N.J. Admin. Code § 11:4-44.3

Current through Register Vol. 56, No. 23, December 2, 2024

Section 11:4-44.3 - Standards for variable contracts

(a) All individual life insurance and annuities contracts on a variable basis shall include the following:

1. A provision describing the periodic reports;

2. A provision specifying any rights for deferral. Any deferral of a minimum guaranteed death benefit for an individual variable life insurance contract shall comply with 17B:25-11; and

3. A provision describing any conditions for partial withdrawals, partial surrenders, loans, transfers and new deposits. Any required minimum amount for a partial withdrawal, partial surrender, loan or transfer shall not exceed $ 1,000.

(b) In addition to the standards set forth at (a) above, all individual life insurance and annuities contracts on a variable basis shall comply with the requirements of 17B:28-1 et seq., and with all statutes and regulations applicable to non-variable life and annuity forms which are not inconsistent with the variable nature of the form.

(c) All individual life insurance contracts on a variable basis shall include a period of free review as described at 11:4-41.3(b)1. The amount to be returned to the policyholder following cancellation of the contract pursuant to this subsection shall be no less than premiums (including fees and charges) applied to the separate account, adjusted for investment gains and losses, plus premiums (including fees and charges) applied to any general account option.

(d) Individual life insurance and annuities contracts on a variable basis may include the following:

1. The contract may permit monies to be deposited into a general account fund. Such fund shall be subject to the Department's requirements for individual general account contracts, including, but not limited to, those set forth at N.J.A.C. 11:4-41 and 11:4-43.

2. The contract may contain variable wording, identified by the use of brackets, to describe the separate account funds and related charges. Variable wording may also be used in application forms which describe separate account funds.

(e) Death benefits in annuity contracts issued on a variable basis will be considered subsidiary or incidental if they satisfy one of the following conditions:

1. A death benefit equal to or less than the contract value (annuity account value or surrender value);

2. A death benefit equal to or less than a "highest periodic value" calculated for any prior period for which the contract was in force (for instance, highest contract anniversary value, highest monthly value, highest five-year value) adjusted for subsequent premiums and withdrawals;

3. A death benefit equal to or less than the greater of the contract value or the accumulation of premiums at a specified interest rate (adjusted for withdrawals) not to exceed 200 percent of premiums, such premiums to be reduced by withdrawals;

4. A death benefit equal to or less than a percentage of the "earnings" or "gain" on the contract (defined as the contract value less premiums paid plus withdrawals), provided that the amount of the death benefit in addition to the contract value is no greater than 50 percent of the gain on the contract;

5. A death benefit based on a combination of an "accumulation" death benefit ((e)3 above) and a death benefit based upon the "gain" of the contract ((e)4 above), provided that the combined amount does not exceed the greater of the two death benefits described in (e)3 and 4 above;

6. Any other death benefit which a qualified actuary, as defined in 11:4-47.2, certifies and demonstrates to the Department has an expected and/or maximum value that is within 25 percent of the value of a death benefit permitted by (e)1 through 5 above.

N.J. Admin. Code § 11:4-44.3

Amended by R.2000 d.130, effective 3/20/2000.
See: 31 N.J.R. 3910(a), 32 N.J.R. 1024(a).
In (a), deleted a former 1, recodified former 2 through 4 as 1 through 3, and substituted "$ 1,000" for "$ 500.00" at the end of the second sentence in the new 3.
Amended by R.2001 d.410, effective 11/5/2001.
See: 33 N.J.R. 2265(a), 33 N.J.R. 3748(a).
In (a), rewrote 2 and 3; added new (c) and recodified former (c) as (d).
Amended by R.2006 d.374, effective 10/16/2006.
See: 37 N.J.R. 3543(a), 38 N.J.R. 4488(b).
Added (e).