South Carolina § 38-69-230 - Provisions required in contracts; provision for termination for nonpayment of consideration.

§ 38-69-230. Provisions required in contracts; provision for termination for nonpayment of consideration.

In the case of contracts issued on or after the operative date of this article as defined in Section 38-69-320, no contract of annuity, except as stated in Section 38-69-220, may be delivered or issued for delivery in this State unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the director or his designee are at least as favorable to the contractholder, upon cessation of payment of considerations under the contract:

(a) That upon cessation of payment of considerations under a contract, the insurer shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300.

(b) 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 any annuity payments, the insurer will pay in lieu of any paid-up annuity benefit a cash surrender benefit of the amount as is specified in Sections 38-69-250, 38-69-260, 38-69-270, 38-69-280, and 38-69-300. The insurer shall reserve the right to defer the payment of the cash surrender benefit for a period of six months after demand therefor with surrender of the contract.

(c) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender, or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of these benefits.

(d) A statement that any paid-up annuity, cash surrender, or death benefits that may be available under the contract are not 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 the benefits are altered by the existence of any additional amounts credited by the insurer to the contract, any indebtedness to the insurer on the contract, or any prior withdrawals from or partial surrenders of the contract.

Notwithstanding the requirements of this section, any deferred annuity contract may provide that, if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to that period would be less than twenty dollars monthly, the insurer may at its option terminate the contract by payment in cash of the then present value of that portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit. This payment relieves the insurer of any further obligation under the contract.

HISTORY: Former 1976 Code SECTION 38-8-30 [1978 Act No. 517 SECTION 3] recodified as SECTION 38-69-230 by 1987 Act No. 155, SECTION 1; 1993 Act No. 181, SECTION 742.