{"data":{"id":"us-ky/krs-304.6-145","jurisdiction":"us-ky","citation":"KRS 304.6-145","heading":"Minimum standards -- Operative dates.","body":"(1) The interest rates used in determining the minimum standard for the valuation of:\n(a) All life insurance policies issued in a particular calendar year, on or after the\neffective date of KRS 304.15-342;\n(b) All individual annuity and pure endowment contract s issued in a particular\ncalendar year on or after January 1, 1983;\n(c) All annuities and pure endowments purchased in a particular calendar year on\nor after January 1, 1983 under group annuity and pure endowment contracts;\nand\n(d) The net increase, if any , in a particular calendar year after January 1, 1983, in\namounts held under guaranteed interest contracts shall be the calendar year\nstatutory valuation interest rates as defined in this section.\n(2) The calendar year statutory valuation interest rates, I, shall be determined as follows\nand the results rounded to the nearer one-quarter of one percent (1/4 of 1%):\n(a) For life insurance,\nI = .03 + W (R1 - .03) + W/2 (R2 - .09);\n(b) For single premium immediate annuities and for annuity benefits involving\nlife contingencies arising from other annuities with cash settlement options\nand from guaranteed interest contracts with cash settlement options,\nI = .03 + W (R - .03)\nwhere R1 is the lesser of R and .09,\nR2 is the greater of R and .09,\nR is the reference interest rate defined in this section,\nand W is the weighting factor defined in this section;\n(c) For other annuities with cash settlement options and guaranteed interest\ncontracts with cash settlement options, valued on an issue year basis, except as\nstated in paragraph (b) above, the formula for life insurance stated in\nparagraph (a) above shall appl y to annuities and guaranteed interest contracts,\nwith guarantee durations in excess of ten (10) years and the formula for single\npremium immediate annuities stated in paragraph (b) above shall apply to\nannuities and guaranteed interest contracts with guar antee duration of ten (10)\nyears or less;\n(d) For other annuities with no cash settlement options and for guaranteed interest\ncontracts with no cash settlement options, the formula for single premium\nimmediate annuities stated in paragraph (b) above shall apply; and\n(e) For other annuities with cash settlement options and guaranteed interest\ncontracts with cash settlement options, valued on a change in fund basis, the\nformula for single premium immediate annuities stated in paragraph (b) above\nshall apply.\nHowever, if the calendar year statutory valuation interest rate for any life\ninsurance policies issued in any calendar year determined without reference to\nthis sentence differs from the corresponding actual rate for similar policies\nissued in the immediately preceding calendar year by less than one-half of one\npercent (1/2 of 1%), the calendar year statutory valuation interest rate for such\nlife insurance policies shall be equal to the corresponding actual rate for the\nimmediately preceding calendar year.  For purposes of applying the\nimmediately preceding sentence, the calendar year statutory valuation interest\nrate for life insurance policies issued in a calendar year shall be determined for\n1980 (using the reference interest rate defined for 1979) and sh all be\ndetermined for each subsequent calendar year regardless of when KRS\n304.15-342 becomes effective.\n(3) The weighting factors referred to in the formulas stated above are given in the\nfollowing tables:\n(a) Weighting Factors for Life Insurance:\nGuarantee Duration   Weighting Factors\n(Years)\n10 or less     .50\nMore than 10, but not\nmore than 20     .45\nMore than 20     .35\nFor life insurance, the guarantee duration is the maximum number of years the\nlife insurance can remain in force on a b asis guaranteed in the policy or under\noptions to convert to plans of life insurance with premium rates or\nnonforfeiture values or both which are guaranteed in the original policy;\n(b) Weighting factor for single premium immediate annuities and for annuity\nbenefits involving life contingencies arising from other annuities with cash\nsettlement options and guaranteed interest contracts with cash settlement\noptions:\n.80\n(c) Weighting factors for other annuities and for guaranteed interest contracts,\nexcept as stated in (b) above, shall be as specified in tables 1., 2., and 3.\nbelow, according to the rules and definitions in 4., 5., and 6. below:\n1. For annuities and guaranteed interest contracts valued on an issue year\nbasis:\nGuarantee Duration          Weighting Factor for Plan Type\n(Years)   A B C\n5 or less:   .80 .60 .50\nMore than 5, but not\nmore than 10   .75 .60 .50\nMore than 10, but not\nmore than 20:   .65 .50 .45\nMore than 20:   .45 .35 .35\n2. For annuities and guaranteed interest contracts valued on a change in\nfund basis, the factors shown in 1. above increased by:\nPlan Type\nA B C\n.15 .25 .05\n3. For annuities and guaranteed interest contracts valued on an issue year\nbasis (o ther than those with no cash settlement options) which do not\nguarantee interest on considerations received more than one (1) year\nafter issue or purchase and for annuities and guaranteed interest\ncontracts valued on a change in fund basis which do not gua rantee\ninterest rates on considerations received more than twelve (12) months\nbeyond the valuation date, the factors shown in 1. or derived in 2.\nincreased by:\nPlan Type\nA B C\n.05 .05 .05\n4. For other annuities with cash settlement optio ns and guaranteed interest\ncontracts with cash settlement options, the guarantee duration is the\nnumber of years for which the contract guarantees interest rates in\nexcess of the calendar year statutory valuation interest rate for life\ninsurance policies w ith guarantee duration in excess of twenty (20)\nyears. For other annuities with no cash settlement options and for\nguaranteed interest contracts with no cash settlement options, the\nguarantee duration is the number of years from the date of issue or date\nof purchase to the date annuity benefits are scheduled to commence.\n5. Plan type as used in the above tables is defined as follows:\nPlan Type A: At any time policyholder may withdraw funds only with an\nadjustment to reflect changes in interest rates or ass et values since\nreceipt of the funds by the insurer, or without such adjustment but\nin installments over five (5) years or more, or as an immediate life\nannuity, or no withdrawal permitted;\nPlan Type B: Before expiration of the interest rate guarantee, policyholder\nmay withdraw funds only with an adjustment to reflect changes in\ninterest rates or asset values since receipt of the funds by the\ninsurer, or without such adjustment but in installments over five\n(5) years or more, or no withdrawal permitt ed. At the end of\ninterest rate guarantee, funds may be withdrawn without such\nadjustment in a single sum or installments over less than five (5)\nyears; and\nPlan Type C: Policyholder may withdraw funds before expiration of interest\nrate guarantee in a single sum or installments over less than five\n(5) years either without adjustment to reflect changes in interest\nrates or asset values since receipt of the funds by the insurer, or\nsubject only to a fixed surrender charge stipulated in the contract\nas a percentage of the fund.\n6. An insurer may elect to value guaranteed interest contracts with cash\nsettlement options and annuities with cash settlement options on either\nan issue year basis or on a change in fund basis. Guaranteed interest\ncontracts with  no cash settlement options and other annuities with no\ncash settlement options must be valued on an issue year basis. As used\nin this section, an issue year basis of valuation refers to a valuation basis\nunder which the interest rate used to determine the  minimum valuation\nstandard applicable to each change in the fund held under the annuity or\nguaranteed interest contract is the calendar year valuation interest rate\nfor the year of the change in the fund.\n(4) The reference interest rate referred to in sub section (2) of this section shall be\ndefined as follows:\n(a) For all life insurance, the lesser of the average over a period of thirty -six (36)\nmonths and the average over a period of twelve (12) months, ending on June\n30 of the calendar year next preceding the year of issue, of Moody's Corporate\nBond Yield Average - Monthly Average Corporates, as published by Moody's\nInvestors Service, Inc.;\n(b) For single premium immediate annuities and for annuity benefits involving\nlife contingencies arising from other annuities with cash settlement options\nand guaranteed interest contracts with cash settlement options, the average\nover a period of twelve (12) months, ending on June 30 of the calendar year of\nissue or year of purchase, of Moody's Corporate Bond Yield Ave rage -\nMonthly Average Corporates, as published by Moody's Investors Service, Inc.;\n(c) For other annuities with cash settlement options and guaranteed interest\ncontracts with cash settlement options, valued on a year of issue basis, except\nas stated in paragraph (b) above, with guarantee duration in excess of ten (10)\nyears, the lesser of the average over a period of thirty -six (36) months and the\naverage over a period of twelve (12) months, ending on June 30 of the\ncalendar year of issue or purchase, of Moody's Corporate Bond Yield Average\n- Monthly Average Corporates, as published by Moody's Investors Service,\nInc.;\n(d) For other annuities with cash settlement options and guaranteed interest\ncontracts with cash settlement options, valued on a year of issu e basis, except\nas stated in paragraph (b) above, with guarantee duration of ten (10) years or\nless, the average over a period of twelve (12) months, ending on June 30 of\nthe calendar year of issue or purchase, of Moody's Corporate Bond Yield\nAverage - Monthly Average Corporates, as published by Moody's Investors\nService, Inc.;\n(e) For other annuities with no cash settlement options and for guaranteed interest\ncontracts with no cash settlement options, the average over a period of twelve\n(12) months, ending  on June 30 of the calendar year of issue or purchase, of\nMoody's Corporate Bond Yield Average - Monthly Average Corporates, as\npublished by Moody's Investors Service, Inc.; and\n(f) For other annuities with cash settlement options and guaranteed interest\ncontracts with cash settlement options, valued on a change in fund basis,\nexcept as stated in paragraph (b) above, the average over a period of twelve\n(12) months, ending on June 30 of the calendar year of the change in the fund,\nof Moody's Corporate Bond Yield Average - Monthly Average Corporates, as\npublished by Moody's Investors Service, Inc.\n(5) In the event that Moody's Corporate Bond Yield Average - Monthly Average\nCorporates is no longer published by Moody's Investors Service, Inc., or in the\nevent th at the National Association of Insurance Commissioners determines that\nMoody's Corporate Bond Yield Average - Monthly Average Corporates as\npublished by Moody's Investors Service, Inc. is no longer appropriate for the\ndetermination of the reference interes t rate, then an alternative method for\ndetermination of the reference interest rate, which is adopted by the National\nAssociation of Insurance Commissioners and approved by regulation promulgated\nby the commissioner, may be substituted.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=16785","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:38Z","sha256":"932605e9dec0aa2266193dd9f066ff40274baf3b1f2ece099c8dafc48c079857","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.6-143","next":"us-ky/krs-304.6-150"},"notice":"GroundRules: Original legal text. Not legal advice."}