, § 9; July 1.
History: L. 2004, ch. 18, § 10; July 1.
History: L. 2004, ch. 18, § 11; July 1.
History: L. 2004, ch. 18, § 12; July 1.
(b) In all other instances, this act shall become operative with respect to
all annuity contracts
issued by the company on or after the second anniversary of this act.
History: L. 2004, ch. 18, § 13; July 1.
Weighting Factor