N.Y. Comp. Codes R. & Regs. tit. 11 § 44.3

Current through Register Vol. 46, No. 51, December 18, 2024

Section 44.3 - Definitions

As used in this Part, the following terms have the following meanings:

(a) Actual accumulation amount, with respect to any contract at any time at or prior to the commencement of any annuity payment is:

(1) the net considerations credited to such contract; minus

(2) premium taxes and premium charges; plus

(3) additional amounts, including interest (which shall not be less in any year than three percent of the sum of the actual accumulation amount and the amount of any indebtedness to the company on the contract) and dividends credited by the company to the contract; minus

(4) administrative charges (which shall not exceed $30 per year); minus

(5) the sum of (i) the amount appropriate according to the terms of the contract to reflect any prior withdrawals from or partial surrenders of the contract; and (ii) the amount of any indebtedness to the company on the contract, including interest due and accrued.

(b) Collection charges means the charges provided for in the contract each time a consideration is credited to the contract but shall not exceed $1.25 per consideration credited to the contract.

(c) Contract means an individual contract or group annuity certificate which is subject to section 4223 of the Insurance Law and provides for cash surrender benefits determined in accordance with a market-value adjustment formula or for a withdrawal charge determined in accordance with a withdrawal charge formula. Unless the context indicates otherwise, contractholder includes certificate holder.

(d) Contract charges means the fixed dollar charges provided for in a contract (subject to any maximum limit based on the amount of annual considerations credited to the contract) not to exceed:

(1) in the case of a contract providing for a single consideration, $75 in the aggregate;

(2) in the case of a contract providing for fixed scheduled considerations, the lesser of, in any year, (i) $30 or (ii) 10 percent of the gross annual considerations; and

(3) in the case of a contract providing flexible considerations, $30 in any year.

(e) Fixed scheduled premium contract or fixed premium contract means a contract under which the amount and timing of payments are fixed by contract and the failure to pay the scheduled premium results in paid-up deferred annuity benefit and/or cash surrender benefits and requires reinstatement to resume premium payments. In this regulation, fixed premium contracts with guaranteed rates shall be governed by the same rules as applicable to flexible premium contracts.

(f) Flexible premium contract means a contract under which the amount or timing of premium payments is determined by the contractholder.

(g) Guaranteed benefit date means, with respect to an actual accumulation amount, the date on which an unadjusted cash surrender benefit is to be made available under a contract after a specified time interval, but does not include other dates, such as the date of death, retirement or other termination of employment of the annuitant when payment of an unadjusted cash surrender benefit may also be provided.

(h) Guaranteed rate means an interest rate to be credited to the actual accumulation amount under a contract that:

(1) is guaranteed for a specified period of time equal to the specified time interval as defined below;

(2) is constant or conforms to a schedule of rates provided in, or declared in advance of crediting pursuant to, the contract;

(3) is not based on actual investment experience; and

(4) is a high interest rate such that not more than a minimal increase (as defined from time to time by the superintendent) in the interest rate is likely to be credited not less frequently than annually.

This guaranteed rate is to be distinguished from the contractual guarantee of a minimum rate of interest (not less than three percent per year) prior to the annuity commencement date over which additional interest is likely to be declared and credited.

(i) High yield obligations means publicly traded obligations that are not investment grade obligations. An investment grade obligation means an obligation that has been placed in one of the top four ratings categories by an independent nationally recognized rating agency acceptable to the superintendent or, if such obligation has not been rated by any such agency, on which the yield computed on current market value is not at least one-half percent greater than on obligations that have been placed in the lowest of such four categories.

(j) Indebtedness means the amount borrowed from the company by a contractholder pursuant to the terms of a contract plus the amount of unpaid accrued interest thereon.

(k) Market value means with respect to assets that are publicly traded the market value thereof, and with respect to other assets the fair value thereof, determined in accordance with procedures established by the company.

(l) Market-value adjustment formula means a formula which is described in the contract for increasing and decreasing the actual accumulation amount in order to determine cash surrender values and which takes into account (1) changes in interest rates on publicly traded obligations or other investments or in interest rates provided in, or declared pursuant to, contracts of the same class as the contract being surrendered; and (2) the length of time between the date on which the contract is surrendered and the next date on which the contract would have provided cash surrender benefits determined without the use of any market-value adjustment formula. Unless explicitly indicated otherwise, the phrase market-value adjustment formula does not include a withdrawal charge formula.

(m) Net considerations means the gross considerations credited to the contract less contract charges and collection charges, but net considerations shall not, for any contract year, be less than zero.

(n) New guarantee rate means the guaranteed rate applicable to new contracts, or to new deposits or additional amounts credited to contracts, of the same class as the contract under which cash surrender benefits are being determined in accordance with a market-value adjustment formula, and having a guarantee period approximately equal to the remaining period of the specified time interval during which a guaranteed rate is applicable to the actual accumulation amount corresponding to such cash surrender benefits. For purposes of this definition, new guarantee rate includes the guaranteed rate to be credited on the actual accumulation amounts under such contracts immediately after a guaranteed benefit date.

(o) Obligations means bonds, debentures, mortgage notes and other evidences of indebtedness (whether or not liability for payment extends beyond the security therefor) as well as participation interests in any of the foregoing.

(p) Premium charges means the charges provided for in the contract based on percentages of net considerations credited to the contract but shall not exceed 10 percent of any net consideration so credited.

(q) Publicly traded security means a security that is listed on a national securities exchange or for which a public market is maintained by dealers in the security.

(r) Qualified actuary means any individual who is a member of the American Academy of Actuaries and, in accordance with Part 95 of this Title, satisfies the qualification standards set by the superintendent for practice in the valuation of life insurance company annual statement liabilities or who is designated a qualified actuary by the superintendent after written application to the superintendent providing evidence of such individual's actuarial knowledge and experience in the valuation of such liabilities.

(s) Short-term debt means an obligation which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.

(t) Specified time interval means the period of time provided for in the contract, not to exceed 10 years, beginning when a premium is remitted (or when additional amounts are credited) and ending when a guaranteed benefit date occurs or, if a guaranteed benefit date has already occurred, beginning on such guaranteed benefit date and ending when another guaranteed benefit date occurs. In case of contracts providing optional retirement dates, a guaranteed benefit date shall be the later of the earliest optional date and of age 55 and thereafter the contractholder must have the option of having guaranteed benefit dates at specified time intervals not exceeding five years.

(u) Superintendent means the Superintendent of Insurance of this State.

(v) Unadjusted cash surrender benefit means an amount equal to the actual accumulation amount (less any applicable withdrawal charge) determined without the use of a market-value adjustment formula.

(w) Withdrawal charge means:

(1) if the cash surrender benefit is computed on the basis of the actual accumulation amount without adjustment by a market-value adjustment formula, an amount not greater than the amount produced by a percentage equal to 10 percent less the premium charge percentage, if any, provided for under the contract; or

(2) if the cash surrender benefit is computed on the basis of the actual accumulation amount adjusted by a market-value adjustment formula, an amount not greater than the amount produced by 10 percent (less the premium charge percentage, if any, provided for under the contract), reduced (but not below zero) by one percent for each year the contract has been in force, except with respect to any additional premium paid under the contract, the company may provide for a withdrawal charge associated with such additional premium, determined as though the contractholder had purchased a separate contract with such additional premium.

(x) Withdrawal charge formula means a formula for determining a market-value or other adjustment of the actual accumulation amount taken as a form of withdrawal charge and limited to an amount not exceeding the maximum charge in subdivision (w) of this section. Unless explicitly stated otherwise, the phrase withdrawal charge formula shall include any market-value adjustment which need not result in a credit but may result in a charge subject to the maximum in subdivision (w).

N.Y. Comp. Codes R. & Regs. Tit. 11 § 44.3