Individual annuity filing helpful hints
The following are issues that repeatedly cause delay of filing review, and/or result in disapproval of, individual annuity filings. Please review this list and all of our individual annuity Product Standards (including those for base contracts, riders, applications and if applicable, equity indexed, fixed deferred paid up and structured settlements) before submitting the Company's filing. By doing so, it will help to speed up our filing review time.
- When any form, or part of a form, in a filing has brackets, then a Statement
of Variability must be included with the filing. The Statement of Variability
will be considered for approval and it must therefore include a range of
variables, and explanation thereof, for each bracketed item. The range of
variables can be composed of either numbers (e.g., Bonus of 1% to 5%) or
a list of all the possible alternative language or items (e.g., Optional
Riders previously filed and approved). Any language not approved in the
Statement of Variability cannot be used.
Any range of numerical values, and any range/list of variable items, must be reasonable and realistic. The Statement of Variability must explain the conditions under which each variable amount/item may change and the relationship between amounts/items.
Please note that vague contract language that is not specific to a variable component of the contract is unacceptable as a variability item. Such wording as “and any other items that are permissible” or “and any other items that comply with law” are unacceptable as contract language variability items. For specific contract language that is variable (e.g., Tax Qualified and Non Tax Qualified), that exact language, as it will appear in the form that is actually issued to a consumer, and the explanation for language variability, need to be included in the Statement of Variability.
At the top of the Statement of Variability document, please include the form number(s) that the Statement of Variability will be used with. The Statement of Variability document is required to have its own unique form number in the bottom left hand corner, and be submitted as a form for approval. For paper filings, list the Statement of Variability on the Forms List. For SERFF filings, attach the Statement of Variability in the Form Schedule tab (additional instructions available in SERFF).
- Zero (0) can NOT be used in the range for any Credit or Benefit. For example, Bonus 0% to 3% is unacceptable.
- While the numerical amount of the Bonus can be bracketed, the Bonus entry itself (i.e., the application thereof) cannot be bracketed. That applies to the Bonus stated on the Application and to the Bonus stated on the Contract Specifications Page(s). For each policy filed, it either provides a Bonus or it does not. If there is a bonus, then it is guaranteed at issue for all policies.
- Any Maximum Fee, Expense, Charge, etc. cannot be bracketed as variable for filing purposes. A Current Fee, Expense, Charge, et al, can be bracketed if the Current amount is shown in close proximity to the Guaranteed (Maximum) Fee, Expense, Charge, et al. The Current amounts need to be listed in the Statement of Variability. Surrender/Withdrawal Charges are not variable and cannot be bracketed.
- The interest rate and mortality table that are used for the basis of the Settlement Option Tables are not variable and cannot be bracketed.
- The name of the index in an Equity Indexed product is not variable and cannot be bracketed. The index can only be changed if the index itself ceases to exist, or if the calculation of the index changes substantially.
- A participation rate, cap, and/or margin may be bracketed as variable for filing purposes only. That bracketing also requires that the Statement of Variability contain a range that is reasonable and realistic. Once issued, the participation rate, cap, and/or margin are guaranteed for the duration of the contract and the contract must clearly state that they are guaranteed for the duration of the contract. A current participation rate, cap, and/or margin may also be used, and the range should be provided in the Statement of Variability.
- The Fixed Accounts are not variable and cannot be bracketed on the Application and cannot be bracketed on the Specifications page (i.e., Data Page, Contract Data, et al).
Name of policy:
- Any contract/policy that allows multiple purchase (premium) payments, but only during the first contract year, are to be called, "Modified Single Premium".
- If the Minimum Interest Rate is less than the Minimum Nonforfeiture Rate, there are several (approximately five) places in the contract where that information, and the impact thereof, must be disclosed and explained to the policy owner. Please see the appropriate Product Standards for additional details.
- If the Constant Maturity Treasury (CMT) rate is being used, and it is being Re-determined, then the Re-determination calculation and the criteria for it must be included in the contract.
- A Suitability statement, regardless of the terminology used (e.g., "appropriate replacement" or "meets insurable needs and financial objectives"), cannot be used to absolve the insurer of its responsibility for obtaining sufficient and appropriate information from the applicant in order to determine that the annuity sale is "not unsuitable".
- For the issue of existing policies and Replacement policies, there are two required questions of the applicant and two required questions of the agent/producer. One question is if the applicant has existing life or annuity policies. The other question is if the policy will replace any existing life or annuity policies. There is an exception for the Replacement question of the agent, which can be done via use of a replacement questionnaire, if it's in addition to the application, and if that form is also filed.
- The Fraud warning must use the terminology of "may be guilty" (not is guilty) and "of fraud" (not of a crime), and "may be" (not will be) subject to "civil or criminal penalties" (not imprisonment), and only if intentional and material to the risk.
Riders, endorsements, or amendments:
- 1. A Rider, Endorsement, or Amendment cannot be used to either delete or reduce benefits,
or to provide less favorable terms, than those provided under an in force base policy. To expedite
review, provide the Oregon filing number for the corresponding base contract that was previously
approved. If it was via a paper filing, then also provide a photocopy of the entire perforated
The Analyst may require a company to file a entirely new version of the base policy if there are significant changes made by the endorsement or amendment
- If the Rider, Endorsement, or Amendment has a charge, then it must be stated on the form itself, or stated on the Contract Specifications page (i.e., Data Page, Contract Data, et al).
- Surrender charges cannot be restarted at any time after contract issue.
- An MVA may only be applied to a guarantee period of more than one year. The negative amount of a contract with a Market Value Adjustment together with the percentage Surrender Charge cannot exceed the maximum surrender charge allowance. Similarly, a Fee, when added to the Surrender Charge, cannot exceed the maximum surrender charge allowance.
- If assessing a Surrender Charge at Death, then such a disclosure is required to be on the Cover Page.
- Surrender/Withdrawal Charges must be stated on the Cover Page or on the Specifications Page (i.e., Data Page, Contract Data, et al). Surrender/Withdrawal Charges cannot be filed as variable.
Deferred paid up annuity:
- When filing a Deferred Paid Up annuity, please also provide a completed Supplement B of the Individual Fixed Annuity Product Standards.
- If a deferred annuity provides Commuted Values, or otherwise refers to commutation at annuitization, then the contract language must specify that the interest rate will be the same as the interest rate that was used to calculate the income payments originally. The exception is for an immediate annuity, which can have charges applicable to commuted values, as long as the charges don't exceed the interest rate by more than 1% of the rate originally used to determine the payment if the original payments are for five (5) years or more.
- At the Maturity date of the contract, the Accumulation Account Value must be available as a lump sum or for annuitization.
- The contract owner must be provided with the option to change the Maturity Date. However, the contract may require that the Maturity date can't occur until the lesser of 10 years from the contract date or the end of the Surrender Charge period.
Incontestability/misstatement of age/sex:
- Misstatement of Age/Sex cannot be used as an exception for the Incontestability provision of the contract. Also, the Misstatement of Age/Sex provision can only allow adjustment for underpayments and overpayments, based on the benefit amount for the correct age/sex at purchase. The provision may also have a specified interest rate, up to a certain amount. The contract provision cannot have any other means for recovery.
Right to cancel/examine, free look period:
- The cover page must specify that there is at least 30 days for Replacement policies.
Multiple interest rate guarantee periods:
- The annuity contract/policy must offer at least a one year Guaranteed Interest Rate Period. If other Guaranteed Interest Rate Periods are offered, then the Application and the Specifications Page(s) must disclose them. The contract language for the initial interest rate period must disclose and explain if the initial term period is nonrenewable. For term periods beyond one year, the contract must disclose and explain the renewal requirements and interest rate determination thereof.
- The loan interest rate plus any added administrative fees cannot exceed the greater of the maximum fixed rate of 8% or a variable rate tied to Moody's Corporate Bond Yield Average/Monthly Average Corporates. See the Product Standards for more details.
- A loan may be deferred under certain circumstances but it may not be deferred for the payment of any premium to the insurer. See the Product Standards for more details.
- Oregon insurance law does not allow a premium tax for individual annuities delivered in Oregon. If assessing a premium tax after the owner moves to another state with premium taxes, then the Specifications page must clearly indicate that the tax is based on premiums paid after the move, and that the amount is limited to a maximum of 3.5%. For any other taxes, with the exception of an income tax, the type and amount must be stated on the Specifications page.
- The Actuarial Memorandum must be consistent with the forms being filed and with the Statement of Variability in the filing.