MINIMUM NONFORFEITURE AMOUNT S.B. 624:
SUMMARY OF BILL
REPORTED FROM COMMITTEE
Senate Bill 624 (as reported without amendment)
Committee: Insurance and Banking
CONTENT
The bill would amend the standard nonforfeiture law for individual deferred annuities, within the Insurance Code, to modify the interest rate used in determining minimum nonforfeiture amount.
Under the law, the minimum value of a paid-up annuity, cash surrender, or death benefits available under an annuity contract must be based on a minimum nonforfeiture amount. The interest rate used in determining minimum nonforfeiture amount must be an annual rate of interest determined as the lesser of 3.0% per annum and the following, which must be specified in the contract if the interest rate will be reset:
-- The five-year constant maturity treasury rate reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20 of 1.0%, specified in the contract no longer than 15 months before the contract issue date or redetermination date.
-- Reduced by 125 basis points.
-- Where the resulting interest rate is not less than 1.0%.
-- The interest rate must apply for an initial period and may be redetermined for additional periods.
The bill would decrease, from 1.0% to 0.15%, the resulting interest rate referenced above.
MCL 500.4072 Legislative Analyst: Stephen Jackson
FISCAL IMPACT
The bill would have no fiscal impact on State or local government.
Date Completed: 10-29-21 Fiscal Analyst: Elizabeth Raczkowski
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.