Study Notes and Published References - Note SN 8I-106-03 - NAIC STANDARD NONFORFIETURE LAW FOR INDIVIDUAL DEF ANNUITIES

Section 2 - Applicability

N/A to
- reinsurance
- group annuity purchased under ret plan
- qualified deferred comp (except IRAs)
- prem deposit fund
- VA
- investment annuity
- immediate annuity
- DA after payments commence
- reversionary annuity

Section 3 - Nonf Requirements

paid up annuity or lump sum payment upon payment stoppage
lists mortality table and int rate for calcing annuity benefits
if PV < $20 @ laps, can cash out instead of setting up pd up annuity

Section 4 - Minimum Values

Min Nonf amt =
- + accumulation of net considerations
- - prior w/d
- - annual $50 contact charge, accumulated at int
- - prem tax paid by co, accum at int
- - loan
net considerations = 87.5% gross considerations
int rate = min(3%, a)
- a = 5 yr Constant Maturity Treasury Rate rounded to nearest 1/20th of 1% - 125 bps
  - not less than 1%
- can be redetermined - redetermination period must be stated in contract
- 125 bps reduction can be increased by up to 100bps if equity indexed
  - commissioner must be satisfied that extra bps don't harm SV

Section 5 - Computation of Present Value

computed using mortality table (if any) and int rates specified in contract for determining minimum paid-up annuity benefits given in contract

Section 6 - Calculation of CSV

CSV >= nonf amt
int rate can be up to 1% hgiher for CSV than for accum

Section 7 - Calculation of Paid-Up Annuity Benefits

CV of paid up annuity needs to be at least as great as nonf value

Section 8 - Maturity Date

assume latest possible maturity date when calcing CSV or PaidUp Benefits

Section 9 - Disclosure of Limited DB

must disclose if DB not >= min nonf amt

Section 10 - Inclusion of Lapse of Time Consideratoins
Sectoin 11 - Proration of Values; Add'l Benefits

Copyright © 2004 Steve Welander.
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