3 Colo. Code Regs. § 702-4-1-1-7
Current through Register Vol. 47, No. 16, August 25, 2024
Section 3 CCR 702-4-1-1-7 - Nonforfeiture BenefitsA. This section applies to any variable annuity contract issued in this state on or after January 1, 2011. This section shall not apply to any: 2. Group annuity contract purchased in connection with one or more retirement plans or plans of deferred compensation established or maintained by or for one or more employers (including partnerships or sole proprietorships), employee organizations, or any combination thereof, other than plans providing individual retirement accounts or individual retirement annuities under Section 408 of the federal "Internal Revenue Code of 1986", as now or hereafter amended;6. Deferred annuity contract after annuity payments have commenced;7. Reversionary annuity; or8. To any contract delivered outside this state through an agent or other representative of the company issuing the contract.B. To the extent that a variable annuity contract provides benefits that do not vary in accordance with the investment performance of a separate account before the annuity commencement date, the contract shall contain provisions that satisfy the requirements of Part 5 of Article 7 of Title 10, C.R.S., and shall not otherwise be subject to this section.C. No variable annuity contract, except as stated in Subsections A and B of this section, shall be delivered or issued for delivery in this state unless it contains in substance the following provisions, or provisions which in the opinion of the Commissioner are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract: 1. That, upon cessation of payment of considerations under a contract or upon written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan described in the contract that complies with Subsection G. The description will include a statement of the mortality table, if any, and guaranteed or assumed interest rates used in calculating annuity payments;2. If a contract provides for a lump sum settlement at maturity or at any other time, that upon surrender of the contract at or prior to the commencement of annuity payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit described in the contract that complies with Subsection H. The contract may provide that the company reserves the right, at its option, to defer the determination and payment of a cash surrender benefit for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists that may make determination and payment impractical; and3. A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract shall not be less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.D. Minimum Nonforfeiture Amount1. The minimum values as specified in this section of paid-up annuity, cash surrender or death benefits available under a variable annuity contract shall be based upon the minimum nonforfeiture amounts as specified in this subsection.2. 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 such time at rates of interest equal to the net investment return of the net considerations, as defined in Subsection 4(A) of this regulation, paid prior to such time, decreased by the following: a. The sum of any prior withdrawals from or partial surrenders of the contract accumulated at rates of interest equal to the net investment return;b. An annual contract charge of fifty dollars ($50), accumulated at rates of interest equal to the net investment return; andc. The amount of any indebtedness to the company on the contract, including interest due and accrued.E. The net considerations for a given contract year used to define the minimum nonforfeiture amount in Subsection D shall be an amount equal to eighty-seven and one-half percent (87.5%) of the gross considerations credited to the contract during such contract year.F. Demonstration that a contract's nonforfeiture amounts comply with this section shall be based on the following assumptions:1. Values should be tested at the end of each of the first twenty (20) contract years;2. A net investment return of seven percent (7%) per year should be used;3. If the contract provides for transfers to another separate account or to another investment division within the same separate account, one transfer per contract year should be assumed;4. With respect to contracts providing for periodic considerations, monthly considerations of one hundred dollars ($100) should be assumed for each of the first two hundred forty (240) months; and5. With respect to contracts providing for a single consideration, a $10,000 single consideration should be assumed.G. Any paid-up annuity benefit available under a variable annuity contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount as specified in Subsection D of this section on that date. Such present value shall be computed using the mortality table, if any, and the guaranteed or assumed interest rates used in calculating the annuity payments.H. For variable annuity contracts that provide cash surrender benefits, such cash surrender benefit at any time prior to the date annuity payments are to commence shall not be less than the minimum nonforfeiture amount as specified in Subsection D of this section computed after the request for surrender is received by the company. The death benefit under such contracts shall be at least equal to the cash surrender benefit.I. Notwithstanding the requirements of this section, a variable annuity contract may provide under the situations specified in Paragraph (1) or (2) of this subsection that the company may cancel the annuity and pay the contract holder its accumulated value and by such payment be released of any further obligation under the contract: 1. If, at the time the annuity becomes payable, the accumulated value is less than $2,000, or would provide an initial income of less than twenty dollars ($20) per month; or2. If, prior to the time the annuity becomes payable, no considerations have been received under the contract for a period of two (2) full years and the total of the gross considerations paid prior to such time, reduced by the sum of any prior withdrawals from or partial surrenders of the contract, is less than $2,000.J. For a variable annuity contract that provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of Subsection D of this section, additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits shall be disregarded in ascertaining the minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits that may be required by this section. The inclusion of such additional benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts and paid-up annuity, cash surrender and death benefits.37 CR 11, June 10, 2014, effective 7/1/201437 CR 12, June 25, 2014, effective 7/15/2014Colorado Register, Vol 37, No. 14. July 25, 2014, effective 8/15/201437 CR 23, December 10, 2014, effective 1/1/201538 CR 03, February 10, 2015, effective 3/15/201538 CR 06, March 25, 2015, effective 4/30/201538 CR 09, May 10, 2015, effective 6/1/201538 CR 13, July 10, 2015, effective 7/30/201538 CR 19, October 10, 2015, effective 11/1/201538 CR 21, November 10, 2015, effective 1/1/201638 CR 23, December 10, 2015, effective 1/1/201639 CR 01, January 10, 2016, effective 2/1/201639 CR 05, March 10, 2016, effective 4/1/201639 CR 08, April 25, 2016, effective 5/15/201639 CR 19, October 10, 2016, effective 11/1/201639 CR 20, October 25, 2016, effective 1/1/201739 CR 22, November 25, 2016, effective 1/1/201739 CR 23, December 10, 2016, effective 1/1/201739 CR 23, December 25, 2016, effective 1/1/201740 CR 03, February 10, 2017, effective 3/15/201740 CR 09, May 10, 2017, effective 6/1/201740 CR 15, August 10, 2017, effective 9/1/201740 CR 17, September 10, 2017, effective 10/1/201740 CR 21, November 10, 2017, effective 12/1/201741 CR 04, February 25, 2018, effective 4/1/201841 CR 05, March 10, 2018, effective 6/1/201841 CR 08, April 25, 2018, effective 6/1/201841 CR 09, May 10, 2018, effective 6/1/201841 CR 11, June 10, 2018, effective 7/1/201841 CR 15, August 10, 2018, effective 9/1/201841 CR 17, September 10, 2018, effective 10/1/201841 CR 18, September 25, 2018, effective 10/15/201841 CR 21, November 10, 2018, effective 12/1/201841 CR 23, December 10, 2018, effective 1/1/201942 CR 01, January 10, 2019, effective 2/1/201941 CR 19, October 10, 2018, effective 3/1/201942 CR 03, February 10, 2019, effective 4/1/201942 CR 04, February 25, 2019, effective 4/1/201942 CR 06, March 25, 2019, effective 6/1/201942 CR 08, April 10, 2019, effective 6/1/201942 CR 15, August 10, 2019, effective 9/1/201942 CR 17, September 10, 2019, effective 10/1/201943 CR 02, January 25, 2020, effective 12/20/201943 CR 02, January 25, 2020, effective 12/23/201942 CR 23, December 10, 2019, effective 1/1/202043 CR 01, January 10, 2020, effective 2/1/202042 CR 24, December 25, 2019, effective 2/2/202043 CR 06, March 25, 2020, effective 4/15/202043 CR 10, May 25, 2020, effective 8/1/202043 CR 14, July 25, 2020, effective 8/15/202043 CR 17, September 10, 2020, effective 10/1/202043 CR 18, September 25, 2020, effective 11/1/202043 CR 22, November 25, 2020, effective 12/15/202043 CR 24, December 25, 2020, effective 1/15/202144 CR 03, February 10, 2021, effective 3/15/202144 CR 08, April 25, 2021, effective 5/15/202144 CR 09, May 10, 2021, effective 6/1/202144 CR 10, May 25, 2021, effective 6/14/202144 CR 10, May 25, 2021, effective 6/15/202144 CR 13, July 10, 2021, effective 8/1/202144 CR 15, August 10, 2021, effective 9/1/202144 CR 19, October 10, 2021, effective 11/1/202144 CR 21, November 10, 2021, effective 12/1/202144 CR 23, December 10, 2021, effective 12/30/202144 CR 21, November 10, 2021, effective 1/1/202244 CR 23, December 10, 2021, effective 1/15/202244 CR 24, December 25, 2021, effective 1/15/202245 CR 03, February 10, 2022, effective 3/2/202245 CR 08, April 25, 2022, effective 5/30/202245 CR 09, May 10, 2022, effective 5/30/202245 CR 10, May 25, 2022, effective 6/14/202245 CR 11, June 10, 2022, effective 6/30/202245 CR 11, June 10, 2022, effective 7/15/202245 CR 19, October 10, 2022, effective 11/1/202245 CR 20, October 25, 2022, effective 11/14/202245 CR 21, November 10, 2022, effective 11/30/202245 CR 24, December 25, 2022, effective 1/14/202346 CR 01, January 10, 2023, effective 2/14/202346 CR 06, March 25, 2023, effective 2/15/202346 CR 03, February 10, 2022, effective 3/2/202346 CR 04, February 25, 2023, effective 3/17/202346 CR 05, March 10, 2023, effective 4/15/202346 CR 09, May 10, 2023, effective 5/30/202346 CR 09, May 10, 2023, effective 6/1/202346 CR 10, May 25, 2023, effective 6/15/202346 CR 11, June 10, 2023, effective 6/30/2023