Annuity Settlement Options / Annuitization Sample Clauses

Annuity Settlement Options / Annuitization. (a) For all accumulation type deferred annuities (rather than fixed scheduled premium or other paid-up deferred annuities), the guaranteed interest rate and annuity mortality table being utilized for the guaranteed purchase rates must be identified in the contract. Section 4223(a)(1)(C). The Department has not approved an annuity purchase basis with an interest rate lower than 0.5%. §3201(c). If projection factors are used, they must also be specified (e.g., if the 1983a table with projection scale G is used, the year to which the mortality rates are projected needs to be specified). The following is an example of language that has been found acceptable: “For annuity payment options 2 and 3 in determining the monthly installment factor, the adjusted age mortality rates are projected for improvement each year. The first mortality rate for each attained age is projected for improvement five (5) years, the second mortality rate is projected for six (6) years and then each successive mortality rate is projected for one additional year.” The language in the example would need to be modified as appropriate to accurately reflect the actual calculation and options under the particular contract. If a percentage of the specified mortality table is to be used, then that percentage must be stated in the description. Contracts subject to the Arizona v ▇▇▇▇▇▇ decision and Title VII of the Civil Rights Act of 1964 must provide for unisex annuity purchase rates. The description of the unisex mortality must be such that the mortality used is reasonably determined. If a pivot age approach is used then the pivot age must be specified. (b) Annuity contracts utilizing a static annuity mortality table typically include a table of guaranteed purchase rates. For contracts utilizing a non-static (dynamic) annuity mortality table (e.g., 2012 Individual Annuity Reserving Table or the 2012 Individual Annuity Mortality Table), the inclusion of the table of guaranteed purchase rates is not required. For contracts utilizing a non-static table: (i) The contract/certificate must describe the guaranteed purchase rates by reference to interest and mortality assumptions; (ii) The contract/certificate must provide the insurer’s contact information for the certificate holder to obtain more detailed information, including a purchase rate quote. The contact information should provide more than just the company’s website address in view of certificate holders who may not have access to the intern...