Chapter 3915 | Life Insurance Policy Provisions

Section 3915.01 | Company defined.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

As used in this chapter, "company" includes corporations and associations.

Section 3915.02 | Application of law.

• Effective: September 13, 2004
• Latest Legislation: Senate Bill 187 - 125th General Assembly

This chapter does not apply to annuities except as provided in sections 3915.051, 3915.073, 3915.14, and 3915.21 to 3915.24 of the Revised Code, industrial policies except as provided in sections 3915.07 and 3915.071 of the Revised Code, fraternal benefit societies, corporations or associations operating on the assessment plan, or corporations or associations which have been organized under sections 3919.01 to 3919.19 of the Revised Code, except corporations and associations which, as of September 28, 1933, have amended their articles of incorporation under section 3919.13 of the Revised Code.

Section 3915.03 | Unauthorized policies not to be issued.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

No policy of life insurance shall be issued or delivered in this state, and no policy of life insurance of a life insurance company organized under the laws of this state shall be issued, unless it meets the requirements of this chapter.

Section 3915.04 | Preliminary term insurance.

• Effective: September 4, 2014
• Latest Legislation: Senate Bill 140 - 130th General Assembly

Life insurance policies may provide for not more than one year preliminary term insurance by incorporation therein of the following clause immediately preceding the "change of beneficiary" clause:

"The first year's insurance under this policy is term insurance."

If the premium charged for term insurance under a limited payment life or endowment preliminary term policy, providing for the payment of all premiums thereon in less than twenty years from the date of the policy, exceeds that charged for like insurance under whole life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a whole life preliminary term policy issued in the same year and at the same age together with an amount equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium-payment period equal to the difference between the value at the end of such period of such a whole life preliminary term policy and the full reserve at such time of such limited payment life or endowment policy. This section does not apply to any policy issued under section 3915.07 of the Revised Code on or after the operative date for such policy as authorized by division (H) of such section.

This section is applicable to any preliminary term policies, except in the case of life insurance policies and annuity and pure endowment contracts issued between July 17, 1947, and November 5, 1959, that are subject to valuation under section 3903.723 of the Revised Code.

Section 3915.05 | Policy provisions to be included.

• Effective: January 1, 2021
• Latest Legislation: House Bill 339 - 133rd General Assembly

No policy of life insurance shall be issued or delivered in this state or be issued by a life insurance company organized under the laws of this state unless such policy contains:

(A) A provision that all premiums shall be payable in advance, either at the home office of the company or to an agent of the company, upon delivery of a receipt signed by one or more of the officers named in the policy;

(B) A provision for a grace of one month for the payment of every premium after the first, which extension period may be subject to an interest charge and during which month the insurance shall continue in force, which provision may contain a stipulation that if the insured dies during the month of grace the overdue premium will be deducted in any settlement under the policy;

(C) A provision that the policy and the application therefor, a copy of which application must be indorsed on the policy, shall constitute the entire contract between the parties and shall be incontestable after it has been in force during the lifetime of the insured for a period of not more than two years from its date, except for nonpayment of premiums, except for violations of the conditions relating to naval or military service in time of war or to aeronautics, and except at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability and provisions which grant additional insurance specifically against death by accident or by accidental means;

(D) A provision that all statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties;

(E) A provision that if the age of the insured has been understated the amount payable under the policy shall be such as the premium would have purchased at the correct age;

(F) A provision that the policy shall participate in the surplus of the company and that, beginning not later than the end of the third policy year, the company will annually determine and account for the portion of the divisible surplus accruing on the policy, and that the owner of the policy has the right each year to have the current dividend arising from such participation paid in cash or applied to the purchase of paid-up additions, and if the policy provides other dividend options, it shall further provide that if the owner of the policy does not elect any such other option the dividend shall be applied to the purchase of paid-up additions.

In lieu of such provision, the policy may contain a provision that:

(1) The policy shall participate in the surplus of the company;

(2) Beginning not later than the end of the fifth policy year, the company will determine and account for the portion of the divisible surplus accruing on the policy;

(3) The owner of the policy has the right to have the current dividend arising from such participation paid in cash;

(4) Such accounting and payment shall be had at periods of not more than five years, at the option of the policyholder.

Renewable term policies of ten years or less may provide that the surplus accruing to such policies shall be determined and apportioned each year after the second policy year and accumulated during each renewal period, and that at the end of any renewal period, on renewal of the policy by the insured, the company shall apply the accumulated surplus as an annuity for the next succeeding renewal term in the reduction of premiums.

The provisions described in this division are not required in nonparticipating policies.

(G) A provision that after three full years' premiums have been paid, the company, at any time while the policy is in force, will advance, on proper assignment of the policy and on the sole security thereof, at a rate of interest calculated pursuant to section 3915.051 of the Revised Code, a sum equal to, or at the option of the owner of the policy, less than, the amount required by section 3915.08 of the Revised Code under the conditions specified in said section, and that the company will deduct from such loan value any indebtedness not already deducted in determining such value and any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year. It shall be further stipulated in the policy that failure to repay any such advance or to pay interest does not void the policy unless the total indebtedness thereon to the company equals or exceeds such loan value at the time of such failure nor until one month after notice has been mailed by the company to the last known address of insured and of the assignee.

No conditions, other than as provided in this division or in section 3915.08 of the Revised Code, shall be exacted as a prerequisite to any such advance.

This provision is not required in term insurance nor does it apply to any form of insurance granted as a nonforfeiture benefit.

(H) A provision for nonforfeiture benefits and cash surrender values in accordance with the requirements of section 3915.06, 3915.07, or 3915.071 of the Revised Code;

(I) Except for policies which guarantee unscheduled changes in benefits upon the happening of specified events or upon the exercise of an option without change to a new policy, a table showing in figures the loan values and the options available under the policies each year upon default in premium payments, during at least the first twenty years of the policy;

(J) A provision that if, in the event of default in premium payments, the value of the policy is applied to the purchase of other insurance, and if such insurance is in force and the original policy has not been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest;

(K) A provision that when a policy becomes a claim by the death of the insured, settlement shall be made upon receipt of due proof of death, or not later than two months after receipt of such proof;

(L) A table showing the amounts of installments in which the policy provides its proceeds may be payable;

(M) A title on its face and back, correctly describing such policy.

Any of the provisions described in this section or portions thereof, relating to premiums not applicable to single premium policies, shall to that extent not be incorporated in such policies.

Section 3915.051 | Policy loan interest rates.

• Effective: June 22, 1984
• Latest Legislation: House Bill 37 - 115th General Assembly

(A) As used in this section:

(1) "Published monthly average" means:

(a) "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 "Moody's corporate bond yield average -- monthly average corporates" is no longer published, a substantially similar average, established by rule promulgated by the superintendent of insurance.

(2) "Policy loan" includes any loan made under a policy including any premium loan made to pay one or more premiums that were not paid to the life insurer as they fell due.

(3) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.

(4) "Policy" includes life insurance policies, certificates issued by a fraternal benefit society, and annuity contracts which provide for policy loans.

(5) The restrictions on the rate of interest which apply to policy loans pursuant to this section shall also apply to the reinstatement of policy loans for the period during and after any lapse of a policy.

(B) Notwithstanding any other provisions of the Revised Code, policies issued or delivered in this state on or after April 1, 1982, shall provide for policy loan interest rates as follows:

(1) A provision permitting a maximum interest rate of not more than eight per cent per annum; or

(2) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law if corresponding adjustments are made in premiums, dividends, or other benefits under the policy.

(C) The rate of interest charged on a policy loan made under division (B)(2) of this section shall not exceed the higher of the following:

(1) The published monthly average for the calendar month ending two months before the date on which the rate is determined;

(2) The rate used to compute the cash surrender values under the policy during the applicable period plus one per cent per annum.

(D) If the maximum rate of interest is determined pursuant to division (B)(2) of this section, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.

(E) The maximum rate for each policy must be determined at regular intervals at least once every twelve months, but not more frequently than once in any three-month period. At the intervals specified in the policy:

(1) The rate being charged may be increased whenever such increase as determined under division (C) of this section would increase that rate by one-half per cent or more per annum;

(2) The rate being charged must be reduced whenever such reduction as determined under division (C) of this section would decrease that rate by one-half per cent or more per annum.

(F) 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 premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in division (F)(3) of this section.

(3) Send to policyholders with loans reasonable advance notice of any increase in the rate;

(4) Include in the notices the substance of the pertinent provisions of divisions (B) and (D) of this section.

(G) No policy shall terminate in a policy year as the sole result of a 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.

(H) The substance of the pertinent provisions of divisions (B) and (D) of this section shall be set forth in the policies to which they apply.

(I) A policy issued or delivered in this state prior to April 1, 1982, may not be amended to provide for fixed interest rates on policy loans in excess of eight per cent. Such a policy may not be amended to provide for adjustable interest rates on policy loans under this section unless all of the following apply:

(1) The form of amendment has been filed with the superintendent of insurance. Such form shall be subject to the provisions of section 3915.14 of the Revised Code and within thirty days after such form has been filed the superintendent may disapprove such form unless it provides for corresponding adjustments to be made in premiums, dividends, or other benefits under the policy.

(2) Disclosure of the provisions of the existing policy which would be changed by the amendment including premiums, dividends, cash surrender values, or other benefits, and disclosure of those applicable provisions as if the amendment were effective, shall be made to the policyholder prior to obtaining such written agreement. No other rights of the policyholder under the policy shall be affected.

(3) The policyholder agrees to the amendment in writing.

Unless a policy amendment providing for a variable interest rate complies with divisions (I)(1) to (3) of this section, the policyholder shall not be charged any rate of interest on a policy loan in excess of that provided in the policy prior to the amendment.

Section 3915.052 | Interest payable on policy proceeds.

• Effective: October 8, 1992
• Latest Legislation: House Bill 427 - 119th General Assembly

(A) On and after January 1, 1993, any life insurance company authorized to do business in this state shall pay interest, in accordance with division (B) of this section and subject to division (C) of this section, on any proceeds that become due pursuant to the terms of a life insurance policy other than a credit life insurance policy.

(B) The interest payable pursuant to division (A) of this section shall be computed from the date of the death of the insured to the date of the payment of the proceeds and shall be at whichever of the following rates is greater:

(1) The annual short-term applicable federal rate for purposes of section 1274(d) of the Internal Revenue Code, as defined in section 5747.01 of the Revised Code, in effect for the month in which the insured died;

(2) The current rate of interest on proceeds left on deposit with the company under an interest settlement option contained in the life insurance policy.

(C) Division (A) of this section does not require, and shall not be construed as requiring, the payment of interest unless the insured was a resident of this state on the date of his death and unless the beneficiary under the life insurance policy elects in writing to receive, or a written election has been made for the beneficiary to receive, the proceeds of the policy by means of a lump sum payment.

(D) Nothing in this section allows, or shall be construed as allowing, any insurance company to withhold the payment to any beneficiary of death proceeds under a life insurance policy for a period that is inconsistent with division (K) of section 3915.05 of the Revised Code or is longer than reasonably necessary to transmit the death proceeds.

Section 3915.053 | Policy of military reservist not to lapse for nonpayment of premiums.

• Effective: January 1, 2021
• Latest Legislation: House Bill 339 - 133rd General Assembly

(A)(1) Except as provided in division (A)(2) of this section, this section shall apply to any individual life insurance policy insuring the life of a reservist, as defined in section 3923.381 of the Revised Code, who is on active duty pursuant to an executive order of the president of the United States, an act of the congress of the United States, or section 5919.29 or 5923.21 of the Revised Code, if the life insurance policy meets both of the following conditions:

(a) The policy has been in force for at least one hundred eighty days.

(b) The policy has been brought within the "Servicemembers Civil Relief Act," 117 Stat. 2835 (2003), 50 U.S.C. App. 541, et seq.

(2) This section does not apply to any policy that was canceled or that had lapsed for the nonpayment of premiums prior to the commencement of the insured's period of military service.

(B) An individual life insurance policy described in division (A) of this section shall not lapse or be forfeited for the nonpayment of premiums during a reservist's period of military service or during the two-year period subsequent to the end of the reservist's period of military service.

(C) This section does not limit a life insurance company's enforcement of provisions in the insured's policy relating to naval or military service in time of war.

Section 3915.06 | Nonforfeiture benefit and cash value.

• Effective: August 25, 1983
• Latest Legislation: House Bill 20 - 115th General Assembly

The nonforfeiture benefit referred to in division (H) of section 3915.05 of the Revised Code shall be available to the owner of the policy in the event of default in premium payments after premiums have been paid for three years, and such benefit shall be a stipulated form of insurance, the net value of which shall be at least equal to the reserve at the date of default on the policy and on any dividend additions thereto, less a sum not more than two and one half per cent of the amount insured by the policy and of any existing dividend additions thereto, and less any existing indebtedness to the company on the policy. The policy shall specify the mortality table and rate of interest adopted for computing such reserves, and shall stipulate that it may be surrendered to the company at its home office within one month from date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance. The policy may stipulate that the company may defer payment for not more than six months after the application therefor is made.

This section does not apply to term insurance of twenty years or less, nor to policies issued pursuant to section 3915.07 or 3915.071 of the Revised Code on or after their respective operative dates for such policies.

Section 3915.07 | Standard nonforfeiture law.

• Effective: August 25, 1983
• Latest Legislation: House Bill 20 - 115th General Assembly

(A) In the case of policies issued before January 1, 1989, or an earlier date, not before January 1, 1983, as of which section 3915.071 of the Revised Code becomes operative for such policies, no such policy of life insurance, except as set forth in division (G) of this section, shall be issued or delivered in this state unless such policy contains in substance the following provisions or corresponding provisions which in the opinion of the superintendent of insurance are at least as favorable to the defaulting or surrendering policyholder:

(1) That in the event of default in any premium payment, the company will grant, upon proper request not later than sixty days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such value as is specified in this section;

(2) That upon surrender of the policy within sixty days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as is specified in this section;

(3) That a specified paid-up nonforfeiture benefit becomes effective as specified in the policy unless the person entitled to make such election elects another available option not later than sixty days after the due date of the premium in default;

(4) That if the policy has become paid up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay, upon surrender of the policy within thirty days after any policy anniversary, a cash surrender value of such amount as is specified in this section;

(5) A statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value and paid-up nonforfeiture benefit available under the policy on each policy anniversary, either during the first twenty policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy;

(6) A statement that the cash surrender values and paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to any applicable statute of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

Any portions of division (A) of this section which are not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.

The company shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand therefor with surrender of the policy.

(B) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by division (A) of this section, shall be an amount not less than the excess of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of the then present value of the adjusted premiums as defined in divisions (D), (E) (1), and (2) of this section, corresponding to premiums which would have fallen due on and after such anniversary, plus the amount of any indebtedness to the company on the policy. Any cash surrender value available within thirty days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by division (A) of this section, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy.

(C) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall have a present value as of such anniversary at least equal to the cash surrender value then provided for by the policy or, if none is provided for, the cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period.

(D) Except as otherwise provided in this division, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform per cent of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums is equal to the sum of the following:

(1) The then present value of the future guaranteed benefits provided for by the policy;

(2) Two per cent of the amount of insurance, if the insurance is uniform in amount, or of the equivalent uniform amount, if the amount of insurance varies with duration of the policy;

(3) Forty per cent of the adjusted premium for the first policy year;

(4) Twenty-five per cent of either the adjusted premium for the first policy year, or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.

In applying the percentage specified in divisions (D) (3) and (4) of this section, no adjusted premium shall be deemed to exceed four per cent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for determining such adjusted premiums is the date as of which the rated age of the insured is determined.

In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for determining such adjusted premiums is the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefits issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; provided, that in the case of a policy providing a varying amount of insurance issued on the life of a child under ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten.

The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in the preceding paragraphs of this division except that, for the purposes of divisions (D) (2), (3), and (4) of this section, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).

Except as otherwise provided in divisions (E) (1) and (2) of this section, all adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the commissioners 1941 standard ordinary mortality table, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than three years younger than the actual age of the insured for policies issued prior to January 1, 1979, and according to an age not more than six years younger than the actual age of the insured for policies issued on and after January 1, 1979 and such calculations for all policies of industrial insurance shall be made on the basis of the 1941 standard industrial mortality table. All calculations shall be made on the basis of the rate of interest, not exceeding three and one-half per cent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. In calculating the present value of any paid-up term insurance with accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than one hundred thirty per cent of the rates of mortality according to such applicable table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on any other table of mortality that is specified by the company and approved by the superintendent of insurance.

(E) (1) In the case of ordinary policies issued on or after the operative date of this division as defined in this division, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1958 standard ordinary mortality table and the rate of interest, not exceeding three and one-half per cent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. Provided that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1958 extended term insurance table. Provided, further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the superintendent. The operative date of this division for any company is the earlier of the date specified in a written notice to the superintendent of the company's election to comply with the provisions of this division or January 1, 1966.

(2) In the case of industrial policies issued on or after the operative date of this division as defined in this division, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1961 standard industrial mortality table and the rate of interest, not exceeding three and one-half per cent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1961 industrial extended term insurance table and provided, that for insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the superintendent. The operative date of this division for any company is the earlier of the date specified in a written notice to the superintendent of the company's election to comply with the provisions of this division or January 1, 1968.

(3) In lieu of the rate of interest provided in divisions (E) (1) and (2) of this section, a company may specify an interest rate not exceeding four per cent for calculating cash surrender values and paid-up nonforfeiture benefits in any ordinary or industrial policy issued on or after January 1, 1975, and prior to January 1, 1979, and may specify an interest rate not exceeding five and one-half per cent for calculating cash surrender values and paid-up nonforfeiture benefits in any ordinary or industrial policy issued on or after January 1, 1979.

(F) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in divisions (B), (C), (D), (E) (1), and (2) of this section may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the dividends used to provide such additions. Notwithstanding division (B) of this section, additional benefits payable:

(1) In the event of death or dismemberment by accident or accidental means;

(2) In the event of total and permanent disability;

(3) As reversionary annuity or deferred reversionary annuity benefits;

(4) As term insurance benefits provided by a rider or supplemental policy provisions to which, if issued as a separate policy, this section would not apply;

(5) As term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child;

(6) As other policy benefits additional to life insurance and endowment benefits shall be disregarded, and premiums for all such additional benefits and any extra premiums to cover impairments or special hazards shall be disregarded, in ascertaining cash surrender values and nonforfeiture benefits required by this section. No such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

(G) This section does not apply to any reinsurance, group insurance, pure endowment, annuity, or reversionary annuity contract, nor to any term policy of uniform amount, or renewal thereof, of fifteen years or less expiring before age sixty-six, for which uniform premiums are payable during the entire term of the policy, nor to any term policy of decreasing amount on which each adjusted premium, calculated as specified in divisions (D), (E) (1), and (2) of this section, is less than the adjusted premium calculated on such fifteen-year term policy issued at the same age and for the same initial amount of insurance, nor to any policy which is delivered outside this state through an agent or other representative of the company issuing the policy.

(H) Except as provided in division (E) (1) of this section with respect to ordinary policies and division (E) (2) of this section with respect to industrial policies any company may, at its option, file with the superintendent a written notice of its election to issue all or any of its policies pursuant to this section on and after a specified date. If such election does not apply to all forms of policies issued on and after such specified date, such election shall specify the forms of policies to which it applies. The operative date of this section with respect to such forms of policies is the date specified in the election pertaining to such forms of policies. No other statute shall be construed as to prohibit any life insurance company from classifying its policies and electing to issue specified forms of policies pursuant to the plan set forth in this section, while using any other legal basis as to reserve calculations and nonforfeiture values as to others of its policies, nor shall it be construed to prohibit any life insurance company from adopting other reasonable classifications of policies or policyholders.

Section 3915.071 | Paid-up nonforfeiture benefit or alternative nonforfeiture benefit.

• Effective: September 4, 2014
• Latest Legislation: Senate Bill 140 - 130th General Assembly

(A) As used in this section, "operative date of the valuation manual" means the January 1 of the first calendar year that the valuation manual, as defined in section 3903.72 of the Revised Code, is effective.

(B) No policy of life insurance shall be delivered or issued for delivery in this state, on or after January 1, 1989, or the operative date (not before January 1, 1983) applicable to such policy, as permitted by division (P) of this section, unless it contains in substance the provisions set out in this division which are applicable to the plan of insurance or corresponding provisions which, in the opinion of the superintendent of insurance, are at least as favorable to the policyholder:

(1) That the company will, upon proper request within sixty days after the due date of a premium in default, grant a paid-up nonforfeiture benefit on a plan stated in the policy. The effective date of the benefit shall be the due date of the unpaid premium. The benefit shall be in the amount specified in this section.

(2) That upon proper request, within the same sixty-day period, the company may substitute an alternative nonforfeiture benefit of an actuarially equivalent value. The amount may be greater or the death benefit may be for a longer period. If the benefit is an endowment benefit, the amount may be greater or payment may be made earlier.

(3) That after premiums have been paid for at least three full years for ordinary insurance or for at least five full years for industrial insurance, the company will, upon surrender of the policy within sixty days after the due date of an unpaid premium, pay a cash surrender value in the amount specified in this section in lieu of any paid-up nonforfeiture benefits.

(4) That if another available nonforfeiture benefit is not elected within sixty days after the due date of an unpaid premium, the paid-up nonforfeiture benefit specified in the policy shall become effective.

(5) That if all premiums for the policy have been paid, the company will pay the cash surrender value, upon surrender of the policy within thirty days after a policy anniversary, in the amount specified in this section. That value will also be available within any such thirty-day period if the policy is continuing under any nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance.

(6) A statement of the mortality table, interest rate, and method used in calculating cash surrender values and paid-up nonforfeiture benefits available under policies which guarantee unscheduled changes in benefits or premiums upon the happening of specified events or upon the exercise of an option without change to a new policy.

For all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and paid-up nonforfeiture benefits, together with a table showing such values and benefits on each policy anniversary during the first twenty policy years, or the term of the policy, if shorter. Values and benefits are to be calculated on the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy.

(7) A statement that the cash surrender values and paid-up nonforfeiture benefits are not less than those required by the law of the state in which the policy is delivered.

(8) An explanation of the manner in which cash surrender values and paid-up nonforfeiture benefits are increased by any paid-up additions to the policy and decreased by any indebtedness to the company on the policy.

(9) A statement that a detailed statement of the method of computation of values and benefits has been filed with the insurance supervisory official of the state in which the policy is delivered if such a detailed statement is not included in the policy.

(10) A statement of the method used in calculating the cash surrender value and paid-up nonforfeiture benefit available on any policy anniversary beyond the last anniversary for which values and benefits are consecutively shown in the policy.

The company shall reserve the right to defer the payment of any cash surrender value for a period of six months after demand and surrender of the policy.

(C) Upon default in payment of a premium due on a policy anniversary, any cash surrender value shall be determined as of the due date. The value shall be not less than the present value on the anniversary of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, had default not occurred, less the present value on the anniversary of the adjusted premiums corresponding to the premiums which would have fallen due on and after such anniversary and less any indebtedness to the company on the policy. Any cash surrender value provided for by the policy shall be in substantial compliance with section 3915.072 of the Revised Code.

If supplemental life insurance or annuity benefits are added at issue, at the option of the insured, to a policy by rider or supplemental policy provision and for an identifiable additional premium, the cash surrender values for the basic insurance and for the supplemental insurance or benefits shall be determined as if each had been issued as a separate policy. The cash surrender value of the policy shall be the sum of the cash surrender value of the basic insurance and of the supplemental insurance or benefits.

The cash surrender value for a family policy, which defines a primary insured and which provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one, is the sum of the cash surrender value of the insurance on the primary insured and the cash surrender value of the term insurance on the spouse, determined as if the insurance on each had been issued as a separate policy.

Any cash surrender value available within thirty days after a policy anniversary, under a policy paid up by completion of all premium payments or continued under any paid-up nonforfeiture benefit, shall be not less than the present value, on the anniversary, of the future guaranteed benefits provided by the policy, including any paid-up additions, and decreased by any indebtedness to the company on the policy.

Any paid-up nonforfeiture benefit available upon default in payment of the premium due on a policy anniversary shall have a present value as of the anniversary at least equal to the policy's cash surrender value on that date or, if none is provided for, the cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for the requisite number of years.

(D)(1) Amounts payable as extra premiums to cover impairments or special hazards and uniform annual contract charges or policy fees specified in the policy statement of the method to be used in calculating cash surrender values and paid-up nonforfeiture benefits are excluded in calculating adjusted premiums and recalculated future adjusted premiums.

A policy issued on a substandard basis but similar to one issued on a standard basis may be considered the same as the standard policy in calculating adjusted premiums and present values if tabular mortality costs in each policy year are the same as those in the standard policy and if the policies differ only in that the substandard policy provides reduced graded amounts of insurance and the standard policy provides higher uniform amounts of insurance.

(2) The adjusted premiums for any policy are calculated on an annual basis and shall be a uniform per cent of the respective premiums specified in the policy for each policy year such that the present value, at the date of issue, of all such adjusted premiums is equal to the sum of the following:

(a) The present value at the date of issue of the future guaranteed benefits;

(b) One per cent of either the amount of insurance, if uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and

(c) One hundred twenty-five per cent of the nonforfeiture net level premium, as defined in division (D)(3) of this section, provided that for the purposes of this division (D)(2)(c) the nonforfeiture net level premium shall not be deemed to exceed four per cent of either the amount of insurance, if uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years.

The date of issue, as used in this division, is the date as of which the rated age of the insured is determined.

(3) The nonforfeiture net level premium is equal to the present value, at the date of issue, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue, of an annuity of one per annum payable on the date of issue and on each anniversary of the policy on which a premium falls due.

(4) Adjusted premiums, present values, additional expense allowances, and nonforfeiture net level premiums for policies which guarantee unscheduled changes in benefits or premiums upon the happening of specified events or upon the exercise of an option without change to a new policy are determined as follows:

(a) At the date of issue, adjusted premiums, nonforfeiture net level premiums, and present values are calculated on the assumption that there will be no change in future benefits or premiums;

(b) At the time of a change in benefits or premiums, future adjusted premiums, nonforfeiture net level premiums and present values are recalculated on the assumption that there will be no other change in future benefits or premiums;

(c) These recalculated future adjusted premiums are a uniform percentage of the respective future premiums specified in the policy for each policy year after the change such that the present value, at the time of change, of the future adjusted premiums is equal to the sum of:

(i) The present value at the time of change of all future guaranteed benefits provided for by the policy;

(ii) Any additional expense allowance less the cash surrender value at that time or, if none, the value of any paid-up nonforfeiture benefit.

(d) The additional expense allowance, at the time of change, is the sum of one per cent of any increase in the average amount of insurance and one hundred twenty-five per cent of any increase in the nonforfeiture net level premium. The average amount of insurance after the change is the average amount of insurance at the beginning of the first ten policy years following the change. The average amount of insurance before the change is the average amount of insurance at the beginning of each of the first ten policy years starting with the date of the most recent previous change or, if there has been no change, the date of issue.

(e) The recalculated nonforfeiture net level premium is the quotient of (i) the present value of the increase in future guaranteed benefits provided by the policy plus (ii) the nonforfeiture net level premium before the change times the present value of an annuity of one per annum payable on each anniversary of the policy on and after the date of change on which a premium would, except for the change, have fallen due divided by (iii) the present value of an annuity of one per annum payable on each anniversary on or after the date of change on which a premium falls due.

(E) For policies issued prior to the operative date of the valuation manual:

(1) For all policies of ordinary insurance issued on the standard basis, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1980 standard ordinary mortality table and a rate of interest not exceeding the nonforfeiture interest rate provided for by division (E)(3) of this section or, at the option of the company, a rate not exceeding the nonforfeiture interest rate for policies issued in the preceding calendar year. The company may elect to use the commissioners 1980 standard ordinary mortality table with ten-year select mortality factors for any specified plan of life insurance. The superintendent may approve the use of any ordinary mortality table adopted after 1980 by the national association of insurance commissioners in determining the minimum nonforfeiture standard for such policies.

(2) For all policies of industrial insurance issued on the standard basis, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1961 standard industrial mortality table and a rate of interest not exceeding the nonforfeiture interest rate provided for by division (E)(3) of this section or, at the option of the company, a rate not exceeding the nonforfeiture interest rate for policies issued in the preceding calendar year. The superintendent may approve the use of any industrial mortality table adopted after 1980 by the national association of insurance commissioners in determining the minimum nonforfeiture standard for such policies.

(3) The nonforfeiture interest rate for a policy issued in any calendar year is equal to one hundred twenty-five per cent of the valuation interest rate for the policy as defined in section 3903.724 of the Revised Code, rounded to the nearer one-quarter of one per cent, provided, however, that the nonforfeiture interest rate shall not be less than four per cent.

(F) For all policies issued on or after the operative date of the valuation manual:

(1) For all policies of ordinary insurance, the valuation manual shall provide the commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the commissioners 1980 standard ordinary mortality table, with or without ten-year select mortality factors, or for the commissioners 1980 extended term insurance table. If the superintendent approves by rule any commissioners standard ordinary mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.

(2) For all policies of industrial insurance, the valuation manual shall provide the commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the commissioners 1961 standard industrial mortality table or the commissioners 1961 industrial extended term insurance table. If the superintendent approves by rule any commissioners standard industrial mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.

(3) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual.

(G) Any cash surrender value for any paid-up nonforfeiture benefit including any paid-up dividend additions shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such benefit and paid-up dividend additions.

(H) Guaranteed paid-up nonforfeiture benefits, including any paid-up additions, shall be calculated on the basis of an interest rate no lower than that specified in the policy when calculating cash surrender values.

(I) Present values, for any paid-up term insurance or any paid-up term insurance with accompanying pure endowment offered as a nonforfeiture benefit, shall be calculated using rates of mortality not to exceed those shown in the commissioners 1980 extended term insurance table for policies of ordinary insurance and those shown in the commissioners 1961 industrial extended term insurance table for policies of industrial insurance. The superintendent may approve the use of any extended term insurance table adopted after 1980 by the national association of insurance commissioners in determining such present values.

(J) Adjusted premiums and present values for policies that are issued on a substandard basis may be calculated on the basis of such table of mortality as may be specified by the company and approved by the superintendent.

(K) The superintendent of insurance may by rule adopt methods for computing cash surrender values and paid-up nonforfeiture benefits for plans of life insurance which are of such a nature that values cannot be determined by any method described in this section, provided the superintendent is satisfied that the benefits provided in any such plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by this section and that the benefits and patterns of premiums for the plan will not mislead prospective policyholders or insureds. Such methods must be consistent with the principles of this section. This division shall apply to any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the company on the basis of estimates of future experience made at the time of any such determination.

(L) Any cash surrender value and any paid-up nonforfeiture benefit, available upon default in payment of a premium due at any time other than on a policy anniversary, shall be calculated with allowance for lapse of time and payment of fractional premiums beyond the preceding policy anniversary. All values referred to in this section may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up addition, other than paid-up term additions, shall be not less than the amount used to provide such additions.

(M) All other policy benefits additional to life insurance and endowment benefits shall be disregarded, and premiums for all such additional benefits and any extra premiums to cover impairments or special hazards shall be disregarded, in ascertaining the cash surrender values and nonforfeiture benefits required by this section. No such additional benefits shall be required to be included in any paid-up nonforfeiture benefit. Such benefits include additional benefits payable:

(1) For death or dismemberment by accident or accidental means;

(2) For total and permanent disability;

(3) As reversionary annuity or deferred reversionary annuity benefits;

(4) As term insurance benefits provided by rider or supplemental policy provisions to which, issued as a separate policy, this section would not apply;

(5) As term insurance on the life of a child or lives of children provided in a policy on the life of a parent, if such term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent.

(N) This section does not apply to any reinsurance, group insurance, pure endowment or annuity or reversionary annuity contract nor to any:

(1) Term policy, or renewal thereof, of uniform amount and for twenty years or less expiring before age seventy-one which provides no guaranteed nonforfeiture or endowment benefit and for which uniform premiums are payable during the entire term and any renewal of the policy;

(2) Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, and for which each adjusted premium is less than the adjusted premium for a term policy described in division (N)(1) of this section issued at the same age and for the same initial amount of insurance;

(3) Policy, which provides no guaranteed nonforfeiture or endowment benefits, and for which the cash surrender value or present value of any paid-up nonforfeiture benefit for any policy year calculated according to this section as of the beginning of such policy year, does not exceed two and one-half per cent of the amount of insurance at the beginning of the same policy year;

(4) Policy which is delivered outside this state through an agent or other representative of the company issuing the policy.

For purposes of determining the applicability of this division to a joint-term life insurance policy, the age at expiry shall be the age at expiry of the oldest life.

(O) No approved policy form need be refiled if nonforfeiture values or methods for computing such values for it are refiled and the only change is in the interest rate or the mortality table.

(P) The operative date of this section shall be January 1, 1989, except that an earlier operative date may be elected as provided in this division. A company may, by written notice filed with the superintendent, elect to issue all, or one or more, of its policy forms pursuant to this section on and after a date specified in the notice. The date specified may be any date on or after January 1, 1983, and before January 1, 1989. The date specified shall be the operative date of this section for the policy form or forms specified in the notice.

No other statute shall be construed to prohibit any life insurance company from classifying its policies and electing to issue specified forms of policies pursuant to the plan set forth in this section, while using other legal basis as to reserve calculations and nonforfeiture values for other of its policies, nor shall it be construed to prohibit any life insurance company from adopting other reasonable classifications of policies or policyholders.

Section 3915.072 | Cash surrender value - nonforfeiture factors.

• Effective: September 4, 2014
• Latest Legislation: Senate Bill 140 - 130th General Assembly

This section applies to all policies of life insurance, not excluded by division (N) of section 3915.071 of the Revised Code, that are delivered, or issued for delivery, in this state on or after January 1, 1989.

(A) Upon default in payment of the premium due on a policy anniversary, the cash surrender value shall not differ by more than two-tenths of one per cent of the amount of insurance from the sum of the greater of zero or the basic cash value, as defined in division (B) of this section, and the present value of any paid-up additions less any indebtedness to the company on the policy. If the amount of insurance is not uniform, the amount is the average amount of insurance in force at the beginning of each of the first ten policy years.

(B) The basic cash value is equal to the present value on the anniversary of the future guaranteed benefits which would have been provided for by the policy had default not occurred less the present value on the anniversary of the nonforfeiture factors corresponding to the premiums which would have fallen due on and after the anniversary. The basic cash value may not be less than the value obtained by substituting the adjusted premiums, as defined in division (D)(2) of section 3915.071 of the Revised Code, for the nonforfeiture factors. Paid-up additions and indebtedness to the company on the policy are not taken into consideration in determining basic cash value. Basic cash values for policies having supplemental life insurance or annuity benefits or for a family policy as described in division (B) of section 3915.071 of the Revised Code shall be determined in the manner provided in division (B) of that section for cash surrender values.

(C) The nonforfeiture factor is a percentage of the adjusted premium, as defined in division (D)(2) of section 3915.071 of the Revised Code, for each policy year. The percentage must be the same for each policy year after the second until the later of the fifth policy anniversary and the first policy anniversary after the second on which the cash surrender value, before including any paid-up additions and before deducting any indebtedness, is at least equal to two-tenths of one per cent of the amount of insurance. Any change in percentage after the fifth policy anniversary must apply to no fewer than five consecutive policy years before a different percentage can be adopted. If the amount of insurance is not uniform, the amount is the average amount of insurance in force at the beginning of each of the first ten policy years.

(D) Adjusted premiums and present values shall be calculated using the same mortality table and interest rate used to demonstrate the policy's compliance with section 3915.071 of the Revised Code. The cash surrender values referred to in this section include any endowment benefit provided for by the policy.

(E) Any cash surrender value available upon default in a premium payment due at any time other than on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available upon default in a premium at any time shall be calculated in accordance with the requirements for determining analogous minimum amounts in section 3915.071 of the Revised Code. The amounts of any cash surrender values and paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed in division (M) of section 3915.071 of the Revised Code shall conform with the principles of this section.

Section 3915.073 | Standard nonforfeiture law for individual deferred annuities.

• Effective: July 21, 2022
• Latest Legislation: Senate Bill 256 - 134th General Assembly

(A) This section shall be known as the standard nonforfeiture law for individual deferred annuities.

(B) This section does 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 retirement accounts or individual retirement annuities under section 408 of the Internal Revenue Code of 1954, 26 U.S.C.A. 408, as amended, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which is delivered outside this state through an agent or other representative of the company issuing the contract.

(C) No contract of annuity, except as stated in division (B) of this section, shall be delivered or issued for delivery in this state unless the contract contains in substance the following provisions, or corresponding provisions that in the opinion of the superintendent of insurance are at least as favorable to the contract owners, relative to the cessation of payment of consideration under the contract:

(1) 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 divisions (E), (F), (G), (H), and (J) of this section;

(2) 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 any paid-up annuity benefit a cash surrender benefit of such amount as is specified in divisions (E), (F), (H), and (J) of this section. The company may reserve the right to defer the payment of such cash surrender benefit for a period not to exceed six months after demand therefor with surrender of the contract. The deferral is contingent upon the company's conveyance of a written request for the deferral to the superintendent and the company's receipt of written approval from the superintendent for the deferral. The request shall address the necessity and equitability to all contract owners of the deferral.

(3) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender, or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits;

(4) A statement that any paid-up annuity, cash surrender, or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract, or any prior withdrawals from or partial surrenders of the contract.

Notwithstanding the requirements of this section, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of two full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than twenty dollars monthly, the company may at its option terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.

(D) The minimum values as specified in divisions (E), (F), (G), (H), and (J) of this section of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this division.

(1)(a) 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 determined in accordance with division (D)(2) of this section of the net considerations, determined in accordance with division (D)(1)(b) of this section, paid prior to such time, decreased by the sum of:

(i) Any prior withdrawals from or partial surrenders of the contract, accumulated at rates of interest determined in accordance with division (D)(2) of this section;

(ii) An annual contract charge of fifty dollars, accumulated at rates of interest determined in accordance with division (D)(2) of this section;

(iii) Any premium tax paid by the company for the contract, accumulated at rates of interest determined in accordance with division (D)(2) of this section;

(iv) The amount of any indebtedness to the company on the contract, including interest due and accrued.

(b) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be an amount equal to eighty-seven and one-half per cent of the gross considerations credited to the contract during that contract year.

(2)(a) The interest rate used in determining minimum nonforfeiture amounts under divisions (D)(1) to (4) of this section shall be an annual rate of interest determined as the lesser of three per cent per annum or the following, which shall be specified in the contract if the interest rate will be reset:

(i) The five-year constant maturity treasury rate reported by the federal reserve as of a date or an average over a period, rounded to the nearest one-twentieth of one per cent, specified in the contract, no longer than fifteen months prior to the contract issue date or the redetermination date specified in division (D)(2)(b) of this section;

(ii) Reduced by one hundred twenty-five basis points;

(iii) Where the resulting interest rate shall not be less than fifteen hundredths of one per cent.

(b) The interest rate determined under division (D)(2)(a) of this section shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the five-year constant maturity treasury rate to be used at each redetermination date.

(3) During the period or term that a contract provides substantive participation in an equity-indexed benefit, the contract may provide for an increase in the reduction described in division (D)(2)(a)(ii) of this section by a maximum of one hundred basis points to reflect the value of the equity-indexed benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed the market value of the benefit. The superintendent may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. If the demonstration is not acceptable to the superintendent, the superintendent may disallow or limit the additional reduction.

(4) The superintendent may adopt rules to implement division (D)(3) of this section and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity-indexed benefit and for other contracts for which the superintendent determines adjustments are justified.

(E) 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. Such present value shall be computed using the mortality table, if any, and the interest rate specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.

(F) For contracts which provide cash surrender benefits, such cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit that would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than one per cent higher than the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.

(G) 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 the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine such maturity value, and increased by any existing additional amounts credited by the company to the contract. For contracts that do not provide any death benefits prior to the commencement of any annuity payments, such present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.

(H) For the purpose of determining the benefits calculated under divisions (F) and (G) of this section, 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 permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.

(I) Any 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.

(J) 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 of the contract year in which cessation of payment of considerations under the contract occurs.

(K) For any contract that 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 benefit shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of divisions (E), (F), (G), (H), and (J) of this section, additional benefits payable:

(1) In the event of total and permanent disability;

(2) As reversionary annuity or deferred reversionary annuity benefits; or

(3) As other policy benefits additional to life insurance, endowment and annuity benefits, and considerations for all such additional benefits shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits that may be required by this section.

The inclusion of such additional benefits shall not be required in any paid-up benefits, unless such additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.

(L) The superintendent may adopt rules in accordance with Chapter 119. of the Revised Code to implement this section.

Last updated May 3, 2022 at 1:15 PM

Section 3915.08 | Loan, reserve, and cash surrender value.

• Effective: November 5, 1959
• Latest Legislation: Senate Bill 428 - 103rd General Assembly

Except in the case of policies to which the second paragraph of this section applies, the loan value referred to in division (G) of section 3915.05 of the Revised Code shall be the reserve at the end of the current policy year on the policy and on any dividend additions thereto, less a sum of not more than two and one-half per cent of the amount insured by the policy and of any dividend additions thereto. The policy shall specify the mortality table and rate of interest adopted for computing such reserve and may further provide that such loan may be deferred for not more than six months after the application therefor is made.

In the case of policies issued pursuant to section 3915.07 of the Revised Code on or after the operative date for such policies as authorized by division (H) of said section, the loan value referred to in division (G) of section 3915.05 of the Revised Code shall be the cash surrender value at the end of the current policy year as required by section 3915.07 of the Revised Code. The company shall reserve the right to defer such loan, except when made to pay premiums, for six months after application therefor is made.

Section 3915.09 | Provisions prohibited.

• Effective: March 22, 1973
• Latest Legislation: House Bill 1 - 110th General Assembly

No policy of life insurance shall be issued or delivered in this state, or be issued by a life insurance company organized under the laws of this state, if it contains any of the following:

(A) A provision for forfeiture of the policy for failure to repay any loan on the policy or to pay interest on such loan while the total indebtedness on the policy is less than its loan value; or any provision for forfeiture for failure to repay any such loan or to pay interest thereon, unless such provision contains a stipulation that no such forfeiture shall occur until at least one month after notice has been mailed by the company to the last known address of the insured and of the assignee;

(B) A provision limiting to less than five years the time within which any action at law or in equity may be commenced after the cause of action accrues;

(C) A provision for any mode of settlement at maturity of less value than the amount insured on the face of the policy plus dividend additions, less any indebtedness to the company on the policy, and less any premium that may by the terms of the policy be deducted;

(D) In a policy form filed under section 3915.14 of the Revised Code after September 16, 1970, a provision that the policy will be eligible to participate in any future distributions of earnings, profits, or surplus of the company which are not allocated to all participating policies by reasonable and nondiscriminatory standards;

(E) A provision that the policy will be eligible to receive a preferential benefit or advantage which will not be available to policies purchased from the company at future dates or under other circumstances, the effect of which is to discriminate against those future policies;

(F) Any provision which is prohibited by a rule adopted by the superintendent of insurance to clarify, construe, or implement any of the prohibitions of divisions (A) to (E), inclusive, of this section.

Section 3915.10 | Time extension for premium payments.

• Effective: October 1, 1953
• Latest Legislation: House Bill 1 - 100th General Assembly

A life insurance company may enter into subsequent agreements in writing with the insured, which need not be attached to the policy, to extend the time for the payment of any premium, or part thereof, upon the condition that failure to comply with the terms of such agreement shall lapse the policy. Subject to any lien that may be created to secure any indebtedness contracted by the insured in consideration of such extension, said agreement shall not impair any right existing under the policy.

Section 3915.11 | Interest added to principal debt.

• Effective: October 1, 1953
• Latest Legislation: House Bill 1 - 100th General Assembly

In ascertaining the indebtedness due upon policy or premium loans, the interest, if not paid when due, shall be added to the principal of such loans and shall bear interest at the rate specified in the note or loan agreement.

Section 3915.12 | Exchange, alteration, or conversion of policy.

• Effective: October 1, 1953
• Latest Legislation: House Bill 1 - 100th General Assembly

Any life insurance company, at the request of the policyholder, may exchange, alter, or convert any policy of life or endowment insurance or any annuity issued by it for or into a policy of another plan of insurance or annuity as of a date not prior to the effective date of the original policy or annuity. If such newly written policy or annuity is issued as of a date prior to the date of the application for exchange, alteration, or conversion, the amount of insurance or annuity thereunder shall not exceed, on the changed plan, whichever is the greater of the two following amounts:

(A) The amount that the premium paid for the original policy or annuity would have purchased, at the age of the insured on the effective date of said original policy or annuity, on the plan of the newly written policy or annuity;

(B) The amount of the original policy or annuity.

Section 3915.13 | Back-dating policies.

• Effective: January 1, 2021
• Latest Legislation: House Bill 339 - 133rd General Assembly

No life insurance company nor any of its agents shall knowingly make, issue, or deliver in this state any policy or contract of life insurance which purports to be issued or to take effect as of a date more than six months before the application therefor was made, if thereby the premium on such policy or contract is reduced below the premium which would be payable thereon, as determined by the nearest birthday of the insured at the time when such application was made. In determining the date when an application was made, under this section the date of execution of the application or the date of medical examination, where such examination is required, whichever is later, shall govern.

This section does not prohibit the exchange, alteration, or conversion of any policy of life or endowment insurance or any annuity in the manner provided by section 3915.12 of the Revised Code, nor does it invalidate any contract made in violation of this section.

Section 3915.14 | Filing of forms of policies.

• Effective: September 13, 2004
• Latest Legislation: Senate Bill 187 - 125th General Assembly

(A) No policy of life insurance, nor any indorsement, rider, or application which becomes or is designed to become a part of any such policy, shall be delivered, issued for delivery, or used in this state, or be issued by a life insurance company organized under the laws of this state, until thirty days after the form of said policy, indorsement, rider, or application has been filed with the superintendent of insurance, unless within that time the superintendent gives the insurance company written approval for the use of the form.

(B) No individual or group annuity policy or contract, including, but not limited to, a guaranteed investment contract, deposit administration contract, funding agreement, structured settlement agreement, or similar types, excluding those required to be filed with the superintendent pursuant to section 3911.011 of the Revised Code, and no certificate, endorsement, rider, or application which becomes or is designed to become a part of any such policy, contract, or agreement, shall be delivered, issued for delivery, or used in this state, or be issued by a life insurance company organized under the laws of this state, until thirty days after the form of said policy, contract, agreement, certificate, endorsement, rider, or application has been filed with the superintendent, unless within that time the superintendent gives the insurance company written approval for the use of the form.

(C) When the superintendent finds within such thirty-day period that the form filed contains any language that is prohibited by any law of this state, including any rule of the superintendent, or is inconsistent, ambiguous, misleading, deceptive, or likely to mislead an applicant or policyholder, the superintendent shall give written notice of such finding to the insurance company that filed the form, and thereafter the insurance company shall not deliver, issue for delivery, or use the form.

The superintendent's action is subject to review by any court of competent jurisdiction, subject to Chapter 119. of the Revised Code.

Section 3915.141 | Filing of form of indorsement or rider providing accelerated benefits.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

In the case of an indorsement or rider that provides accelerated benefits in accordance with sections 3915.21 to 3915.24 of the Revised Code, the filing of the form of the indorsement or rider as required by section 3915.14 of the Revised Code shall include the form number of the policy or contract with which the indorsement or rider may be used.

Section 3915.15 | Provisions of policies of foreign companies.

• Effective: October 1, 1953
• Latest Legislation: House Bill 1 - 100th General Assembly

The policies of a life insurance company, not organized under the laws of this state, may contain any provision which the law of the state, territory, district, or country under which the company is organized prescribes shall be in such policies when they are issued in this state, and the policies of a life insurance company organized under the laws of this state, when issued or delivered in any other state, territory, district, or country, may contain any provision required by the laws of the state, territory, district, or country in which such policies are issued.

Section 3915.16 | Interstate insurance product regulation code adopted.

• Effective: August 21, 2006
• Latest Legislation: Senate Bill 268 - 126th General Assembly

The "Interstate Insurance Product Regulation Compact" is intended to help states join together to establish an interstate compact to regulate designated insurance products. Pursuant to terms and conditions of this section, the state of Ohio seeks to join with other states and establish the interstate insurance product regulation commission, and thus become a member of the interstate insurance product regulation commission.

The "Interstate Insurance Product Regulation Compact" is hereby enacted into law and entered into with all other states which have legally joined in the compact:

"Interstate Insurance Product Regulation Compact"

Article I. Purposes

The purposes of this Compact are, through means of joint and cooperative action among the Compacting States:

1. To promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products;

2. To develop uniform standards for insurance products covered under the Compact;

3. To establish a central clearinghouse to receive and provide prompt review of insurance products covered under the Compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more Compacting States;

4. To give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standard;

5. To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the Compact;

6. To create the Interstate Insurance Product Regulation Commission; and

7. To perform these and such other related functions as may be consistent with the state regulation of the business of insurance.

Article II. Definitions

For purposes of this Compact:

1. "Advertisement" means any material designed to create public interest in a Product, or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more specifically defined in the Rules and Operating Procedures of the Commission.

2. "Bylaws" means those bylaws established by the Commission for its governance, or for directing or controlling the Commission's actions or conduct.

3. "Compacting State" means any State which has enacted this Compact legislation and which has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant to Article XIV, Section 2.

4. "Commission" means the "Interstate Insurance Product Regulation Commission" established by this Compact.

5. "Commissioner" means the chief insurance regulatory official of a State including, but not limited to commissioner, superintendent, director or administrator.

6. "Domiciliary State" means the state in which an Insurer is incorporated or organized; or, in the case of an alien Insurer, its state of entry.

7. "Insurer" means any entity licensed by a State to issue contracts of insurance for any of the lines of insurance covered by this Act.

8. "Member" means the person chosen by a Compacting State as its representative to the Commission, or his or her designee. The superintendent of insurance or the superintendent's designee shall serve as the member to the Commission for the state of Ohio.

9. "Non-compacting State" means any State which is not at the time a Compacting State.

10. "Operating Procedures" means procedures promulgated by the Commission implementing a Rule, Uniform Standard or a provision of this Compact.

11. "Product" means the form of a policy or contract, including any application, endorsement, or related form which is attached to and made a part of the policy or contract, and any evidence of coverage or certificate, for an individual or group annuity, life insurance, disability income or long-term care insurance product that an Insurer is authorized to issue.

12. "Rule" means a statement of general or particular applicability and future effect promulgated by the Commission, including a Uniform Standard developed pursuant to Article VII of this Compact, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the Commission, which shall have the force and effect of law in the Compacting States.

13. "State" means any state, district or territory of the United States of America.

14. "Third-Party Filer" means an entity that submits a Product filing to the Commission on behalf of an Insurer.

15. "Uniform Standard" means a standard adopted by the Commission for a Product line, pursuant to Article VII of the Compact, and shall include all of the Product requirements in aggregate; provided, that each Uniform Standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a Product and the form of the Product made available to the public shall not be unfair, inequitable, or against public policy as determined by the Commission.

Article III. Establishment of the Commission and Venue

1. The Compacting States hereby create and establish a joint public agency known as the "Interstate Insurance Product Regulation Commission." Pursuant to Article IV, the Commission will have the power to develop Uniform Standards for Product lines, receive and provide prompt review of Products filed therewith, and give approval to those Product filings satisfying applicable Uniform Standards; provided, it is not intended for the Commission to be the exclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibit any Insurer from filing its product in any State wherein the Insurer is licensed to conduct the business of insurance; and any such filing shall be subject to the laws of the State where filed.

2. The Commission is a body corporate and politic, and an instrumentality of the Compacting States.

3. The Commission is solely responsible for its liabilities except as otherwise specifically provided in this Compact.

4. Venue is proper and judicial proceedings by or against the Commission shall be brought solely and exclusively in a Court of competent jurisdiction where the principal office of the Commission is located.

Article IV. Powers of the Commission

The Commission shall have the following powers:

1. To promulgate Rules, pursuant to Article VII of this Compact, which shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in this Compact;

2. To exercise its rule-making authority and establish reasonable Uniform Standards for Products covered under the Compact, and Advertisement related thereto, which shall have the force and effect of law and shall be binding in the Compacting States, but only for those Products filed with the Commission, provided, that a Compacting State shall have the right to opt out of such Uniform Standard pursuant to Article VII, to the extent and in the manner provided in this Compact, and, provided further, that any Uniform Standard established by the Commission for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the National Association of Insurance Commissioners' Long-term Care Insurance Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 2001. The Commission shall consider whether any subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model Regulation adopted by the NAIC require amending of the Uniform Standards established by the Commission for long-term care insurance products;

3. To receive and review in an expeditious manner Products filed with the Commission, and rate filings for disability income and long-term care insurance Products, and give approval of those Products and rate filings that satisfy the applicable Uniform Standard, where such approval shall have the force and effect of law and be binding on the Compacting States to the extent and in the manner provided in the Compact;

4. To receive and review in an expeditious manner Advertisement relating to long-term care insurance products for which Uniform Standards have been adopted by the Commission and give approval to all Advertisement that satisfies the applicable Uniform Standard. For any product covered under this Compact, other than long-term care insurance products, the Commission shall have the authority to require an insurer to submit all or any part of its Advertisement with respect to that product for review or approval prior to use, if the Commission determines that the nature of the product is such that an Advertisement of the product could have the capacity or tendency to mislead the public. The actions of the Commission as provided in this section shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in the Compact;

5. To exercise its rule-making authority and designate Products and Advertisement that may be subject to a self-certification process without the need for prior approval by the Commission;

6. To promulgate Operating Procedures, pursuant to Article VII of this Compact, which shall be binding in the Compacting States to the extent and in the manner provided in this Compact;

7. To bring and prosecute legal proceedings or actions in its name as the Commission; provided, that the standing of any state insurance department to sue or be sued under applicable law shall not be affected;

8. To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence;

9. To establish and maintain offices;

10. To purchase and maintain insurance and bonds;

11. To borrow, accept or contract for services of personnel, including, but not limited to, employees of a Compacting State;

12. To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the Compact, and determine their qualifications; and to establish the Commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel;

13. To accept any and all appropriate donations and grants of money, equipment, supplies, materials and services, and to receive, utilize and dispose of the same; provided that at all times the Commission shall strive to avoid any appearance of impropriety;

14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal or mixed; provided that at all times the Commission shall strive to avoid any appearance of impropriety;

15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of any property, real, personal or mixed;

16. To remit filing fees to Compacting States as may be set forth in the Bylaws, Rules or Operating Procedures;

17. To enforce compliance by Compacting States with Rules, Uniform Standards, Operating Procedures and Bylaws;

18. To provide for dispute resolution among Compacting States;

19. To advise Compacting States on issues relating to Insurers domiciled or doing business in Non-compacting jurisdictions, consistent with the purposes of this Compact;

20. To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments;

21. To establish a budget and make expenditures;

22. To borrow money;

23. To appoint committees, including advisory committees comprising members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and such other interested persons as may be designated in the Bylaws;

24. To provide and receive information from, and to cooperate with law enforcement agencies;

25. To adopt and use a corporate seal; and

26. To perform such other functions as may be necessary or appropriate to achieve the purposes of this Compact consistent with the state regulation of the business of insurance.

Article V. Organization of the Commission

1. Membership, Voting and Bylaws

a. Each Compacting State shall have and be limited to one member. Each member shall be qualified to serve in that capacity pursuant to applicable law of the Compacting State. Any member may be removed or suspended from office as provided by the law of the State from which he or she shall be appointed. Any vacancy occurring in the Commission shall be filled in accordance with the laws of the Compacting State wherein the vacancy exists. Nothing herein shall be construed to affect the manner in which a Compacting State determines the election or appointment and qualification of its own Commissioner.

b. Each member shall be entitled to one vote and shall have an opportunity to participate in the governance of the Commission in accordance with the Bylaws. Notwithstanding any provision herein to the contrary, no action of the Commission with respect to the promulgation of a Uniform Standard shall be effective unless two-thirds (2/3) of the members vote in favor thereof.

c. The Commission shall, by a majority of the members, prescribe Bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of the Compact, including, but not limited to:

i. Establishing the fiscal year of the Commission;

ii. Providing reasonable procedures for appointing and electing members, as well as holding meetings, of the Management Committee;

iii. Providing reasonable standards and procedures: (i) for the establishment and meetings of other committees, and (ii) governing any general or specific delegation of any authority or function of the Commission;

iv. Providing reasonable procedures for calling and conducting meetings of the Commission that consists of a majority of Commission members, ensuring reasonable advance notice of each such meeting and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public's interest, the privacy of individuals, and insurers' proprietary information, including trade secrets. The Commission may meet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the Commission must make public (i) a copy of the vote to close the meeting revealing the vote of each member with no proxy votes allowed, and (ii) votes taken during such meeting;

v. Establishing the titles, duties and authority and reasonable procedures for the election of the officers of the Commission;

vi. Providing reasonable standards and procedures for the establishment of the personnel policies and programs of the Commission. Notwithstanding any civil service or other similar laws of any Compacting State the Bylaws shall exclusively govern the personnel policies and programs of the Commission;

vii. Promulgating a code of ethics to address permissible and prohibited activities of commission members and employees; and

viii. Providing a mechanism for winding up the operations of the Commission and the equitable disposition of any surplus funds that may exist after the termination of the Compact after the payment and/or reserving of all of its debts and obligations.

d. The Commission shall publish its bylaws in a convenient form and file a copy thereof and a copy of any amendments thereto, with the appropriate agency or officer in each of the Compacting States.

2. Management Committee, Officers and Personnel

a. A Management Committee comprising no more than fourteen (14) members shall be established as follows:

i. One (1) member from each of the six (6) Compacting States with the largest premium volume for individual and group annuities, life, disability income and long-term care insurance products, determined from the records of the NAIC for the prior year;

ii. Four (4) members from those Compacting States with at least two percent (2%) of the market based on the premium volume described above, other than the six (6) Compacting States with the largest premium volume, selected on a rotating basis as provided in the Bylaws; and

iii. Four (4) members from those Compacting States with less than two percent (2%) of the market, based on the premium volume described above, with one (1) selected from each of the four (4) zone regions of the NAIC as provided in the Bylaws.

b. The Management Committee shall have such authority and duties as may be set forth in the Bylaws, including but not limited to:

i. Managing the affairs of the Commission in a manner consistent with the Bylaws and purposes of the Commission;

ii. Establishing and overseeing an organizational structure within, and appropriate procedures for, the Commission to provide for the creation of Uniform Standards and other Rules, receipt and review of product filings, administrative and technical support functions, review of decisions regarding the disapproval of a product filing, and the review of elections made by a Compacting State to opt out of a Uniform Standard; provided that a Uniform Standard shall not be submitted to the Compacting States for adoption unless approved by two-thirds (2/3) of the members of the Management Committee;

iii. Overseeing the offices of the Commission; and

iv. Planning, implementing, and coordinating communications and activities with other state, federal and local government organizations in order to advance the goals of the Commission.

c. The Commission shall elect annually officers from the Management Committee, with each having such authority and duties, as may be specified in the Bylaws.

d. The Management Committee may, subject to the approval of the Commission, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the Commission may deem appropriate. The executive director shall serve as secretary to the Commission, but shall not be a member of the Commission. The executive director shall hire and supervise such other staff as may be authorized by the Commission.

3. Legislative and Advisory Committees

a. A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the Commission, including the Management Committee; provided that the manner of selection and term of any legislative committee member shall be as set forth in the Bylaws. Prior to the adoption by the Commission of any Uniform Standard revision to the Bylaws, annual budget or other significant matter as may be provided in the Bylaws, the Management Committee shall consult with and report to the legislative committee.

b. The Commission shall establish two (2) advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives.

c. The Commission may establish additional advisory committees as its Bylaws may provide for the carrying out of its functions.

4. Corporate Records of the Commission

The Commission shall maintain its corporate books and records in accordance with the Bylaws.

5. Qualified Immunity, Defense and Indemnification

a. The members, officers, executive director, employees and representatives of the Commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing in this paragraph shall be construed to protect any such person from suit and/or liability for any damage, loss, injury or liability caused by intentional or willful and wanton misconduct of that person.

b. The Commission shall defend any member, officer, executive director, employee or representative of the Commission in any civil action seeking to impose liability arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing herein shall be construed to prohibit that person from retaining his or her own counsel; and provided further, that the actual or alleged act, error or omission did not result from that person's intentional or willful and wanton misconduct.

c. The Commission shall indemnify and hold harmless any member, officer, executive director, employee or representative of the Commission for the amount of any settlement or judgment obtained against that person arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that such person had a reasonable basis for believing occurred with the scope of Commission employment, duties or responsibilities, provided, that the actual or alleged act, error or omission did not result from the intentional or willful and wanton misconduct of that person.

Article VI. Meetings and Acts of the Commission

1. The Commission shall meet and take such actions as are consistent with the provisions of this Compact and Bylaws.

2. Each member of the Commission shall have the right and power to cast a vote to which that Compacting State is entitled and to participate in the business and affairs of the Commission. A member shall vote in person or by such other means as provided in the Bylaws. The Bylaws may provide for members' participation in meetings by telephone or other means of communication.

3. The Commission shall meet at least once during each calendar year. Additional meetings shall be held as set forth in the Bylaws.

Article VII. Rules and Operating Procedures: Rulemaking Functions of the Commission and Opting Out of Uniform Standards

1. Rulemaking Authority. The Commission shall promulgate reasonable Rules, including Uniform Standards, and Operating Procedures in order to effectively and efficiently achieve the purposes of this Compact. Notwithstanding the foregoing, in the event the Commission exercises its rulemaking authority in a manner that is beyond the scope of the purposes of this Act, or the powers granted hereunder, then such an action by the Commission shall be invalid and have no force and effect.

2. Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant to a rulemaking process that conforms to the Model State Administrative Procedure Act of 1981 as amended, as may be appropriate to the operations of the Commission. Before the Commission adopts a Uniform Standard, the Commission shall give written notice to the relevant state legislative committee(s) in each Compacting State responsible for insurance issues of its intention to adopt the Uniform Standard. The Commission in adopting a Uniform Standard shall consider fully all submitted materials and issue a concise explanation of its decision.

3. Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shall become effective ninety (90) days after its promulgation by the Commission or such later date as the Commission may determine; provided, however, that a Compacting State may opt out of a Uniform Standard as provided in this Article. "Opt out" shall be defined as any action by a Compacting State to decline to adopt or participate in a promulgated Uniform Standard. All other Rules and Operating Procedures, and amendments thereto, shall become effective as of the date specified in each Rule, Operating Procedure or amendment.

4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard, either by legislation or regulation duly promulgated by the Insurance Department under the Compacting State's Administrative Procedure Act. If a Compacting State elects to opt out of a Uniform Standard by regulation, it must (a) give written notice to the Commission no later than ten (10) business days after the Uniform Standard is promulgated, or at the time the State becomes a Compacting State and (b) find that the Uniform Standard does not provide reasonable protections to the citizens of the State, given the conditions in the State. The Commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the State which warrant a departure from the Uniform Standard and determining that the Uniform Standard would not reasonably protect the citizens of the State. The Commissioner must consider and balance the following factors and find that the conditions in the State and needs of the citizens of the State outweigh: (i) the intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted by the Commission provides reasonable protections to consumers of the relevant Product.

Notwithstanding the foregoing, a Compacting State may, at the time of its enactment of this Compact, prospectively opt out of all Uniform Standards involving long-term care insurance products by expressly providing for such opt out in the enacted Compact, and such an opt out shall not be treated as a material variance in the offer or acceptance of any State to participate in this Compact. Such an opt out shall be effective at the time of enactment of this Compact by the Compacting State and shall apply to all existing Uniform Standards involving long-term care insurance products and those subsequently promulgated.

5. Effect of Opt Out. If a Compacting State elects to opt out of a Uniform Standard, the Uniform Standard shall remain applicable in the Compacting State electing to opt out until such time the opt out legislation is enacted into law or the regulation opting out becomes effective.

Once the opt out of a Uniform Standard by a Compacting State becomes effective as provided under the laws of that State, the Uniform Standard shall have no further force and effect in that State unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of the State. If a Compacting State opts out of a Uniform Standard after the Uniform Standard has been made effective in that State, the opt out shall have the same prospective effect as provided under Article XIV for withdrawals.

6. Stay of Uniform Standard. If a Compacting State has formally initiated the process of opting out of a Uniform Standard by regulation, and while the regulatory opt out is pending, the Compacting State may petition the Commission, at least fifteen (15) days before the effective date of the Uniform Standard, to stay the effectiveness of the Uniform Standard in that State. The Commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success. If a stay is granted or extended by the Commission, the stay or extension thereof may postpone the effective date by up to ninety (90) days, unless affirmatively extended by the Commission; provided, a stay may not be permitted to remain in effect for more than one (1) year unless the Compacting State can show extraordinary circumstances which warrant a continuance of the stay, including, but not limited to, the existence of a legal challenge which prevents the Compacting State from opting out. A stay may be terminated by the Commission upon notice that the rulemaking process has been terminated.

7. Not later than thirty (30) days after a Rule or Operating Procedure is promulgated, any person may file a petition for judicial review of the Rule or Operating Procedure; provided, that the filing of such a petition shall not stay or otherwise prevent the Rule or Operating Procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the Commission consistent with applicable law and shall not find the Rule or Operating Procedure to be unlawful if the Rule or Operating Procedure represents a reasonable exercise of the Commission's authority.

Article VIII. Commission Records and Enforcement

1. The Commission shall promulgate Rules establishing conditions and procedures for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers' trade secrets. The Commission may promulgate additional Rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

2. Except as to privileged records, data and information, the laws of any Compacting State pertaining to confidentiality or nondisclosure shall not relieve any Compacting State Commissioner of the duty to disclose any relevant records, data or information to the Commission; provided, that disclosure to the Commission shall not be deemed to waive or otherwise affect any confidentiality requirement; and further provided, that, except as otherwise expressly provided in this Act, the Commission shall not be subject to the Compacting State's laws pertaining to confidentiality and nondisclosure with respect to records, data and information in its possession. Confidential information of the Commission shall remain confidential after such information is provided to any Commissioner.

3. The Commission shall monitor Compacting States for compliance with duly adopted Bylaws, Rules, including Uniform Standards, and Operating Procedures. The Commission shall notify any non-complying Compacting State in writing of its non-compliance with Commission Bylaws, Rules or Operating Procedures. If a non-complying Compacting State fails to remedy its noncompliance within the time specified in the notice of noncompliance, the Compacting State shall be deemed to be in default as set forth in Article XIV.

4. The Commissioner of any State in which an Insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise his or her authority to oversee the market regulation of the activities of the Insurer in accordance with the provisions of the State's law. The Commissioner's enforcement of compliance with the Compact is governed by the following provisions:

a. With respect to the Commissioner's market regulation of a Product or Advertisement that is approved or certified to the Commission, the content of the Product or Advertisement shall not constitute a violation of the provisions, standards or requirements of the Compact except upon a final order of the Commission, issued at the request of a Commissioner after prior notice to the Insurer and an opportunity for hearing before the Commission.

b. Before a Commissioner may bring an action for violation of any provision, standard or requirement of the Compact relating to the content of an Advertisement not approved or certified to the Commission, the Commission, or an authorized Commission officer or employee, must authorize the action. However, authorization pursuant to this paragraph does not require notice to the Insurer, opportunity for hearing or disclosure of requests for authorization or records of the Commission's action on such requests.

Article IX. Dispute Resolution

The Commission shall attempt, upon the request of a member, to resolve any disputes or other issues that are subject to this Compact and which may arise between two or more Compacting States, or between Compacting States and Non-compacting States, and the Commission shall promulgate an Operating Procedure providing for resolution of such disputes.

Article X. Product Filing and Approval

1. Insurers and Third-Party Filers seeking to have a Product approved by the Commission shall file the Product with, and pay applicable filing fees to, the Commission. Nothing in this Act shall be construed to restrict or otherwise prevent an insurer from filing its Product with the insurance department in any State wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the States where filed.

2. The Commission shall establish appropriate filing and review processes and procedures pursuant to Commission Rules and Operating Procedures. Notwithstanding any provision herein to the contrary, the Commission shall promulgate Rules to establish conditions and procedures under which the Commission will provide public access to Product filing information. In establishing such Rules, the Commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a Product filing or supporting information.

3. Any Product approved by the Commission may be sold or otherwise issued in those Compacting States for which the Insurer is legally authorized to do business.

Article XI. Review of Commission Decisions Regarding Filings

1. Not later than thirty (30) days after the Commission has given notice of a disapproved Product or Advertisement filed with the Commission, the Insurer or Third Party Filer whose filing was disapproved may appeal the determination to a review panel appointed by the Commission. The Commission shall promulgate Rules to establish procedures for appointing such review panels and provide for notice and hearing. An allegation that the Commission, in disapproving a Product or Advertisement filed with the Commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with Article III, Section 4.

2. The Commission shall have authority to monitor, review and reconsider Products and Advertisement subsequent to their filing or approval upon a finding that the product does not meet the relevant Uniform Standard. Where appropriate, the Commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in Section 1 above.

Article XII. Finance

1. The Commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the Commission may accept contributions and other forms of funding from the National Association of Insurance Commissioners, Compacting States and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the Commission concerning the performance of its duties shall not be compromised.

2. The Commission shall collect a filing fee from each Insurer and Third Party Filer filing a product with the Commission to cover the cost of the operations and activities of the Commission and its staff in a total amount sufficient to cover the Commission's annual budget.

3. The Commission's budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in Article VII of this Compact.

4. The Commission shall be exempt from all taxation in and by the Compacting States.

5. The Commission shall not pledge the credit of any Compacting State, except by and with the appropriate legal authority of that Compacting State.

6. The Commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the Commission shall be subject to the accounting procedures established under its Bylaws. The financial accounts and reports including the system of internal controls and procedures of the Commission shall be audited annually by an independent certified public accountant. Upon the determination of the Commission, but no less frequently than every three (3) years, the review of the independent auditor shall include a management and performance audit of the Commission. The Commission shall make an Annual Report to the Governor and the legislature of the Compacting States, which shall include a report of the independent audit. The Commission's internal accounts shall not be confidential and such materials may be shared with the Commissioner of any Compacting State upon request provided, however, that any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers' proprietary information, including trade secrets, shall remain confidential.

7. No Compacting State shall have any claim to or ownership of any property held by or vested in the Commission or to any Commission funds held pursuant to the provisions of this Compact.

Article XIII. Compacting States, Effective Date and Amendment

1. Any state is eligible to become a Compacting State.

2. The Compact shall become effective and binding upon legislative enactment of the Compact into law by two Compacting States; provided, the Commission shall become effective for purposes of adopting Uniform Standards for, reviewing, and giving approval or disapproval of, Products filed with the Commission that satisfy applicable Uniform Standards only after twenty-six (26) States are Compacting States or, alternatively, by States representing greater than forty percent (40%) of the premium volume for life insurance, annuity, disability income and long-term care insurance products, based on records of the NAIC for the prior year. Therefore, it shall become effective and binding as to any other Compacting State upon enactment of the Compact into law by that State.

3. Amendments to the Compact may be proposed by the Commission for enactment by the Compacting States. No amendment shall become effective and binding upon the Commission and the Compacting States unless and until all Compacting States enact the amendment into law.

Article XIV. Withdrawal, Default and Termination

1. Withdrawal

a. Once effective, the Compact shall continue in force and remain binding upon each and every Compacting State; provided, that a Compacting State may withdraw from the Compact ("Withdrawing State") by enacting a statute specifically repealing the statute which enacted the Compact into law.

b. The effective date of withdrawal is the effective date of the repealing statute. However, the withdrawal shall not apply to any product filings approved or self-certified, or any Advertisement of such products, on the date the repealing statute becomes effective, except by mutual agreement of the Commission and the Withdrawing State unless the approval is rescinded by the Withdrawing State as provided in Paragraph e of this section.

c. The Commissioner of the Withdrawing State shall immediately notify the Management Committee in writing upon the introduction of legislation repealing this Compact in the Withdrawing State.

d. The Commission shall notify the other Compacting States of the introduction of such legislation within ten (10) days after its receipt of notice thereof.

e. The Withdrawing State is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the Commission and the Withdrawing State. The Commission's approval of Products and Advertisement prior to the effective date of withdrawal shall continue to be effective and be given full force and effect in the Withdrawing State, unless formally rescinded by the Withdrawing State in the same manner as provided by the laws of the Withdrawing State for the prospective disapproval of products or advertisement previously approved under state law.

f. Reinstatement following withdrawal of any Compacting State shall occur upon the effective date of the Withdrawing State reenacting the Compact.

2. Default

a. If the Commission determines that any Compacting State has at any time defaulted ("Defaulting State") in the performance of any of its obligations or responsibilities under this Compact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after notice and hearing as set forth in the Bylaws, all rights, privileges and benefits conferred by this Compact on the Defaulting State shall be suspended from the effective date of default as fixed by the Commission. The grounds for default include, but are not limited to, failure of a Compacting State to perform its obligations or responsibilities, and any other grounds designated in Commission Rules. The Commission shall immediately notify the Defaulting State in writing of the Defaulting State's suspension pending a cure of the default. The Commission shall stipulate the conditions and the time period within which the Defaulting State must cure its default. If the Defaulting State fails to cure the default within the time period specified by the Commission, the Defaulting State shall be terminated from the Compact and all rights, privileges and benefits conferred by this Compact shall be terminated from the effective date of termination.

b. Product approvals by the Commission or product self-certifications, or any Advertisement in connection with such product, that are in force on the effective date of termination shall remain in force in the Defaulting State in the same manner as if the Defaulting State had withdrawn voluntarily pursuant to Section 1 of this article.

c. Reinstatement following termination of any Compacting State requires a reenactment of the Compact.

3. Dissolution of Compact

a. The Compact dissolves effective upon the date of the withdrawal or default of the Compacting State which reduces membership in the Compact to one Compacting State.

b. Upon the dissolution of this Compact, the Compact becomes null and void and shall be of no further force or effect, and the business and affairs of the Commission shall be wound up and any surplus funds shall be distributed in accordance with the Bylaws.

Article XV. Severability and Construction

1. The provisions of this Compact shall be severable; and if any phrase, clause, sentence or provision is deemed unenforceable, the remaining provisions of the Compact shall be enforceable.

2. The provisions of this Compact shall be liberally construed to effectuate its purposes.

Article XVI. Binding Effect of Compact and Other Laws

1. Other Laws

a. Nothing herein prevents the enforcement of any other law of a Compacting State, except as provided in Paragraph b of this section.

b. For any Product approved or certified to the Commission, the Rules, Uniform Standards and any other requirements of the Commission shall constitute the exclusive provisions applicable to the content, approval and certification of such Products. For Advertisement that is subject to the Commission's authority, any Rule, Uniform Standard or other requirement of the Commission which governs the content of the Advertisement shall constitute the exclusive provision that a Commissioner may apply to the content of the Advertisement. Notwithstanding the foregoing, no action taken by the Commission shall abrogate or restrict: (i) the access of any person to state courts; (ii) remedies available under state law related to breach of contract, tort, or other laws not specifically directed to the content of the Product; (iii) state law relating to the construction of insurance contracts; or (iv) the authority of the attorney general of the state, including but not limited to maintaining any actions or proceedings, as authorized by law.

c. All insurance products filed with individual States shall be subject to the laws of those States.

2. Binding Effect of this Compact

a. All lawful actions of the Commission, including all Rules and Operating Procedures promulgated by the Commission, are binding upon the Compacting States.

b. All agreements between the Commission and the Compacting States are binding in accordance with their terms.

c. Upon the request of a party to a conflict over the meaning or interpretation of Commission actions, and upon a majority vote of the Compacting States, the Commission may issue advisory opinions regarding the meaning or interpretation in dispute.

d. In the event any provision of this Compact exceeds the constitutional limits imposed on the legislature of any Compacting State, the obligations, duties, powers or jurisdiction sought to be conferred by that provision upon the Commission shall be ineffective as to that Compacting State, and those obligations, duties, powers or jurisdiction shall remain in the Compacting State and shall be exercised by the agency thereof to which those obligations, duties, powers or jurisdiction are delegated by law in effect at the time this Compact becomes effective.

Section 3915.21 | Accelerated benefits definitions.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

As used in sections 3915.21 to 3915.24 of the Revised Code:

(A) "Accelerated benefits" means the benefits that are payable under a policy and that meet all of the following criteria:

(1) The benefits are payable to the policyholder or certificate holder during the lifetime of the insured and upon the occurrence of a qualifying event.

(2) The benefits are payable in amounts that are fixed at the time of the acceleration of the benefits.

(3) The benefits reduce the death benefit otherwise payable under the policy.

(B) "Policy" means any policy, rider, indorsement, annuity contract, or endowment contract delivered or issued for delivery in this state by a life insurance company.

(C) "Qualifying event" means the occurrence of any of the following:

(1) A medical condition that drastically reduces the potential life span of the insured to a period of time that is within the period of time specified in the policy;

(2) A medical condition that requires the use of extensive or extraordinary medical care or treatment, including a major organ transplant or the continuous use of artificial life support systems, without which the insured would likely die;

(3) A condition that normally results in continuous confinement in an eligible institution, as defined in the policy, if the insured is expected to remain in the institution for the remainder of his life;

(4) A medical condition that, in the absence of extensive or extraordinary medical care or treatment, would drastically reduce the potential life span of the insured. Such conditions may include any of the following:

(a) Coronary artery disease that results in an acute infarction or that requires surgery;

(b) Permanent neurological deficit resulting from cerebral vascular accident;

(c) End stage renal failure;

(d) Acquired immunodeficiency syndrome;

(e) Any other medical condition that the superintendent of insurance may approve for a particular policy filing.

(5) Any other qualifying event that the superintendent may approve for a particular policy filing.

Section 3915.22 | Application of chapter.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

(A) Except as provided in division (B) of this section, every policy that provides accelerated benefits and that is issued or delivered in this state on or after the effective date of this section is subject to this chapter.

(B) Sections 3915.21 to 3915.24 of the Revised Code do not apply to any policy that provides accelerated benefits for the sole purpose of providing directly or supplementing long-term care insurance as defined in section 3923.41 of the Revised Code.

Section 3915.23 | Accelerated benefits calculated on mortality risks.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

The accelerated benefits provided by any policy subject to this chapter are life insurance benefits and are calculated primarily on the basis of mortality risks rather than morbidity risks.

Section 3915.24 | Rules.

• Effective: October 23, 1991
• Latest Legislation: House Bill 16 - 119th General Assembly

Within six months after the effective date of this section, the superintendent of insurance shall adopt rules in accordance with Chapter 119. of the Revised Code to carry out the purposes of sections 3915.21 to 3915.24 of the Revised Code. The rules shall include criteria for the payment of accelerated benefits, disclosure requirements, and actuarial standards.