Standard Nonforfeiture Law for Individual Deferred Annuities

What this document is

Standard Nonforfeiture Law for Individual Deferred Annuities 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 #805, Section 6 (Calculation of Cash Surrender Value)

  “In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time.”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities, Section 4A(1) and 4A(1)(a) (minimum nonforfeiture amount)

  “The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in Subsection B of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum...”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities § 9 (disclosure of limited death benefits)

  “A contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities (#805), Section 3A(2): Nonforfeiture Requirements

  “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 company shall pay in lieu of a paid-up annuity benefit a cash surrender benefit of such amount as is specified in...”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities (#805), Section 3A(1): Nonforfeiture Requirements

  “That upon cessation of payment of considerations under a contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in Sections 5, 6, 7, 8 and 10;”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities (#805), Section 5: Computation of Present Value

  “Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Present value shall be computed using the mortality table, if any, and the interest rates...”

• NAIC Standard Nonforfeiture Law for Individual Deferred Annuities (#805), Section 2A: Applicability

  “This Act shall not apply to any reinsurance, group annuity purchased under a retirement plan or plan of deferred compensation established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual...”

• Standard Nonforfeiture Law for Individual Deferred Annuities, Section 11 (first sentence)

  “For a contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture...”

• Standard Nonforfeiture Law for Individual Deferred Annuities, Section 2B and Section 2C

  “B Sections 3 through 8 shall not apply to contingent deferred annuities. C. Notwithstanding Subsection B, the commissioner shall have the authority to prescribe, by regulation, nonforfeiture benefits for contingent deferred annuities that are, in the opinion of the commissioner, equitable to the...”

• Standard Nonforfeiture Law for Individual Deferred Annuities, Section 7

  “For contracts that do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under...”

• Standard Nonforfeiture Law for Individual Deferred Annuities, Section 8

  “For the purpose of determining the benefits calculated under Sections 6 and 7, in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be...”

• Standard Nonforfeiture Law for Individual Deferred Annuities, Section 10 (Inclusion of Lapse of Time Considerations)

  “Any paid-up annuity, cash surrender or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning...”

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