2017 New Jersey Revised Statutes
TITLE 17B - INSURANCE
Section 17B:25-24 - Minimum values.
17B:25-24 Minimum values.
4. The minimum values provided by sections 5, 6, 7, 8 and 10 of this act of any paid-up annuity, cash surrender or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this section.
a. (1) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to that time at rates of interest as indicated in subsection b. of this section of the net considerations, as defined in paragraph (2) of this subsection, paid prior to that time, decreased by the sum of subparagraphs (a) through (d) below:
(a) Any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest as indicated in subsection b. of this section;
(b) An annual contract charge of $50, accumulated at rates of interest as indicated in subsection b. of this section;
(c) Any premium tax paid by the company for the contract, accumulated at rates of interest as indicated in subsection b. of this section; and
(d) The amount of any indebtedness to the company on the contract, including interest due and accrued.
(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to 87.5% of the gross considerations credited to the contract during that contract year, except that in the case of a single premium contract, net considerations shall consist of 90% of the gross considerations credited to the contract during that contract year.
b. The interest rate used in determining minimum nonforfeiture amounts shall be an annual rate of interest determined as the lesser of 3% per annum or the following, which shall be specified in the contract if the interest rate will be reset:
(1) The five-year Constant Maturity Treasury Rate reported by the Federal Reserve Board as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under paragraph (4) of this section;
(2) Reduced by 125 basis points;
(3) Where the resulting interest rate is not less than 1% per annum; and
(4) The interest rate shall apply for an initial period, and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year Constant Maturity Treasury Rate to be used at each redetermination date.
c. During the period or term that a contract provides a substantive participation in an equity indexed benefit, it may increase the reduction described in paragraph (2) of subsection b. of this section by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If that demonstration is not acceptable to the commissioner, the commissioner may disallow or limit the additional reduction.
d. The commissioner may adopt rules to implement the provisions of subsection c. of this section which provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the commissioner determines adjustments are justified.