2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 511 - PROVISIONS APPLICABLE TO LIFE INSURANCE COMPANIES AND ASSOCIATIONS
511.36 - INTEREST RATES ON POLICY LOANS.

        511.36  INTEREST RATES ON POLICY LOANS.
         1.  Life insurance policies issued after July 1, 1984 may provide
      interest rates on policy loans in accordance with either of the
      following:
         a.  A maximum interest rate of not more than eight percent per
      annum.
         b.  An adjustable maximum interest rate established as
      permitted under this section.
         2.  The rate of interest charged on a policy loan made under
      subsection 1, paragraph "b", shall not exceed the greater of the
      following:
         a.  The published monthly average for the calendar month
      ending two months before the date on which the rate is determined.
      For purposes of this subsection, "published monthly average"
      means one of the following:
         (1)  Moody's corporate bond yield average-monthly average
      corporates as published in Moody's investors service, inc., or any
      successor to the investors service.
         (2)  If Moody's corporate bond yield average-monthly average
      corporates is no longer published, a substantially similar average
      established by rule issued by the commissioner of insurance.
         b.  The rate used to compute the cash surrender values under
      the policy during the applicable period plus one percent per annum.
         3.  If the maximum rate of interest is determined under subsection
      1, paragraph "b", the policy shall state the frequency at which
      the rate is to be determined for that policy.
         4.  The maximum rate for the policy shall be determined at
      established intervals at least once every twelve months, but not more
      frequently than once every three months.  At the intervals
      established in the policy the rate:
         a.  May be increased when an increase as determined under
      subsection 2 would increase the charged rate by one-half percent or
      more per annum.
         b.  Shall be reduced when a reduction as determined under
      subsection 2 would decrease the charged rate by one-half percent or
      more per annum.
         5.  When a cash loan is made, the insurer shall notify the
      policyholder of the initial interest rate on the loan.  With respect
      to premium loans, the insurer shall notify the policyholder of the
      initial interest rate as soon as the insurer can reasonably do so
      after making the loan.  An insurer need not inform the policyholder
      of the interest rate when an additional premium loan is made unless
      the interest rate increases.  However, policyholders with either cash
      or premium loans shall receive reasonable advance notice of any
      increase in the interest rate.  Notices required under this
      subsection shall also contain the following information:
         a.  The maximum interest rate on the loan if the loan is a
      fixed rate loan.
         b.  The fact that the interest rate is adjustable if the loan
      is an adjustable rate loan.
         c.  The frequency at which the rate is to be determined for
      that policy or if an adjustable interest rate, the established
      intervals at which the rate may be adjusted.
         6.  A policy shall not terminate in a policy year solely as the
      result of change in the interest rate during that year.  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.
         7.  Policies of insurance upon which a loan can be made shall
      state the following:
         a.  Whether fixed rate loans or adjustable rate loans are
      permitted.
         b.  If fixed rate loans are permitted, the maximum rate of
      interest on those loans.
         c.  If adjustable rate loans are permitted, the established
      intervals at which the rate may be adjusted.
         8.  Unless the context otherwise requires, for purposes of this
      section:
         a.  The rate of interest on policy loans includes the interest
      rate charged on reinstatement of policy loans for the period during
      and after a lapse of the policy.
         b.  "Policy loan" includes a premium loan made under a policy
      to pay a premium that was not paid to the insurer when due.
         c.  "Policyholder" includes the owner of the policy or the
      person designated, on the records of the insurer, to pay premiums.
         d.  "Policy" includes certificates issued by a fraternal
      benefit society and annuity contracts which provide for policy loans.

         9.  Other provisions of law do not apply to policy loan interest
      rates unless made specifically applicable to the rates.  

         84 Acts, ch 1017, § 1; 97 Acts, ch 186, §8
         Referred to in § 511.38