Section 2523.4 - Nonforfeiture Rate and Minimum Nonforfeiture Amount(a) At any point in time, an annuity contract (or certificate) without an equity-indexed benefit will have one nonforfeiture rate and one nonforfeiture amount applicable to the entire contract that is determined in compliance with Section 10168.25 of the Insurance Code.(b) For an annuity contract (or certificate) in which equity-indexed benefits are available the annuity contract (or certificate) may have more than one nonforfeiture rate applicable to the contract (or certificate) subject to the following: (1) If the contract has a non equity-indexed benefit, the nonforfeiture interest rate applicable to the non equity-indexed benefit shall be determined in compliance with Subsection 10168.25(d) of the Insurance Code.(2) If an additional reduction is elected for equity-indexed benefits, reduced nonforfeiture interest rates may apply to each equity-indexed benefit for which the additional reduction is elected in compliance with Subsection 10168.25(e) of the Insurance Code and Section 2523.5 of this Article.(3) The minimum nonforfeiture amount for the contract is determined by calculating a nonforfeiture amount, without any reduction for indebtedness to the company on the contract including interest due and accrued on the indebtedness, for each equity-indexed and non equity-indexed benefit using the nonforfeiture interest rates described in this subsection, summing the results, and then deducting any indebtedness to the company on the contract including interest due and accrued on the indebtedness.(4) When contract value is transferred (see the example of transfer of minimum nonforfeiture amount in Section 2523.6, Appendix B) (A) From a benefit, the benefit's minimum nonforfeiture amount is reduced by the benefit's minimum nonforfeiture amount prior to the transfer multiplied by the proportion of the benefit's contract value that is transferred;(B) To a benefit, the benefit's minimum nonforfeiture amount is increased by the sum of all reductions in minimum nonforfeiture amounts determined under (A) multiplied by the proportion of total contract value that is transferred to that benefit;(C) For purposes of the calculations specified in (A) and (B) above, the contract value must first be reduced by any fees associated with the transfer.(5) In the case of a withdrawal from a benefit in which the amount of withdrawal exceeds the benefit's nonforfeiture amount, the insurer shall treat the excess withdrawal in a manner at least as favorable to the contract holder as deducting the excess withdrawal from the nonforfeiture amounts of other benefits in order from lowest to highest nonforfeiture interest rate.(6) Any contract charge or premium taxes paid by the company must be allocated to a benefit's minimum nonforfeiture amount based on the percentage of that benefit's contract value to the total contract value.Cal. Code Regs. Tit. 10, § 2523.4
1. New section filed 12-19-2012; operative 12-19-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 51). Note: Authority cited: Sections 10168.25(f) and 10168.92, Insurance Code. Reference: Section 10168.25, Insurance Code.
1. New section filed 12-19-2012; operative 12-19-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 51).