State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-22 > 31a-22-420

31A-22-420. Policy loans.
(1) This section applies to all life insurance policies and annuity contracts, includingcertificates issued by fraternal insurers, which contain policy loan provisions. A "policy loan"includes any arrangement by which a premium is paid to the life insurer after the normal duedate.
(2) As used in this section, "published monthly average" means:
(a) The monthly average of the composite yield on Moody's Corporate Bond YieldAverage--Monthly Average Corporates, as published by Moody's Investors Service, Inc., or anysuccessor to that publication; or
(b) in the event that Moody's Corporate Bond Yield Average--Monthly AverageCorporates is no longer published, a substantially similar average, established by thecommissioner by rule.
(3) (a) Policies issued on or after May 12, 1981, shall provide for policy loan interestrates by:
(i) a provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate calculated under thissection.
(b) The rate of interest charged on a policy loan made under Subsection (3)(a)(ii) maynot exceed the higher of:
(i) the published monthly average for the calendar month ending two months before thedate on which the rate is determined; or
(ii) the rate used to compute cash surrender values under the policy during the sameperiod, plus 1% per annum.
(c) If the maximum rate of interest is determined under Subsection (3)(a)(ii), the policyshall contain a provision setting forth the frequency at which the rate is to be determined for thatpolicy.
(d) The maximum rate under Subsection (3)(a)(ii) for each policy shall be determined atregular intervals at least once every 12 months, but not more frequently than once in anythree-month period. At the intervals specified in the policy:
(i) the rate being charged may be increased whenever the increase determined underSubsection (3)(b) would increase that rate by 1/2% or more per annum; and
(ii) the rate being charged shall be reduced whenever the reduction determined underSubsection (3)(b) would decrease that rate by 1/2% or more per annum.
(e) Every life insurer shall:
(i) notify the policyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(ii) notify the policyholder 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 the initial loan, but notice neednot be given to the policyholder when a further premium loan is added, except as provided inSubsection (3)(e)(iii);
(iii) send to policyholders with loans, reasonable advance notice of any increase in therate; and
(iv) include in the notices required by Subsection (3)(e)(i), (ii), and (iii) the substance ofthe pertinent provisions of Subsections (3)(a) and (c).
(f) No policy may terminate during a policy year solely because of a change in the

interest rate during that policy year. Coverage shall continue during that policy year until itwould have terminated if there had been no change in interest rate during that policy year.
(g) The pertinent provisions of Subsections (3)(a) and (c) shall be set forth in the policiesto which they apply.
(4) This section applies to an insurance policy issued before May 12, 1981, only if thepolicyholder agrees to its application in writing, after receiving explicit disclosure of theprovisions regarding premiums, dividends, and nonforfeiture cash values of the existing andamended insurance policies prior to execution of the written agreement. No other rights of thepolicyholder under the insurance policy are affected by this agreement.
(5) The policy shall contain a provision permitting the insurer, upon the commissioner'sapproval, to defer granting a policy loan for up to six months after application for the loan. Policy loans for the payment of premium to the insurer may not be deferred under thissubsection.

Amended by Chapter 204, 1986 General Session

State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-22 > 31a-22-420

31A-22-420. Policy loans.
(1) This section applies to all life insurance policies and annuity contracts, includingcertificates issued by fraternal insurers, which contain policy loan provisions. A "policy loan"includes any arrangement by which a premium is paid to the life insurer after the normal duedate.
(2) As used in this section, "published monthly average" means:
(a) The monthly average of the composite yield on Moody's Corporate Bond YieldAverage--Monthly Average Corporates, as published by Moody's Investors Service, Inc., or anysuccessor to that publication; or
(b) in the event that Moody's Corporate Bond Yield Average--Monthly AverageCorporates is no longer published, a substantially similar average, established by thecommissioner by rule.
(3) (a) Policies issued on or after May 12, 1981, shall provide for policy loan interestrates by:
(i) a provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate calculated under thissection.
(b) The rate of interest charged on a policy loan made under Subsection (3)(a)(ii) maynot exceed the higher of:
(i) the published monthly average for the calendar month ending two months before thedate on which the rate is determined; or
(ii) the rate used to compute cash surrender values under the policy during the sameperiod, plus 1% per annum.
(c) If the maximum rate of interest is determined under Subsection (3)(a)(ii), the policyshall contain a provision setting forth the frequency at which the rate is to be determined for thatpolicy.
(d) The maximum rate under Subsection (3)(a)(ii) for each policy shall be determined atregular intervals at least once every 12 months, but not more frequently than once in anythree-month period. At the intervals specified in the policy:
(i) the rate being charged may be increased whenever the increase determined underSubsection (3)(b) would increase that rate by 1/2% or more per annum; and
(ii) the rate being charged shall be reduced whenever the reduction determined underSubsection (3)(b) would decrease that rate by 1/2% or more per annum.
(e) Every life insurer shall:
(i) notify the policyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(ii) notify the policyholder 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 the initial loan, but notice neednot be given to the policyholder when a further premium loan is added, except as provided inSubsection (3)(e)(iii);
(iii) send to policyholders with loans, reasonable advance notice of any increase in therate; and
(iv) include in the notices required by Subsection (3)(e)(i), (ii), and (iii) the substance ofthe pertinent provisions of Subsections (3)(a) and (c).
(f) No policy may terminate during a policy year solely because of a change in the

interest rate during that policy year. Coverage shall continue during that policy year until itwould have terminated if there had been no change in interest rate during that policy year.
(g) The pertinent provisions of Subsections (3)(a) and (c) shall be set forth in the policiesto which they apply.
(4) This section applies to an insurance policy issued before May 12, 1981, only if thepolicyholder agrees to its application in writing, after receiving explicit disclosure of theprovisions regarding premiums, dividends, and nonforfeiture cash values of the existing andamended insurance policies prior to execution of the written agreement. No other rights of thepolicyholder under the insurance policy are affected by this agreement.
(5) The policy shall contain a provision permitting the insurer, upon the commissioner'sapproval, to defer granting a policy loan for up to six months after application for the loan. Policy loans for the payment of premium to the insurer may not be deferred under thissubsection.

Amended by Chapter 204, 1986 General Session


State Codes and Statutes

State Codes and Statutes

Statutes > Utah > Title-31a > Chapter-22 > 31a-22-420

31A-22-420. Policy loans.
(1) This section applies to all life insurance policies and annuity contracts, includingcertificates issued by fraternal insurers, which contain policy loan provisions. A "policy loan"includes any arrangement by which a premium is paid to the life insurer after the normal duedate.
(2) As used in this section, "published monthly average" means:
(a) The monthly average of the composite yield on Moody's Corporate Bond YieldAverage--Monthly Average Corporates, as published by Moody's Investors Service, Inc., or anysuccessor to that publication; or
(b) in the event that Moody's Corporate Bond Yield Average--Monthly AverageCorporates is no longer published, a substantially similar average, established by thecommissioner by rule.
(3) (a) Policies issued on or after May 12, 1981, shall provide for policy loan interestrates by:
(i) a provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate calculated under thissection.
(b) The rate of interest charged on a policy loan made under Subsection (3)(a)(ii) maynot exceed the higher of:
(i) the published monthly average for the calendar month ending two months before thedate on which the rate is determined; or
(ii) the rate used to compute cash surrender values under the policy during the sameperiod, plus 1% per annum.
(c) If the maximum rate of interest is determined under Subsection (3)(a)(ii), the policyshall contain a provision setting forth the frequency at which the rate is to be determined for thatpolicy.
(d) The maximum rate under Subsection (3)(a)(ii) for each policy shall be determined atregular intervals at least once every 12 months, but not more frequently than once in anythree-month period. At the intervals specified in the policy:
(i) the rate being charged may be increased whenever the increase determined underSubsection (3)(b) would increase that rate by 1/2% or more per annum; and
(ii) the rate being charged shall be reduced whenever the reduction determined underSubsection (3)(b) would decrease that rate by 1/2% or more per annum.
(e) Every life insurer shall:
(i) notify the policyholder at the time a cash loan is made of the initial rate of interest onthe loan;
(ii) notify the policyholder 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 the initial loan, but notice neednot be given to the policyholder when a further premium loan is added, except as provided inSubsection (3)(e)(iii);
(iii) send to policyholders with loans, reasonable advance notice of any increase in therate; and
(iv) include in the notices required by Subsection (3)(e)(i), (ii), and (iii) the substance ofthe pertinent provisions of Subsections (3)(a) and (c).
(f) No policy may terminate during a policy year solely because of a change in the

interest rate during that policy year. Coverage shall continue during that policy year until itwould have terminated if there had been no change in interest rate during that policy year.
(g) The pertinent provisions of Subsections (3)(a) and (c) shall be set forth in the policiesto which they apply.
(4) This section applies to an insurance policy issued before May 12, 1981, only if thepolicyholder agrees to its application in writing, after receiving explicit disclosure of theprovisions regarding premiums, dividends, and nonforfeiture cash values of the existing andamended insurance policies prior to execution of the written agreement. No other rights of thepolicyholder under the insurance policy are affected by this agreement.
(5) The policy shall contain a provision permitting the insurer, upon the commissioner'sapproval, to defer granting a policy loan for up to six months after application for the loan. Policy loans for the payment of premium to the insurer may not be deferred under thissubsection.

Amended by Chapter 204, 1986 General Session