Section 760 IAC 1-48-10 - Actuarial standardsAuthority: IC 27-1-3-7
Affected: IC 27-1-12
Sec. 10.
(a) The following financing options apply:(1) The insurer may require a premium charge or cost of insurance charge for the accelerated benefit. These charges shall be based on sound actuarial principles. In the case of group insurance, the additional cost may also be reflected in the experience rating.(2) The insurer may pay a present value of the face amount. The calculation shall be based on any applicable actuarial discount appropriate to the policy design. The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles and disclosed in the contract or actuarial memorandum provided under section 11 of this rule. The maximum interest rate used shall be no greater than the greater of: (A) the current yield on ninety (90) day treasury bills; or(B) the current maximum statutory adjustable policy loan interest rate.(3) The insurer may accrue an interest charge on the amount of the accelerated benefits. The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles and disclosed in the contract or actuarial memorandum. The maximum interest rate used shall be no greater than the greater of: (A) the current yield on ninety (90) day treasury bills; or(B) the current maximum statutory adjustable policy loan interest rate. The interest rate accrued on the portion of the accelerated benefits which limit the amount available as a policy loan shall be no more than the policy loan interest rate stated in the contract.
(b) Accelerated benefit payments may have the following effects on cash value: (1) When payment of an accelerated benefit results in a reduction in the death benefit, there shall be no more than a pro rata reduction in the cash value based on the percentage of death benefits accelerated to produce the accelerated benefit payment.(2) Alternatively, the payment of accelerated benefits, any administrative expense charges, any future premiums, and any accrued interest can be considered a lien against the death benefit of the policy or rider. As long as such a lien is outstanding, access to the cash value, whether by surrender, partial withdrawal, or policy loan, may be restricted to any excess of the cash value over the sum of any outstanding policy loans and a pro rata portion of the cash value. At any point in time, such pro rata portion of the cash value shall be the cash value at that point times the ratio of the lien at that point divided by the insured's death benefit at that point.(c) The payment of an accelerated benefit may not be required to be applied toward repaying an amount greater than a pro rata proportion of any outstanding policy loans. Department of Insurance; 760 IAC 1-48-10; filed Feb 23, 1993, 5:00 p.m.: 16 IR 1823; readopted filed Sep 14, 2001, 12:22 p.m.: 25 IR 531; readopted filed Nov 27, 2007, 4:01 p.m.: 20071226-IR-760070717RFA; readopted filed November 26, 2013, 3:43 p.m.: 20131225-IR-760130479RFAReadopted filed 11/19/2019, 9:18 a.m.: 20191218-IR-760190497RFA