Montana § 33-2-414 - Interest Rate Weighting Factor

§ 33-2-414. Interest Rate Weighting Factor

Interest rate weighting factor. (1) The weighting factors referred to in the formulas stated in 33-2-413 are as follows: (a) (i) for life insurance: Guarantee Duration in Years Weighting Factors 10 or less .50 More than 10 but not more than 20 .45 More than 20 .35 (ii) for life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values, or both, that are guaranteed in the original policy; (b) .80 for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options; (c) for other annuities and for guaranteed interest contracts, except as stated in subsection (1)(b), according to the guarantee duration established in subsections (1)(c)(i) through (1)(c)(iii) and the rules and definitions established in subsections (2) through (4): (i) for annuities and guaranteed interest contracts valued on an issue year basis: Guarantee Duration in Years Weighting Factor for Plan Type A B C 5 or less .80 .60 .50 More than 5 but not more than 10 .75 .60 .50 More than 10 but not more than 20 .65 .50 .45 More than 20 .45 .35 .35 Plan Type (ii) A B C for annuities and guaranteed interest contracts valued on a change-in-fund basis, the factors shown in subsection (1)(c)(i) increased by: .15 .25 .05 Plan Type (iii) A B C for annuities and guaranteed interest contracts valued on an issue year basis, other than those without cash settlement options, that do not guarantee interest on considerations received more than 1 year after issue or purchase and for annuities and guaranteed interest contracts valued on a change-in-fund basis that do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors set forth in subsection (1)(c)(i) or derived in subsection (1)(c)(ii) increased by: .05 .05 .05 (2) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of 20 years. For other annuities without cash settlement options and for guaranteed interest contracts without cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence. (3) Plan types used in subsection (1)(c) are: (a) Plan Type A--No withdrawal is permitted or at any time policyholder may withdraw funds only: (i) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; (ii) without an adjustment but in installments over 5 years or more; or (iii) as an immediate life annuity. (b) Plan Type B-- (i) Before expiration of the interest rate guarantee, no withdrawal is permitted or a policyholder may withdraw funds only: (A) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; (B) without an adjustment but in installments over 5 years or more. (ii) At the end of the interest rate guarantee, funds may be withdrawn without an adjustment in a single sum or installments over less than 5 years. (c) Plan Type C--A policyholder may withdraw funds before expiration of the interest rate guarantee in a single sum or installments over less than 5 years either: (i) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or (ii) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund. (4) (a) An insurer may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change-in-fund basis. Guaranteed interest contracts without cash settlement options and other annuities without cash settlement options must be valued on an issue year basis. (b) As used in subsection (4): (i) issue year basis of valuation is a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract; and (ii) change-in-fund basis of valuation is a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.