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A life insurance company may not accept additional payments under policy provisions that permit deposits to be made in funds that are ancillary to the basic benefits and that are established for the payment of future premiums on individual life policies or annuity contracts, or for the purchase of annuity benefits under the policies or contracts at a future date, unless it meets the following conditions and limitations:
In the case of life insurance policies, the maximum amount that may be held by the insurer at any time in the funds is the lesser of:
The total amount of the next ten (10) annual premiums payable; or
The difference between the greater of the sum assured or the guaranteed maturity value and the cash value; or
In the case of annuity contracts, the maximum amount that may be held by the insurer at any time in the funds is five (5) times the maximum annual amount that may be deposited in the funds as specified in subdivision (a)(2);
For both life insurance policies and annuity contracts, the maximum amount that may be deposited in the funds in any one (1) year is two (2) annual premiums currently payable under the policy, or in the case of policies or contracts under which premiums may vary in amount, twice the average amount of annual premiums paid under the policy or contract during the previous five (5) years or the number of years for which the policy or contract has been in force, if fewer than five (5) years;
If the insurer guarantees interest rates on the funds in excess of the interest rate permitted for the valuation of annuities and pure endowments, additional reserves in respect of the interest guarantees may be required, based on requirements determined by the commissioner;
Unpaid premiums under life insurance policies shall be automatically paid from the deposit fund, unless the policy provides that any automatic premium loan provision shall first become effective;
The funds shall be payable upon death or other termination of the policy or contract;
Provisions may be included to allow policy owners to withdraw the funds subject to the condition that the policy provision reserves to the insurer the right to defer payment for six (6) months;
Any projections of these funds at current interest rates that may be used must be clearly identified as current rate projections, and the current rate projections are restricted to the same policy periods or attained ages as projections made at guaranteed interest rates. Projections at interest rates in excess of the rates guaranteed may not be made for any attained ages greater than sixty-five (65) years of age;
Sales promotion literature and contract forms shall not in any way create the impression that the funds are the same as a savings account or deposit in a bank or savings institution and the use of passbooks that bear any resemblance to savings bank passbooks or similar items is prohibited; and
The limitations in subdivisions (a)(1) and (2) shall not apply to:
A single payment equal to the discounted value of specific premiums paid in advance; and
A policyholder's deposit account established primarily as a premium payment facility, unless the total amount in the account exceeds twice the sum of the annual premiums payable on all policies for which premiums are being paid from the account;
The limitations in subdivision (a)(1) shall not apply to a policyholder's deposit account if a penalty is imposed upon the policyholder on funds withdrawn in cash, the penalty to be imposed only when total funds withdrawn exceed an amount equal to the limitations in subdivision (a)(1), the penalty to be equal to interest earnings in excess of the guaranteed rate on the amount of policyholder's withdrawal during the six-month period immediately preceding policyholder's withdrawal request; provided, that the penalty shall be waived by the insurer:
During the thirty-day period immediately following each three-year policy period from the effective date of the policy; and
At any time after the insured attains sixty (60) years of age;
The penalty shall not be applicable to payment upon death or termination of the policy or contract.
This section shall not apply:
Except for subdivisions (a)(3), (7) and (8), to policies or contracts issued under pension or profit-sharing plans, including plans that cover self-employed individuals and owner-employees, that qualify for special tax treatment under the Internal Revenue Code, compiled in 26 U.S.C., and are regulated by the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1001, et seq.);
Except for subdivisions (a)(3), (7) and (8), to policies or contracts issued in connection with individual retirement accounts, as defined in the Internal Revenue Code;
Except for subdivisions (a)(3), (7) and (8), to annuity contracts purchased by public schools, religious, charitable or other similar organizations; or