N.Y. Comp. Codes R. & Regs. Tit. 11 §§ 50-2.5

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

Section 50-2.5 - Separate accounts

(a) A separate account contract may provide that some or all of the assets of the separate account are not chargeable with liabilities arising out of any other business of the insurer, provided that the portion of assets of the separate account not chargeable with liabilities arising out of any other business of the insurer shall not exceed the following:

(1) the assets purchased with considerations allocated to the separate account by the contract holder or certificate holder; minus

(2) any benefits paid from such assets; minus

(3) any charges taken from such assets under the terms of the contract or certificate; minus

(4) any contract holder or certificate holder initiated transfers of such assets out of the separate account; plus

(5) the net investment returns earned on the net amount of such assets.

(b) In the case of a separate account contract providing fixed benefits or minimum guaranteed benefits, an insurer shall satisfy the asset maintenance requirements of Insurance Law section 4240(a)(8) if, in the aggregate, amounts held in a designated portion of the general account, a supplemental non-insulated account and applicable separate account are sufficient to satisfy the asset maintenance requirements.

(c) No insurer shall make a sale, exchange or other transfer of assets between any of the insurer's separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, the insurer makes such transfer solely to establish the account or to support the operation of the contracts with respect to the separate account to which the insurer makes the transfer, and unless the insurer makes the transfer, whether into or from a separate account by a transfer of:

(1) cash; or

(2) securities having a valuation that can be readily determined in the marketplace, provided that the insurer shall obtain the superintendent's approval prior to the transfer of any non-cash assets to or from a separate account. An insurer may transfer amounts among separate accounts or between any other investment account and one or more of its separate accounts if the superintendent determines that the transfer would not be inequitable.

(d) A separate account may invest the assets allocated to any separate account in the securities of an investment company subject to or registered pursuant to the federal Investment Company Act of 1940, as amended, provided that:

(1) the insurer has satisfied the superintendent that the investment by the separate account is not hazardous to the public or the policyholders, contractholders, or certificate holders of the insurer in this State;

(2) the investments of the investment company comply with the restrictions and limitations on investments by the insurer imposed by Insurance Law section 4240(a)(2) and any other provisions of the law; and

(3) if, subsequent to the purchase of the securities of the investment company, the separate account's investments cease to comply fully with the restrictions and limitations imposed by paragraph (2) of this subdivision, then all separate accounts shall cease investing in the securities of the investment company and existing separate account investments in the securities of the investment company shall be recognized as admitted assets, for the purposes of subdivision (a) of this section, only to the extent that they comply with paragraph (2) of this subdivision.

(e) Expenses shall be allocated to the separate account business in accordance with Insurance Law section 4240(a)(6) and Part 91 of this Title (Insurance Regulation 33).

(f) Conflicts of interest rules under any provision of the Insurance Law or this Title that apply to the officers or directors of insurers shall also apply to the members of the committee, board or other similar governing body of every separate account. No officer or director of any insurer maintaining a separate account or any member of the committee, board or other similar governing body of the separate account shall receive, in addition to a fixed salary or compensation, any commission, other compensation, money or valuable thing either directly or indirectly, with respect to the purchase, sale or loan of the assets of the separate account.

(g) A separate account contract providing variable benefits other than variable benefits as described in section 50-2.3(a)(7)(iii) of this Subpart shall, with respect to such variable benefits, provide, as an incidental benefit, for the payment of a death benefit in the event of death prior to the annuity commencement date.

(1) The amount of the incidental death benefit shall not be less than the accumulated value of the contract on the date the death benefit is determined in accordance with Insurance Law section 4240(d)(2) and shall not exceed the greater of:

(i) the accumulated value of the contract on the date the death benefit is determined in accordance with Insurance Law section 4240(d)(2); or

(ii) the highest accumulated value at specified anniversaries occurring not more frequently than annually plus premium contributions since such anniversary, less withdrawals since the anniversary; or

(iii) the aggregate amount of contract holder or certificate holder contributions less withdrawals of the contributions made prior to the time of death.

(2) Any death benefit provision that complies with the requirements of this subdivision shall not be subject to the provisions of the Insurance Law applicable to life insurance policies. However, any other death benefit in excess of the benefits set forth in subparagraphs (i), (ii), and (iii) of paragraph (1) of this subdivision provided during the deferred period shall be subject to the provisions of the Insurance Law applicable to life insurance policies. The insurer shall demonstrate to the superintendent's satisfaction that any death benefits in excess of the benefits set forth in subparagraphs (i), (ii), and (iii) of paragraph (1) of this subdivision include nonforfeiture benefits at least as favorable as those provided for in Insurance Law section 4221.

(h) A separate account annuity contract may provide that, at the time the annuity becomes payable, the insurer may, at its option, in lieu of commencing annuity payments, cancel the annuity and pay the contract holder its accumulated value, if such accumulated value is less than $5000 or would provide an income the initial amount of which is less than $20 per month or if the amount of the annuity does not meet other minimum requirements as approved in writing by the superintendent. However, an insurer shall not exercise this option under a variable annuity contract where doing so will result in forfeiture of guaranteed benefits other than guaranteed annuity purchase rates, unless the present value of the guaranteed benefits is less than the accumulated value. Such present value shall be calculated using the guaranteed annuity purchase rates in the contract.

N.Y. Comp. Codes R. & Regs. Tit. 11 §§ 50-2.5

Adopted New York State Register August 31, 2022/Volume XLIV, Issue 35, eff. 8/31/2022