{"data":{"id":"us-ky/krs-304.15-315","jurisdiction":"us-ky","citation":"KRS 304.15-315","heading":"Standard Nonforfeiture Law for Individual Deferred Annuities.","body":"(1) This section shall be known as the \"Standard Nonforfeiture Law for Individual\nDeferred Annuities.\"\n(2) This section shall not apply to any reinsurance group annuity purchased under a\nretirement plan or plan of deferred compensation established or maintaine d by an\nemployer (including a partnership or sole proprietorship) or by an employee\norganization, or by both, other than a plan providing individual retirement accounts\nor individual retirement annuities under Section 408 of the Internal Revenue Code,\nas now or hereafter amended, premium deposit fund, variable annuity, investment\nannuity, immediate annuity, any deferred annuity contract after annuity payments\nhave commenced, or reversionary annuity, nor to any contract which shall be\ndelivered outside this state through an agent or other representative of the insurer\nissuing the contract. However, to the extent that a variable annuity contract provides\nbenefits that do not, before the maturity date, vary in accordance with the\ninvestment performance of any s eparate account or accounts maintained by the\ninsurer as to such contract, as provided for in KRS 304.15 -390, the contract shall\ncontain provisions that satisfy the requirements of this section and shall not\notherwise be subject to this section.\n(3) In the  case of contracts issued on or after the operative date of this section as\ndefined in subsection (12) of this section, no contract of annuity, except as stated in\nsubsection (2) of this section, shall be delivered or issued for delivery in this state\nunless it contains in substance the following provisions, or corresponding\nprovisions which in the opinion of the commissioner are at least as favorable to the\ncontract holder, upon cessation of payment of considerations under the contract.\n(a) That upon cessation of payment of considerations under a contract, the insurer\nwill grant a paid-up annuity benefit on a plan stipulated in the contract of such\nvalue as is specified in subsections (5), (6), (7), (8), and (10) of this section.\n(b) If a contract provides for a lump sum settlement at maturity, or at any other\ntime, that upon surrender of the contract at or prior to the commencement of\nany annuity payments, the insurer will pay in lieu of any paid -up annuity\nbenefit a cash surrender benefit of such amount as  is specified in subsections\n(5), (6), (8), and (10) of this section. The insurer shall reserve the right to defer\nthe payment of such cash surrender benefit for a period of six (6) months after\ndemand therefor with surrender of the contract.\n(c) A statement of the mortality table, if any, and interest rates used in calculating\nany minimum paid -up annuity, cash surrender or death benefits that are\nguaranteed under the contract, together with sufficient information to\ndetermine the amounts of such benefits.\n(d) A statement that any paid -up annuity, cash surrender or death benefits that\nmay be available under the contract are not less than the minimum benefits\nrequired by any statute of the state in which the contract is delivered and an\nexplanation of the man ner in which such benefits are altered by the existence\nof any additional amounts credited by the insurer to the contract, any\nindebtedness to the insurer on the contract or any prior withdrawals from or\npartial surrenders of the contract.\nNotwithstanding the requirements of this subsection, any deferred annuity contract\nmay provide that if no considerations have been received under a contract for a\nperiod of two (2) full years and the portion of the paid-up annuity benefit at maturity\non the plan stipulat ed in the contract arising from considerations paid prior to such\nperiod would be less than twenty dollars ($20) monthly, the insurer may at its\noption terminate such contract by payment in cash of the then present value of such\nportion of the paid-up annuity benefit, calculated on the basis of the mortality table,\nif any, and interest rate specified in the contract for determining the paid -up annuity\nbenefit, and by such payment shall be relieved of any further obligation under such\ncontract.\n(4) The minimum values as specified in subsections (5), (6), (7), (8), and (10) of this\nsection of any paid -up annuity, cash surrender or death benefits available under an\nannuity contract shall be based upon minimum nonforfeiture amounts as defined in\nthis section.\n(a) With respect to contracts providing for flexible considerations, the minimum\nnonforfeiture amount at any time at or prior to the commencement of any\nannuity payments shall be equal to an accumulation up to such time at a rate\nof interest of three percent  (3%) per annum of percentages of the net\nconsiderations (as hereinafter defined) paid prior to such time, decreased by\nthe sum of:\n1. Any prior withdrawals from or partial surrenders of the contract\naccumulated at a rate of interest of three percent (3%) per annum; and\n2. The amount of any indebtedness to the insurer on the contract, including\ninterest due and accrued;\nand increased by any existing additional amounts credited by the insurer to the\ncontract. The net considerations for a given contract year used to define the\nminimum nonforfeiture amount shall be an amount not less than zero and\nshall be equal to the corresponding gross consideration credited to the contract\nduring that contract year less an annual contract charge of thirty dollars ($30)\nand less a collection charge of one dollar and twenty -five cents ($1.25) per\nconsideration credited to the contract durin g that contract year. The\npercentages of net considerations shall be sixty -five percent (65%) of the net\nconsideration for the first contract year and eighty -seven and one-half percent\n(87.5%) of the net considerations for the second and later contract yea rs.\nNotwithstanding the provisions of the preceding sentence, the percentage shall\nbe sixty-five percent (65%) of the portion of the total net consideration for any\nrenewal contract year which exceeds by not more than two (2) times the sum\nof those portions of the net considerations in all prior contract years for which\nthe percentage was sixty-five percent (65%).\n(b) Notwithstanding any other provision of this subsection, for any contract issued\non or after July 1, 2003, and before July 1, 2006, the intere st rate at which net\nconsiderations, prior withdrawals, and partial surrenders shall be accumulated\nfor the purpose of determining nonforfeiture amounts shall be no less than one\nand one-half percent (1.5%) per annum.\n(c) With respect to contracts providin g for fixed scheduled considerations,\nminimum nonforfeiture amounts shall be calculated on the assumption that\nconsiderations are paid annually in advance and shall be defined as for\ncontracts with flexible considerations which are paid annually with two ( 2)\nexceptions:\n1. The portion of the net consideration for the first contract year to be\naccumulated shall be the sum of sixty -five percent (65%) of the net\nconsideration for the first contract year plus twenty -two and one -half\npercent (22.5%) of the exces s of the net consideration for the first\ncontract year over the lesser of the net considerations for the second and\nthird contract years; and\n2. The annual contract charge shall be the lesser of,\na. Thirty dollars ($30), or\nb. Ten percent (10%) of the gross annual consideration.\n(d) With respect to contracts providing for a single consideration, minimum\nnonforfeiture amounts shall be defined as for contracts with flexible\nconsiderations except that the percentage of net consideration used to\ndetermine the minimum nonforfeiture amount shall be equal to ninety percent\n(90%) and the net consideration shall be the gross consideration less a contract\ncharge of seventy-five dollars ($75).\n(5) Any paid-up annuity benefit available under a contract shall be such tha t its present\nvalue on the date annuity payments are to commence is at least equal to the\nminimum nonforfeiture amount on that date. Such present value shall be computed\nusing the mortality table, if any, and the interest rate specified in the contract for\ndetermining the minimum paid-up annuity benefits guaranteed in the contract.\n(6) For contracts which provide cash surrender benefits, such cash surrender benefits\navailable prior to maturity shall not be less than the present value as of the date of\nsurrender of that portion of the maturity value of the paid -up annuity benefit which\nwould be provided under the contract at maturity arising from considerations paid\nprior to the time of cash surrender reduced by the amount appropriate to reflect any\nprior wit hdrawals from or partial surrenders of the contract, such present value\nbeing calculated on the basis of an interest rate not more than one percent (1%)\nhigher than the interest rate specified in the contract for accumulating the net\nconsiderations to dete rmine such maturity value, decreased by the amount of any\nindebtedness to the insurer on the contract, including interest due and accrued, and\nincreased by any existing additional amounts credited by the insurer to the contract.\nIn no event shall any cash surrender benefit be less than the minimum nonforfeiture\namount at that time. The death benefit under such contracts shall be at least equal to\nthe cash surrender benefit.\n(7) For contracts which do not provide cash surrender benefits, the present value of  any\npaid-up annuity benefit available as a nonforfeiture option at any time prior to\nmaturity shall not be less than the present value of that portion of the maturity value\nof the paid -up annuity benefit provided under the contract arising from\nconsiderations paid prior to the time the contract is surrendered in exchange for, or\nchanged to, a deferred paid -up annuity, such present value being calculated for the\nperiod prior to the maturity date on the basis of the interest rate specified in the\ncontract for accumulating the net considerations to determine such maturity value,\nand increased by any existing additional amounts credited by the insurer to the\ncontract. For contracts which do not provide any death benefits prior to the\ncommencement of any annuity payments, such present values shall be calculated on\nthe basis of such interest rate and the mortality table specified in the contract for\ndetermining the maturity value of the paid-up annuity benefit. However, in no event\nshall the present value of a pai d-up annuity benefit be less than the minimum\nnonforfeiture amount at that time.\n(8) For the purpose of determining the benefits calculated under subsections (6) and (7)\nof this section, in the case of annuity contracts under which an election may be\nmade to have annuity payments commence at optional maturity dates, the maturity\ndate shall be deemed to be the latest date for which election shall be permitted by\nthe contract, but shall not be deemed to be later than the anniversary of the contract\nnext follo wing the annuitant's seventieth birthday or the tenth anniversary of the\ncontract, whichever is later.\n(9) Any contract which does not provide cash surrender benefits or does not provide\ndeath benefits at least equal to the minimum nonforfeiture amount pri or to the\ncommencement of any annuity payments shall include a statement in a prominent\nplace in the contract that such benefits are not provided.\n(10) Any paid-up annuity, cash surrender or death benefits available at any time, other\nthan on the contract anniversary under any contract with fixed scheduled\nconsiderations, shall be calculated with allowance for the lapse of time and the\npayment of any scheduled considerations beyond the beginning of the contract year\nin which cessation of payment of considerations under the contract occurs.\n(11) For any contract which provides, within the same contract by rider or supplemental\ncontract provision, both annuity benefits and life insurance benefits that are in\nexcess of the greater of cash surrender benefits or a return of the gross\nconsiderations with interest, the minimum nonforfeiture benefits shall be equal to\nthe sum of the minimum nonforfeiture benefits for the annuity portion and the\nminimum nonforfeiture benefits, if any, for the life insurance portion computed as if\neach portion were a separate contract. Notwithstanding the provisions of\nsubsections (5), (6), (7), (8), and (10) of this section, additional benefits payable:\n(a) In the event of total and permanent disability;\n(b) As reversionary annuity or deferred reversionary annuity benefits; or\n(c) As other policy benefits additional to life insurance, endowment and annuity\nbenefits, and considerations for all such additional benefits;\nshall be disregarded in ascertaining the minimum nonforfeiture amoun ts, paid -up\nannuity, cash surrender and death benefits that may be required by this section. The\ninclusion of such additional benefits shall not be required in any paid -up benefits,\nunless such additional benefits separately would require minimum nonforfei ture\namounts, paid-up annuity, cash surrender and death benefits.\n(12) (a) 1. After August 1, 2005, any insurer may file with the commissioner a\nwritten notice of its election to apply the provisions of KRS 304.15 -365\non a contract-form by contract-form basis to annuity contracts issued by\nthe insurer during the period from the date of the election through June\n30, 2006;\n2. In all other instances, insurers shall apply the provisions of KRS 304.15-\n315 to annuity contracts issued through June 30, 2006; and\n(b) Insurers shall apply the provisions of KRS 304.15 -365 to all annuity contracts\nissued on or after July 1, 2006.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17231","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:44Z","sha256":"021e19ead36db69390689fee9d695f08d3814c7b516001143f49743d627e7f98","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.15-312","next":"us-ky/krs-304.15-320"},"notice":"GroundRules: Original legal text. Not legal advice."}