§58‑61‑10. Maximum rate of interest on policy loans.
(a) Policies issued onor after September 1, 1981 shall provide for policy loan interest rates asfollows:
(1) A provisionpermitting a maximum interest rate of not more than eight percent (8%) per annum;or
(2) A provisionpermitting an adjustable maximum interest rate established from time to time bythe life insurer as permitted by law.
(b) The rate ofinterest on a policy loan made under subsection (a)(2) shall not exceed thehigher of the following:
(1) The publishedmonthly average for the calendar month ending two months before the date onwhich the rate is determined; or
(2) The rate used tocompute the cash surrender values under the policy during the applicable periodplus one percent (1%) per annum.
(c) If the maximum rateof interest is determined pursuant to subsection (a)(2), the policy shallcontain a provision setting forth the frequency at which the rate is to bedetermined for that policy.
(d) The maximum ratefor each policy must be determined at regular intervals at least once every 12months, but not more frequently than once in any three‑month period. Atthe intervals specified in the policy:
(1) The rate beingcharged may be increased whenever such increase as determined under subsection(b) would increase that rate by one‑half percent (1/2%) or more perannum;
(2) The rate beingcharged must be reduced whenever such reduction as determined under subsection(b) would decrease that rate by one‑half percent (1/2%) or more perannum.
(e) The life insurershall:
(1) Notify thepolicyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(2) Notify thepolicyholder with respect to premium loans of the initial rate of interest onthe loan as soon as it is reasonably practical to do so after making theinitial loan. Notice need not be given to the policyholder when a furtherpremium loan is added, except as provided in (3) below;
(3) Send topolicyholders with loans reasonable advance notice of any increase in the rate;and
(4) Include in thenotices required above the substance of the pertinent provisions of subsections(a) and (c).
(f) No policy shallterminate in a policy year as the sole result of change in the interest rateduring that policy year, and the life insurer shall maintain coverage duringthat policy year until the time at which it would otherwise have terminated ifthere had been no change during that policy year.
(g) The substance ofthe pertinent provisions of subsections (a) and (c) shall be set forth in thepolicies to which they apply.
(h) For purposes ofthis section:
(1) The rate of intereston policy loans permitted under this section includes the interest rate chargedon reinstatement of policy loans for the period during and after any lapse of apolicy.
(2) The term"policy loan" includes any premium loan made under a policy to payone or more premiums that were not paid to the life insurer as they fell due.
(3) The term"policyholder" includes the owner of the policy or the persondesignated to pay premiums as shown on the records of the life insurer.
(4) The term"policy" includes certificates issued by a fraternal benefit societyand annuity contracts which provide for policy loans.
(i) No other provisionof law shall apply to policy loan interest rates unless made specificallyapplicable to such rates. (1981, c. 841, s. 1.)
§58‑61‑10. Maximum rate of interest on policy loans.
(a) Policies issued onor after September 1, 1981 shall provide for policy loan interest rates asfollows:
(1) A provisionpermitting a maximum interest rate of not more than eight percent (8%) per annum;or
(2) A provisionpermitting an adjustable maximum interest rate established from time to time bythe life insurer as permitted by law.
(b) The rate ofinterest on a policy loan made under subsection (a)(2) shall not exceed thehigher of the following:
(1) The publishedmonthly average for the calendar month ending two months before the date onwhich the rate is determined; or
(2) The rate used tocompute the cash surrender values under the policy during the applicable periodplus one percent (1%) per annum.
(c) If the maximum rateof interest is determined pursuant to subsection (a)(2), the policy shallcontain a provision setting forth the frequency at which the rate is to bedetermined for that policy.
(d) The maximum ratefor each policy must be determined at regular intervals at least once every 12months, but not more frequently than once in any three‑month period. Atthe intervals specified in the policy:
(1) The rate beingcharged may be increased whenever such increase as determined under subsection(b) would increase that rate by one‑half percent (1/2%) or more perannum;
(2) The rate beingcharged must be reduced whenever such reduction as determined under subsection(b) would decrease that rate by one‑half percent (1/2%) or more perannum.
(e) The life insurershall:
(1) Notify thepolicyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(2) Notify thepolicyholder with respect to premium loans of the initial rate of interest onthe loan as soon as it is reasonably practical to do so after making theinitial loan. Notice need not be given to the policyholder when a furtherpremium loan is added, except as provided in (3) below;
(3) Send topolicyholders with loans reasonable advance notice of any increase in the rate;and
(4) Include in thenotices required above the substance of the pertinent provisions of subsections(a) and (c).
(f) No policy shallterminate in a policy year as the sole result of change in the interest rateduring that policy year, and the life insurer shall maintain coverage duringthat policy year until the time at which it would otherwise have terminated ifthere had been no change during that policy year.
(g) The substance ofthe pertinent provisions of subsections (a) and (c) shall be set forth in thepolicies to which they apply.
(h) For purposes ofthis section:
(1) The rate of intereston policy loans permitted under this section includes the interest rate chargedon reinstatement of policy loans for the period during and after any lapse of apolicy.
(2) The term"policy loan" includes any premium loan made under a policy to payone or more premiums that were not paid to the life insurer as they fell due.
(3) The term"policyholder" includes the owner of the policy or the persondesignated to pay premiums as shown on the records of the life insurer.
(4) The term"policy" includes certificates issued by a fraternal benefit societyand annuity contracts which provide for policy loans.
(i) No other provisionof law shall apply to policy loan interest rates unless made specificallyapplicable to such rates. (1981, c. 841, s. 1.)
§58‑61‑10. Maximum rate of interest on policy loans.
(a) Policies issued onor after September 1, 1981 shall provide for policy loan interest rates asfollows:
(1) A provisionpermitting a maximum interest rate of not more than eight percent (8%) per annum;or
(2) A provisionpermitting an adjustable maximum interest rate established from time to time bythe life insurer as permitted by law.
(b) The rate ofinterest on a policy loan made under subsection (a)(2) shall not exceed thehigher of the following:
(1) The publishedmonthly average for the calendar month ending two months before the date onwhich the rate is determined; or
(2) The rate used tocompute the cash surrender values under the policy during the applicable periodplus one percent (1%) per annum.
(c) If the maximum rateof interest is determined pursuant to subsection (a)(2), the policy shallcontain a provision setting forth the frequency at which the rate is to bedetermined for that policy.
(d) The maximum ratefor each policy must be determined at regular intervals at least once every 12months, but not more frequently than once in any three‑month period. Atthe intervals specified in the policy:
(1) The rate beingcharged may be increased whenever such increase as determined under subsection(b) would increase that rate by one‑half percent (1/2%) or more perannum;
(2) The rate beingcharged must be reduced whenever such reduction as determined under subsection(b) would decrease that rate by one‑half percent (1/2%) or more perannum.
(e) The life insurershall:
(1) Notify thepolicyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(2) Notify thepolicyholder with respect to premium loans of the initial rate of interest onthe loan as soon as it is reasonably practical to do so after making theinitial loan. Notice need not be given to the policyholder when a furtherpremium loan is added, except as provided in (3) below;
(3) Send topolicyholders with loans reasonable advance notice of any increase in the rate;and
(4) Include in thenotices required above the substance of the pertinent provisions of subsections(a) and (c).
(f) No policy shallterminate in a policy year as the sole result of change in the interest rateduring that policy year, and the life insurer shall maintain coverage duringthat policy year until the time at which it would otherwise have terminated ifthere had been no change during that policy year.
(g) The substance ofthe pertinent provisions of subsections (a) and (c) shall be set forth in thepolicies to which they apply.
(h) For purposes ofthis section:
(1) The rate of intereston policy loans permitted under this section includes the interest rate chargedon reinstatement of policy loans for the period during and after any lapse of apolicy.
(2) The term"policy loan" includes any premium loan made under a policy to payone or more premiums that were not paid to the life insurer as they fell due.
(3) The term"policyholder" includes the owner of the policy or the persondesignated to pay premiums as shown on the records of the life insurer.
(4) The term"policy" includes certificates issued by a fraternal benefit societyand annuity contracts which provide for policy loans.
(i) No other provisionof law shall apply to policy loan interest rates unless made specificallyapplicable to such rates. (1981, c. 841, s. 1.)
