CHAPTER 12.7. FUNDING AGREEMENTS
IC 27-1-12.7
Chapter 12.7. Funding Agreements
IC 27-1-12.7-1
"Funding agreement"
Sec. 1. As used in this chapter, "funding agreement" means anagreement that:
(1) is issued by a life insurance company to a holder;
(2) authorizes a life insurance company to accept funds; and
(3) provides for an accumulation of the funds for the purpose ofmaking one (1) or more payments at future dates in amountsthat are not based on mortality or morbidity contingencies of theholder of the funding agreement.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-2
"Holder"
Sec. 2. As used in this chapter, "holder" means a person describedin section 5 of this chapter that is issued a funding agreement by alife insurance company.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-3
"Life insurance company"
Sec. 3. As used in this chapter, "life insurance company" meansa life insurance company authorized to issue a product described inClass 1(c) of IC 27-1-5-1.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-4
"Optional modes of settlement"
Sec. 4. As used in this chapter, "optional modes of settlement"means the manner in which the funding agreement is structured torepay interest and principal to the holder.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-5
Issuance or issuance for delivery of funding agreements
Sec. 5. A life insurance company may issue or issue for deliveryin Indiana a funding agreement to the following:
(1) A person authorized by a state or foreign country to engagein an insurance business or a subsidiary of an insurancebusiness.
(2) A person who uses the funding agreement for the purpose offunding:
(A) benefits under an employee benefit plan (as defined inthe federal Employee Retirement Security Act of 1974, 29U.S.C. 1001 et seq.);
(B) the activities of a nonprofit organization exempt fromfederal income taxation under Section 501(c)(3) of the
Internal Revenue Code or a similar nonprofit organizationdomiciled in a foreign country;
(C) a program of:
(i) the United States government;
(ii) a state government;
(iii) a political subdivision;
(iv) a foreign country; or
(v) an agency or instrumentality of the United States or astate government, a political subdivision, or a foreigncountry;
(D) an agreement providing for periodic payments insatisfaction of a claim;
(E) a program of an institution with assets exceedingtwenty-five million dollars ($25,000,000);
(F) a program in which a business entity, including a trust:
(i) purchases and holds funding agreements; and
(ii) issues securities by using the funding agreement tofinance or collateralize the securities; or
(G) any program or activity substantially similar to aprogram or an activity described in clauses (A) through (F)that is first authorized by the commissioner.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-6
Funding agreements interpretation
Sec. 6. The issuance of a funding agreement:
(1) constitutes an activity necessary, convenient, or expedientto the business of a life insurance company under IC 27-1-7-2;
(2) is not insurance under IC 27-1-5-1;
(3) is not a security (as defined in IC 23-19-1-2(28)); and
(4) does not constitute gross premium for taxation purposesunder IC 27-1-18-2.
As added by P.L.178-2003, SEC.18. Amended by P.L.27-2007,SEC.25.
IC 27-1-12.7-7
Guaranteed or credited amounts under funding agreements
Sec. 7. An amount may not be guaranteed or credited under afunding agreement except:
(1) upon reasonable assumptions as to investment income andexpenses; and
(2) on a basis equitable to all holders of funding agreements ofa given class.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-8
Segregated asset accounts
Sec. 8. An amount paid to a life insurance company and proceedsapplied to amounts paid under optional modes of settlement under afunding agreement may be allocated by the insurer to one (1) or more
segregated asset accounts in the manner described in Class 1(c) ofIC 27-1-5-1.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-9
Commissioner; conditions; rules
Sec. 9. The commissioner may establish reasonable conditions oradopt rules under IC 4-22-2 regarding:
(1) reserve amounts to be maintained by a life insurancecompany for funding agreements;
(2) accounting and reporting of funds credited under fundingagreements; and
(3) other matters regarding funding agreements thecommissioner considers necessary, proper, and advisable.
As added by P.L.178-2003, SEC.18.
IC 27-1-12.7-10
Regulation; funding agreement not a covered policy; claim forpayments; assets in segregated asset account
Sec. 10. Notwithstanding any other provision of law:
(1) the commissioner has the sole authority to regulate theissuance and sale of funding agreements;
(2) a funding agreement is not considered a covered policyunder IC 27-8-8-2.3(d);
(3) a claim for payments under a funding agreement must betreated as a loss claim described in Class 2 of IC 27-9-3-40; and
(4) assets supporting a funding agreement in a segregated assetaccount under section 8 of this chapter are subject toIC 27-9-3-40.5 and Class 1(c) of IC 27-1-5-1.
As added by P.L.178-2003, SEC.18. Amended by P.L.193-2006,SEC.2; P.L.173-2007, SEC.8; P.L.1-2010, SEC.109.