NAIC Model Policy Loan Interest Rate Bill (#590)

What this document is

NAIC Model Policy Loan Interest Rate Bill (#590) is a naic model law published by National Association of Insurance Commissioners (NAIC). It is one of the documents that insurance license exam questions are written from, including life & health practice questions. This page summarizes it and points to the official version, which is the text to rely on.

Sections cited in practice questions

Each practice answer shows the exact passage it comes from. These are sections of this document that questions cite, with a short excerpt from the source text.

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3.B

  “The rate of interest charged on a policy loan made under Subsection A(2) shall not exceed the higher of the following: (1) The published monthly average for the calendar month ending two (2) months before the date on which the rate is determined; or (2) The rate used to compute the cash surrender...”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 4

  “The provisions of this Act shall not apply to any insurance contract issued before the effective date of this Act unless the policyholder agrees in writing to the applicability of such provisions.”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3.F (Maximum Rate of Interest of Policy Loans)

  “no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3.A(1)

  “A provision permitting a maximum interest rate of not more than eight percent (8%) per annum;”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3.D(2)

  “The rate charged must be reduced whenever a reduction as determined under Subsection B would decrease that rate by one-half percent (1/2%) or more per annum.”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 2

  “Section 2. Definitions For purposes of this Act the “published monthly average” means: A. The Moody’s Corporate Bond Yield Average - Monthly Average Corporates as published by Moody’s Investors Service, Inc. or any successor thereto; or B. In the event that the Moody’s Corporate Bond Yield Average...”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3.E(2)

  “E. The life insurer shall: (1) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan; (2) Notify the policyholder with respect to the premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making...”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3C

  “C. If the maximum rate of interest is determined pursuant to Subsection A(2), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.”

• NAIC Model Policy Loan Interest Rate Bill (#590), Section 3I

  “I. No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.”

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Questions about this source

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