S.D. Admin. R. 20:07:18:03

Current through Register Vol. 51, page 57, November 12, 2024

Section 20:07:18:03 - Limitations on purchase of life insurance on key person

The purchase of cash value life insurance on a key person by a bank is subject to the following limitations:

(1) A bank may not purchase life insurance policies for the bank's own account as an investment;

(2) A bank's purchase of a life insurance policy underwritten by one company on a key person may not exceed 25 percent of the bank's capital stock and surplus as measured by the policy's cash surrender value at the time of purchase;

(3) A bank may not commit an amount toward the purchase of life insurance policies, as measured by the cash surrender value at the time of purchase, that is more than 25 percent of the bank's capital stock, surplus, and undivided profits;

(4) A bank may not purchase life insurance policies for estate planning purposes except in connection with a compensation package;

(5) A bank's authority to hold life insurance on a key person ceases when the key person is no longer employed by the bank or no longer meets the definition of a key person.

S.D. Admin. R. 20:07:18:03

20 SDR 33, effective 9/5/1993.

General Authority: SDCL 51A-2-13, 51A-4-42.

Law Implemented: SDCL 51A-4-42.