Md. Code, Insurance § 16-101
Except as otherwise provided in this title, this title applies to contracts of life insurance and annuities, other than reinsurance, group life insurance, and group annuities.
Md. Code, Insurance, Title 16
Md. Code, Insurance, Title 16
in effectMd. Code, Insurance § 16-102
An insurer that is authorized to issue ordinary life insurance in the State may issue wholesale life insurance.
Md. Code, Insurance § 16-103
A life insurer may not:
(1) issue or deliver in the State a policy of life insurance or an annuity contract that provides for the payment of an assessment by a policyholder or member in addition to the premium stated in the policy or annuity contract to be charged for the life insurance or annuity; or
(2) levy or collect an assessment prohibited by item (1) of this section.
Md. Code, Insurance § 16-104
(a) An insurer may not knowingly deliver or issue for delivery in the State a policy of life insurance that purports to be issued or to take effect as of a date more than 6 months before the application for the policy was made, if, as a result, the premium on the policy is reduced below the premium that would have been payable on the policy as determined by the insuring age of the insured when the application was made.
(b) An insurance producer or other representative of an insurer may not in the State prepare, submit, or accept an application for life insurance that bears a date earlier than the date when the application was made by the insured or applicant, if, as a result, the premium on the policy is reduced below the premium that would have been payable on the policy as determined by the insuring age of the insured when the application was made.
(c) This section does not:
(1) invalidate a contract made in violation of this section; or
(2) prohibit the exchange, alteration, or conversion of a policy of life insurance.
Md. Code, Insurance § 16-105
(a) This section does not apply to policies or contracts issued to an employee in connection with the funding of a pension, annuity, or profit-sharing plan that is qualified or exempt under § 401, § 403, § 404, or § 501 of the Internal Revenue Code, if participation in the plan is a condition of employment.
(b) Each policy of life insurance or annuity contract subject to this title shall have attached to or prominently printed on its face the following information:
(1) a notice to the policyholder that:
(i) for 10 days after the date the policy or annuity contract is delivered to the policyholder, the policyholder may surrender the policy or annuity contract to the insurer for cancellation by giving the insurer written notice of cancellation; and
(ii) the insurer shall return to the policyholder a pro rata premium for the unexpired term of the policy or annuity contract; or
(2) a similar notice to the policyholder that in the opinion of the Commissioner is not less favorable to the policyholder.
Md. Code, Insurance § 16-106
(a) On request of a policyholder, a life insurer may exchange, alter, or convert a policy of life insurance or endowment insurance or an annuity contract issued by the life insurer or any other benefits additional to the policy or annuity contract, for or into a policy that:
(1) conforms with the laws in force on the date of the original policy or annuity contract, if the rewritten policy is, by its terms, made effective as of that date; or
(2) conforms with the laws in force on a subsequent date as of which the rewritten policy is, by its terms, made effective.
(b) (1) This subsection applies only if the rewritten policy is made effective as of a date earlier than the date on which the exchange, alteration, or conversion occurs.
(2) The amount of insurance under a rewritten policy subject to this subsection may not exceed the greater of:
(i) the amount of insurance under the original policy or annuity contract; and
(ii) the amount of insurance that the premium paid for the original policy or annuity contract would have purchased if the rewritten policy had been applied for originally.
(3) If evidence of insurability is required in conjunction with an exchange, alteration, or conversion to a policy on a plan that requires a lower premium rate, or to a policy to which benefits or features are added that differ from the original policy, the rewritten policy may provide that the date on which the exchange, alteration, or conversion occurs shall be used to determine:
(i) the applicability of an incontestability clause in the rewritten policy to the right of the insurer to contest the exchange, alteration, or conversion; or
(ii) the applicability of a clause in the rewritten policy that limits liability in the event of the suicide of the insured.
Md. Code, Insurance § 16-107
(a) A reinstated policy of life insurance or reinstated annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period after reinstatement and with the same conditions and exceptions as the policy or annuity contract provides with respect to contestability after original issue.
(b) (1) A reinstated policy of life insurance or reinstated annuity contract may exclude or restrict liability to the same extent that liability might have been or was excluded or restricted when the policy or annuity contract originally was issued.
(2) The exclusion or restriction is effective as of the date of reinstatement.
Md. Code, Insurance § 16-108
(a) A life insurer may hold under agreement the proceeds of a policy issued by it on the terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with the exemptions from the claims of creditors of beneficiaries other than the policyholder, as set forth in the policy or as agreed to in writing by the life insurer and the policyholder.
(b) If a policyholder has not made an agreement described in subsection (a) of this section, on maturity of the policy the life insurer may hold the proceeds of the policy under an agreement with the beneficiaries.
(c) The life insurer need not segregate any funds held under this section, but may hold the funds as part of the life insurer’s general assets.
Md. Code, Insurance § 16-109
(a) Except as provided in subsection (b) of this section, interest on benefits payable under a policy of life insurance issued in the State accrues and is payable from the date of death of the insured to the date the proceeds of the policy are paid.
(b) (1) An insurer need not pay interest on benefits if the proceeds of the policy are paid within 30 days after the date of death of the insured.
(2) If proof of death is submitted to the insurer more than 180 days after the date of death of the insured, interest accrues and is payable from the date on which proof of death is submitted to the date on which the proceeds of the policy are paid.
(c) Interest under this section accrues and is payable at a rate not less than the rate of interest payable on death proceeds left on deposit with the insurer.
Md. Code, Insurance § 16-110
(a) If a resident of the State dies intestate and leaves an estate that consists of assets, including life insurance proceeds, in a total amount not exceeding $1,000, an insurer may pay the life insurance proceeds to the decedent’s surviving spouse, child, or parent, without the grant of letters of administration, if the individual to whom payment is to be made provides the insurer with:
(1) an affidavit that states that the entire estate of the decedent, including life insurance proceeds, does not exceed $1,000; or
(2) a letter of administration as provided by the Small Estate Law, §§ 5-601 through 5-607 of the Estates and Trusts Article.
(b) The insurer may pay the share of a minor to an institution or to a relative of the minor, with custody of the minor, without requiring the institution or relative to be appointed the legal guardian of the minor.
(c) Payment by an insurer under this section, or under a facility of payment clause in a policy of life insurance, discharges the insurer from all further liability with respect to the life insurance proceeds.
Md. Code, Insurance § 16-111
(a) The proceeds of a policy of life insurance or under an annuity contract on the life of an individual made for the benefit of or assigned to the spouse, child, or dependent relative of the individual are exempt from all claims of the creditors of the individual arising out of or based on an obligation created after June 1, 1945, whether or not the right to change the named beneficiary is reserved or allowed to the individual.
(b) For purposes of this section, proceeds include death benefits, cash surrender and loan values, premiums waived, and dividends, whether used to reduce the premiums or used or applied in any other manner, except if the debtor has, after issuance of the policy, elected to receive the dividends in cash.
(c) This section does not prohibit a creditor from collecting a debt out of the proceeds of a life insurance policy pledged by the insured as security for the debt.
(d) A change of beneficiary, assignment, or other transfer is valid except for transfer with actual intent to hinder, delay, or defraud creditors.
Md. Code, Insurance § 16-112
A life insurer may not deliver in the State, as part of or in combination with an insurance, endowment, or annuity contract, and additional to the rights, dividends, and benefits arising out of the contract, an agreement or plan that:
(1) provides for the accumulation of profits over a period of years and for payment of all or part of the accumulated profits only to members or policyholders of a designated group or class who continue as members or policyholders until the end of a specified period of years;
(2) provides that, on the death of anyone other than a beneficiary or an insured under the contract, the owner or beneficiary of the contract shall receive the payment or granting of anything of value;
(3) provides that all or part of the premiums or consideration for the contract, dividends, coupons, reserves, special reserves, excess interest, or money in excess of the normal reserve required to meet the contractual guarantees of the contract are to be placed or invested in special funds or segregated accounts without insurance or life contingency features, if the funds or earnings are divided among those taking the contract or their beneficiaries or assignees; or
(4) as an inducement to or in connection with the sale or acceptance of the contract, provides for:
(i) the sale, solicitation, or delivery of stock or shares of stock in a company;
(ii) a benefit certificate, securities, or special advisory board contract, or other similar contracts or resolutions; or
(iii) policy dividends bearing a stated relationship to dividends on the stock of a company.
Md. Code, Insurance § 16-113
(a) Subject to the approval of the Commissioner, an insurer authorized to deliver or issue for delivery an annuity contract in the State may deliver or issue for delivery funding agreements.
(b) A funding agreement may be issued to:
(1) a person, or a subsidiary of the person, that is authorized by a state or foreign country to engage in the insurance business; or
(2) a person, other than a person or a subsidiary of the person that is authorized to engage in the insurance business, to fund:
(i) benefits directly or indirectly under an employee benefit plan, as defined in the federal Employee Retirement Income Security Act of 1974, that is maintained in the United States, or under a similar plan maintained in a foreign country;
(ii) the activities of an organization exempt from taxation under § 501(c) of the Internal Revenue Code, or of a similar organization in a foreign country;
(iii) a program, or plan as defined in § 457 of the Internal Revenue Code, of the federal government, a state or political subdivision of a state, or a foreign country or political subdivision of a foreign country;
(iv) an agreement that provides for periodic payments in satisfaction of a claim; or
(v) a program of an institution that has assets in excess of $25,000,000.
(c) (1) An amount may not be guaranteed or credited under a funding agreement except on a reasonable assumption as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class.
(2) A funding agreement may not provide for payment to or by the insurer based on a mortality or morbidity contingency.
(d) (1) Under a funding agreement, an insurer may allocate amounts paid to the insurer and proceeds applied under optional modes of settlement to the insurer’s general account or to one or more separate accounts.
(2) Amounts allocated to the insurer’s general account and any resulting accumulations shall be invested and reinvested in accordance with the provisions of this article governing investment of the reserves of life insurers.
(3) Amounts allocated to a separate account and any resulting accumulations may be invested and reinvested subject only to §§ 5–506, 5–507, and 5–512(b), (e), (f), (g), (h), and (i) of this article and regulations adopted under subsection (e) of this section.
(e) (1) The Commissioner may adopt regulations governing:
(i) the standards for approval of forms of funding agreements;
(ii) the reserves to be maintained by insurers that issue funding agreements;
(iii) the accounting and reporting of funds credited under funding agreements;
(iv) the disclosure of information to holders and prospective holders of funding agreements; and
(v) the qualification and compensation of persons that sell funding agreements on behalf of insurers.
(2) With respect to separate accounts and any resulting accumulations, the Commissioner shall adopt regulations governing the type and amount of investments that may be made under a funding agreement.
(3) Notwithstanding any other provision of law, the Commissioner has sole authority to regulate:
(i) the issuance and sale of funding agreements; and
(ii) the persons that sell funding agreements on behalf of insurers.
(f) (1) The issuance or delivery of a funding agreement is not the business of life insurance, annuities, health insurance, property insurance, casualty insurance, surety insurance, marine insurance, wet marine and transportation insurance, title insurance, or reinsurance, but is an insurance business.
(2) Solely for the purpose of application of the Tax - General Article, the funding agreements authorized by this section are deemed to be annuity contracts.
Md. Code, Insurance § 16-114
(a) In this section, “community foundation” means a nonprofit organization that is:
(1) formed to receive contributions and distribute money to meet cultural, educational, charitable, environmental, civic, or other similar needs of a community; and
(2) governed by a board of private citizens who reside in the community.
(b) An educational or religious organization, hospital, or community foundation may not make or issue in the State agreements for annuity payments with donors until it has obtained from the Commissioner a special permit issued in accordance with this section.
(c) (1) On application, the Commissioner may issue a special permit to make agreements for annuity payments with donors to an educational or religious organization not conducted for profit and engaged in bona fide educational or religious activities, to a hospital in the State, or to a community foundation if the educational or religious organization, hospital, or community foundation:
(i) except as provided in paragraph (2) of this subsection, has been in active operation in the State for at least 10 years before issuance of the special permit; and
(ii) has been granted exemption from federal income taxation under § 501 of the Internal Revenue Code.
(2) The Commissioner may issue a special permit to a community foundation that has been in existence for at least 5 years but less than 10 years if the community foundation maintains assets in an amount up to 100% of the contributions made to the community foundation, as determined by the Commissioner.
(d) (1) Each special permit holder shall have and maintain assets at least equal to adequate reserves on its outstanding agreements for annuity payments with donors as indicated by its audited fiscal year–end financial statements.
(2) In determining the reserves of a special permit holder on outstanding agreements for annuity payments with donors, a deduction shall be made for all or part of an annuity risk that is reinsured by an authorized life insurer.
(3) (i) Subject to paragraph (5) of this subsection, a special permit holder shall submit annually audited fiscal year–end financial statements to the Commissioner within 180 days after the end of the special permit holder’s fiscal year.
(ii) The financial statements required under subparagraph (i) of this paragraph shall be:
1. presented in conformity with generally accepted accounting principles; and
2. audited by a certified public accountant.
(4) The audited fiscal year–end financial statements shall be treated as confidential by the Commissioner and are not available for public inspection.
(5) On application by the special permit holder, the Commissioner:
(i) may waive the requirement of audited fiscal year–end financial statements; and
(ii) may require instead additional documents or information that the Commissioner considers necessary.
(e) A special permit issued under this section authorizes the special permit holder to receive gifts of money or other property conditional on, or in consideration of, the special permit holder’s agreement to pay an annuity to the donor or the donor’s nominee and to make and carry out agreements for annuity payments with donors.
(f) A special permit is in effect only as long as the special permit holder is exempt from federal income taxation under § 501 of the Internal Revenue Code.
(g) (1) If the Commissioner finds, after notice and hearing, that a special permit holder has failed to comply with the requirements of this section or is not exempt from federal income taxation under § 501 of the Internal Revenue Code, the Commissioner may:
(i) revoke or suspend the special permit; or
(ii) order the special permit holder to stop making new agreements for annuity payments with donors until the requirements have been satisfied.
(2) In case of revocation or suspension, outstanding agreements for annuity payments with donors shall remain in force.
(3) The action of the Commissioner under this subsection is subject to judicial review under § 2–215 of this article.
(h) (1) Except as otherwise provided in this section, a special permit holder is exempt from the provisions of this article with respect to issuing annuities.
(2) Special permit holders are not subject to a law enacted after June 1, 1957, unless they are expressly designated in the law.
(i) (1) Other than by agreements for annuity payments with donors, an educational or religious organization, hospital, or community foundation may agree to:
(i) accept conditional donations; and
(ii) pay to the donor or the donor’s nominee a specified return established with reference to the actual net earnings of the particular donation or with reference to the actual or estimated earnings of a specified fund of the donee organization.
(2) An educational or religious organization, hospital, or community foundation that accepts conditional donations and pays a specified return to donors under paragraph (1) of this subsection is exempt from this section and all other provisions of this article with respect to issuing annuities.
(3) Educational or religious organizations, hospitals, or community foundations that accept conditional donations and pay specified returns to donors under this subsection are not subject to any law enacted after June 1, 1957, unless they are expressly designated in the law.
(j) Notwithstanding the absence of express power in the charter of a domestic educational, religious, or hospital corporation or community foundation, the corporation or community foundation may make the agreements for annuity payments with donors or other agreements with respect to conditional donations that are expressly allowed by this section.
Md. Code, Insurance § 16-115
(a) A person who engages in the business of burial insurance is subject to and shall comply with all of the provisions of this article relating to the organization, qualification, and conduct of life insurers.
(b) This section does not limit or restrict the definitions of life insurance or life insurer in § 1-101 of this article.
Md. Code, Insurance § 16-116
(a) In this section, “public entity” means:
(1) a political subdivision of the State;
(2) a unit of the State or a local government; or
(3) a nonprofit or nonstock corporation that:
(i) receives 50% or more of its annual operating budget from the State or a local government; and
(ii) is exempt from taxation under § 501(c)(3) or (4) of the Internal Revenue Code.
(b) Public entities may pool together to purchase life insurance or to self-insure against life risks.
Md. Code, Insurance § 16-117
(a) In this section, “retained asset account” means any mechanism whereby the settlement of proceeds payable under a life insurance policy or an annuity contract is accomplished by the insurer or an entity acting on behalf of the insurer depositing the proceeds into a checking or draft account, where those proceeds are retained by the insurer in accordance with a supplementary contract.
(b) An insurer may not offer a retained asset account as the mode of settlement of the proceeds payable under a life insurance policy or an annuity contract unless the insurer:
(1) offers the beneficiary at least one other mode of settlement of proceeds; and
(2) complies with the provisions of subsections (c) and (d) of this section.
(c) Except as provided in subsection (e) of this section, when a beneficiary files a claim for proceeds, if one of the settlement options is a retained asset account, the insurer shall disclose in writing to the beneficiary all the settlement options available under the policy or contract.
(d) (1) Except as provided in subsection (e) of this section, if an insurer offers to a beneficiary a retained asset account as a settlement option, the insurer shall provide to the beneficiary in writing:
(i) a recommendation to consult a tax advisor, an investment advisor, or any other financial advisor regarding tax liability and investment options;
(ii) an explanation of the features of the retained asset account, including:
1. the method used to determine interest rates applied to the retained asset account, when and how interest rates may change, and any dividends and other gains that may be paid or distributed to the account holder;
2. the custodian of the funds or assets of the retained asset account;
3. whether the funds in the retained asset account are guaranteed by the Federal Deposit Insurance Corporation (FDIC) and the amount of the coverage, if any;
4. the limitations, if any, on the numbers and amounts of withdrawals of funds from the retained asset account or investment, including any minimum or maximum withdrawal amounts;
5. the services provided for a fee, including a list of the fees or the method of their calculation;
6. the nature and frequency of statements of account;
7. a statement that the obligation of the insurer to pay the total policy or contract proceeds is satisfied by depositing the total proceeds in the retained asset account;
8. a statement that the entire proceeds are available to the account holder by the use of one check, draft, or other instrument;
9. a statement that the insurer or a related party may derive income, in addition to any fees charged on the retained asset account, from the total gains received on the investment of the balance of funds in the retained asset account; and
10. the telephone number, address, and other contact information, including Web site address, for obtaining additional information regarding the retained asset account; and
(iii) the statement “For further information, please contact your state insurance department”.
(2) The information required under paragraph (1) of this subsection shall be in easy to read language.
(e) An insurer is not required to provide the disclosures or information specified in subsections (c) and (d) of this section if:
(1) the insurer permits the beneficiary to file the claim over the telephone;
(2) the insurer does not require the beneficiary to file a death certificate or other paperwork to file the claim for proceeds; and
(3) the beneficiary selects payment of a lump sum check, payable directly to the beneficiary, as the settlement option during the telephone call in which the beneficiary files the claim for proceeds.
(f) Failure to meet any requirement of this section is an unfair trade practice and a violation of Title 27 of this article.
Md. Code, Insurance § 16-118
(a) (1) In this section the following words have the meanings indicated.
(2) “Credit life insurance” has the meaning stated in § 13–101 of this article.
(3) “Death master file” means:
(i) the Social Security Administration’s Death Master File; or
(ii) any other database or service that is at least as comprehensive as the Social Security Administration’s Death Master File for determining that an individual reportedly has died.
(4) “Death master file match” means a match, resulting from a search of a death master file, of a Social Security number or a name and date of birth of an individual on the death master file with the Social Security number or the name and date of birth of an insured, annuitant, or retained asset account holder.
(5) “Pre–need insurance contract” means a life insurance policy or certificate, annuity contract, or other insurance contract that, by assignment or otherwise, has as a purpose the funding of an agreement relating to the purchase or provision of specific funeral or cemetery merchandise or services to be provided at the time of death of an individual.
(6) “Retained asset account” has the meaning stated in § 16–117(a) of this subtitle.
(b) This section does not apply to:
(1) an annuity contract that:
(i) is used to fund an employment–based retirement plan or program; and
(ii) does not require the insurer under the annuity contract to pay death benefits to the beneficiaries of specific plan or program participants;
(2) a policy or certificate of life insurance that provides a death benefit under:
(i) an employee benefit plan subject to the federal Employee Retirement Income Security Act of 1974; or
(ii) any federal employee benefit program;
(3) a pre–need insurance contract;
(4) a policy or certificate of credit life insurance; or
(5) a policy or certificate of accidental death and dismemberment insurance.
(c) (1) An insurer that issues, delivers, or renews a policy of life insurance or an annuity contract in the State shall perform a comparison of the insurer’s in–force life insurance policies, annuity contracts, and retained asset accounts against the latest version of a death master file to identify any death benefit payments that may be due under the policies, contracts, or retained asset accounts as a result of the death of an insured, annuitant, or retained asset account holder.
(2) An insurer shall perform the comparison required under paragraph (1) of this subsection:
(i) at regular intervals, on at least a semiannual basis; and
(ii) in good faith, using criteria reasonably designed to identify individuals whose death would require the payment of benefits by the insurer under a life insurance policy, annuity contract, or retained asset account.
(3) For a group life insurance policy, an insurer is not required to perform the comparison required under paragraph (1) of this subsection unless the insurer provides full record–keeping services to the group life insurance policy holder.
(d) (1) If a comparison performed by an insurer under subsection (c) of this section results in a death master file match with an insured, annuitant, or retained asset account holder, the insurer, within 90 days after the comparison was performed, shall:
(i) conduct a good faith effort to confirm the death of the insured, annuitant, or retained asset account holder using other available records and information;
(ii) determine whether benefits are due under the applicable life insurance policy, annuity contract, or retained asset account; and
(iii) if benefits are due under the policy, contract, or retained asset account:
1. use good faith efforts to locate the beneficiary; and
2. provide to the beneficiary the appropriate claims forms and instructions necessary to make a claim.
(2) An insurer shall document the good faith efforts made to:
(i) confirm the death of an insured, annuitant, or retained asset account holder under paragraph (1)(i) of this subsection; and
(ii) locate a beneficiary under paragraph (1)(iii)1 of this subsection.
(3) To the extent permitted by law, an insurer may disclose the minimum necessary personal information about an insured, an annuitant, a retained asset account holder, or a beneficiary to a person that the insurer reasonably believes may be able to assist the insurer in locating a beneficiary as required under paragraph (1)(iii)1 of this subsection.
(e) An insurer may not charge an insured, an annuitant, a retained asset account holder, a beneficiary, or any other person for any fees or costs incurred by the insurer in connection with complying with subsections (c) and (d) of this section.
(f) The Commissioner may adopt regulations to implement this section.
Md. Code, Insurance § 16-119
(a) (1) A life insurer may refuse an application for a policy of life insurance on the life of a minor only if the refusal is consistent with § 27–501(a)(2) of this article.
(2) An application for a policy of life insurance on the life of a minor that is submitted for underwriting shall include:
(i) the signature of the applicant; and
(ii) unless the minor is emancipated or married, the consent and signature of the parent or legal guardian with whom the minor resides.
(3) The life insurer shall include on the first page of the application for a policy of life insurance on the life of a minor, on a disclosure provided to the applicant at the time of application, or on an endorsement to the policy the following statement in 12 point bold type:
“A person who feloniously and intentionally kills, conspires to kill, or procures the killing of the insured and who is a named beneficiary of a life insurance policy on the insured is not entitled to a benefit under the policy.”.
(b) As part of the life insurer’s written standards and procedures for policy application and acceptance, the life insurer shall:
(1) request that the applicant for a policy of life insurance on the life of a minor identify the amount of other life insurance coverage on the life of the minor that is in force or pending at the time of the application;
(2) document the applicant’s response on the application; and
(3) take reasonable steps to verify the amount of other life insurance in force or pending.
(c) If an application for a life insurance policy on the life of a minor is for a policy that has a benefit of $50,000 or less and is issued without underwriting, the life insurer shall:
(1) request that the applicant for a policy of life insurance on the life of a minor identify the amount, if any, of other life insurance coverage on the life of the minor that is in force or pending at the time of the application;
(2) document the applicant’s response on the application;
(3) take reasonable steps to verify the total amount of life insurance in force or pending; and
(4) document the steps taken on a particular application to verify the total amount of life insurance in force or pending.
(d) (1) For each application for a policy of life insurance on the life of a minor that is rejected by a life insurer, the life insurer shall maintain at the life insurer’s home or principal office, for at least 3 years after the date the application was signed by the applicant, a complete file containing:
(i) the original signed application;
(ii) the life insurer’s underwriting analysis;
(iii) any correspondence with the applicant; and
(iv) any other documents pertinent to the decision to reject the application.
(2) The life insurer shall obtain and keep records sufficient to demonstrate that the applicant for a policy of life insurance on the life of a minor has an insurable interest in the life of the minor in accordance with § 12–201 of this article.
Md. Code, Insurance § 16-120
Except as otherwise provided in this title, an insurer shall maintain records of insurance transactions related to each individual or group policy of life insurance and each individual or group annuity for a period of at least 7 years after the policy or annuity is no longer in effect.
Md. Code, Insurance § 16-201
(a) Except as otherwise provided in this section, a policy of life insurance may not be delivered or issued for delivery in the State unless it contains in substance each applicable provision required by §§ 16-202 through 16-213 of this subtitle.
(b) This section does not apply to:
(1) group life insurance;
(2) pure endowments;
(3) annuity contracts; or
(4) a provision of a policy of life insurance or contract supplemental to the policy that relates to disability benefits or to additional benefits for death by accident or accidental means.
(c) To the extent that a provision or part of a provision required by this subtitle does not apply to a single premium or term policy, the provision or part of the provision need not be included in the policy.
Md. Code, Insurance § 16-202
(a) (1) Each policy of life insurance shall contain a provision that a grace period shall be allowed within which the payment of any premium after the first may be made.
(2) The grace period shall be:
(i) 30 days;
(ii) at the option of the insurer, 1 month of not less than 30 days; or
(iii) 4 weeks, for a policy of industrial life insurance with premiums payable more frequently than monthly.
(b) The policy continues in full force during the grace period.
(c) If a claim arises under the policy during the grace period, the amount of any premium due or overdue may be deducted from the policy proceeds.
Md. Code, Insurance § 16-203
(a) Each policy of life insurance shall contain a provision that the policy is incontestable, except for nonpayment of premiums, after the policy has been in force during the lifetime of the insured for 2 years after its date of issue.
(b) The incontestability provision described in subsection (a) of this section does not apply to policy provisions that relate to disability benefits or to additional benefits for death by accident or accidental means.
(c) A provision in a policy of life insurance that provides that the policy is incontestable after a specified period:
(1) precludes only a contest of the validity of the policy; and
(2) does not preclude the assertion of defenses based on provisions in the policy that exclude or restrict coverage, whether or not the restrictions or exclusions are excepted in the provision.
Md. Code, Insurance § 16-204
(a) Each policy of life insurance shall contain a provision that the policy, or the policy and the application for the policy if a copy of the application is endorsed on or attached to the policy when issued, constitute the entire contract between the parties.
(b) If the application is made part of the policy, the policy shall contain a provision that the statements in the application, in the absence of fraud, are considered representations and not warranties.
Md. Code, Insurance § 16-205
(a) Each policy of life insurance shall contain a provision that if the age of the insured or of any other individual whose age is considered in determining the premium or benefit has been misstated, the amount payable or benefit accruing under the policy shall be the amount or benefit that the premium would have purchased had the correct age been stated.
(b) (1) If an application or policy expressly limits the insurable age and the correct age at the date of issue is outside the insurable age limit, the policy is voidable at the option of the insurer during the lifetime of the insured, but not later than 3 years after the date of issue of the policy.
(2) If the insurer exercises the option to void the policy, the insurer shall return to the insured the aggregate of gross premiums charged on the policy, less:
(i) dividends paid in cash or used to pay premiums on the policy; and
(ii) any indebtedness to the insurer on the policy, including interest due and accrued.
(3) The insurer may not exercise the option to void the policy more than 30 days after the correct age is established.
(4) Subject to paragraph (5) of this subsection, if the insurer does not exercise the option to void the policy or if the age discrepancy is not discovered within 3 years after the date of issue of the policy, the insurer may not void the policy and the amount payable shall be determined in accordance with subsection (a) of this section.
(5) If the premium rates of the insurer at the date of issue of the policy do not include a rate for the correct age, the amount payable shall be determined in accordance with established actuarial principles.
Md. Code, Insurance § 16-206
(a) (1) Each participating ordinary life insurance policy shall contain a provision that:
(i) each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and
(ii) the dividends arising from the apportionment shall be credited each year beginning not later than the end of the third policy year.
(2) Each participating industrial life insurance policy shall contain a provision that:
(i) each year the insurer shall determine and apportion any divisible surplus under the policy that will accrue on the policy anniversary or other dividend date specified in the policy; and
(ii) the dividends arising from the apportionment shall be credited each year beginning not later than the end of the fifth policy year.
(3) The policy may not contain a provision that the payment of any dividend payable under this section is contingent on the payment of any premium due on or after the date when the dividend becomes payable.
(b) (1) Subject to paragraph (2) of this subsection, each policy shall contain a provision that the party entitled to the dividend may elect to have the dividend:
(i) paid in cash;
(ii) applied to the payment of any premium then due;
(iii) applied to provide paid-up additions to the policy; or
(iv) left to accumulate at an interest rate not less than the rate specified in the policy.
(2) A term policy need not provide the dividend options specified in paragraph (1)(iii) and (iv) of this subsection.
(3) Each participating ordinary life insurance policy shall contain a provision that a specified option becomes effective unless the party entitled to the dividend notifies the insurer in writing of a different option within 30 days after the date on which the dividend is payable.
(c) If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, the policy may provide that any divisible surplus apportioned while the insurance is in force under the nonforfeiture provision shall be applied in any manner specified in the policy.
(d) This section does not prohibit an insurer from granting to the party entitled to the dividends the right to elect another dividend option offered by the insurer in addition to the options required by this section, whether or not the additional option is specified in the policy.
(e) This section does not prohibit payment of additional dividends on default of payment of premiums or on termination of the policy.
Md. Code, Insurance § 16-207
(a) This section does not apply to:
(1) term policies;
(2) term insurance benefits provided by rider or supplemental policy provisions; or
(3) industrial life insurance policies.
(b) Each policy of life insurance shall contain a provision that, on proper assignment or pledge of the policy and on the sole security of the policy, the insurer shall advance an amount equal to, or at the option of the party entitled to the advance, an amount not exceeding the loan value of the policy:
(1) after premiums have been paid for at least 3 years;
(2) after the policy has a cash surrender value; and
(3) while no premium is in default beyond the grace period.
(c) (1) Except as provided in paragraph (2) of this subsection and subject to § 16-208 of this subtitle, the insurer may charge interest on the advance at a rate specified in the policy not exceeding an effective rate of 6% per year.
(2) The Commissioner may authorize an interest rate exceeding an effective rate of 6% but not exceeding 8% per year if the Commissioner finds that a greater rate will reduce the net cost of life insurance offered by the insurer in direct relationship to the revenue from the increase.
(d) (1) Subject to paragraph (2) of this subsection, the loan value of a policy shall at least equal the cash surrender value of the policy at the end of the current policy year.
(2) In determining the cash surrender value of a policy, the insurer may deduct from the loan value or from the proceeds of the loan:
(i) any existing indebtedness to the insurer not already deducted including any interest then accrued but not due;
(ii) any unpaid balance of the premium for the current policy year; and
(iii) interest on the loan to the end of the current policy year.
(e) Each policy may also contain a provision that:
(1) interest on any indebtedness that is not paid when due shall be added to the existing indebtedness and shall bear interest at the same rate; and
(2) the policy terminates if:
(i) the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy; and
(ii) at least 30 days before termination, the insurer mails notice to the last known address of the insured or policy owner and of any assignee of record at the home office of the insurer.
(f) Each policy shall allow the insurer to defer granting a loan, other than for the payment of a premium to the insurer, for 6 months after application for the loan.
(g) Except for those policies that require weekly premium payments, each policy shall provide for an automatic premium loan, subject to an election by the party entitled to elect.
Md. Code, Insurance § 16-208
(a) (1) In this section the following words have the meanings indicated.
(2) “Policy” includes:
(i) a certificate issued by a fraternal benefit society that provides for policy loans; and
(ii) an annuity contract that provides for policy loans.
(3) “Policyholder” includes:
(i) the owner of a policy; and
(ii) the person designated to pay premiums as shown on the records of the life insurer.
(4) “Policy loan” includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as the premiums fell due.
(5) “Published monthly average” means:
(i) Moody’s corporate bond yield average - monthly average corporates as published by Moody’s Investors Service, Inc. or its successor; or
(ii) if the Moody’s corporate bond yield average - monthly average corporates is not published, a substantially similar average that the Commissioner establishes by regulation.
(b) Each policy of life insurance issued on or after July 1, 1983, shall contain a provision that:
(1) allows a maximum interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, not exceeding an effective rate of 8% per year; or
(2) allows an adjustable maximum annual interest rate on a policy loan, including the interest rate charge on reinstatement of a policy loan during and after any lapse of a policy, set by the insurer as allowed by law not exceeding the greater of:
(i) the published monthly average for the calendar month ending 2 months before the date the rate is determined; or
(ii) the annual rate used to calculate the cash surrender values under the policy during the applicable period plus 1%.
(c) (1) If the maximum rate of interest is determined under subsection (b)(2) of this section, the policy shall include provisions that disclose the frequency at which the rate will be determined for the policy.
(2) The maximum annual interest rate for each policy with an adjustable policy loan interest rate must be determined at regular intervals at least once every 12 months, but not more than once in any 3-month period.
(d) For a policy with an adjustable policy loan interest rate, at the intervals specified in the policy:
(1) the interest rate may be increased if the calculation under subsection (b)(2) of this section would increase the annual rate by at least 0.5%; and
(2) the interest rate shall be reduced if the calculation under subsection (b)(2) of this section would reduce the annual rate by at least 0.5%.
(e) (1) This subsection applies only to a policy with an adjustable policy loan interest rate.
(2) When a cash loan is made, the life insurer shall notify the policyholder of the beginning annual interest rate on the loan.
(3) When a premium loan is made, the life insurer shall notify the policyholder as soon as is reasonably practical after making the initial loan of the beginning annual interest rate on the loan.
(4) The life insurer shall give reasonable advance notice to policyholders with outstanding loans of any increase in interest rates.
(5) The notices required under this subsection shall include the substance of the relevant provisions of subsections (b) and (c)(2) of this section.
(f) (1) This subsection applies only to a policy with an adjustable policy loan interest rate.
(2) The loan value of the policy shall be determined under Subtitle 3 of this title.
(3) A policy may not terminate during a policy year solely as the result of a change in the interest rate during the policy year.
(4) The life insurer shall maintain coverage during the policy year until the time that the policy would otherwise have terminated had there been no change in interest rate during the policy year.
(g) Unless made specifically applicable to policy loan interest rates, other provisions of law do not apply to policy loan interest rates.
(h) On request, a life insurer shall notify the policyholder each year of the cash value of the policy for the current policy year.
(i) A life insurer that offers policies with an adjustable policy loan interest rate shall establish a written pricing or dividend policy that provides that the policyholders shall receive the benefits from increased earnings of the insurer that result from the use of an adjustable rate by receiving higher dividends, higher cash values, lower premiums, or a combination of benefits.
Md. Code, Insurance § 16-209
If a policy of life insurance provides that the proceeds may be paid in installments or as an annuity, the policy shall contain a provision that so states and shall include a table that shows the amount and period of the installment or annuity if determinable when the policy is issued.
Md. Code, Insurance § 16-210
(a) Each policy of life insurance shall contain a provision that, subject to subsection (b) of this section, a policy of industrial life insurance will be reinstated within 2 years and any other policy of life insurance will be reinstated within 3 years after the due date of the first premium in default on:
(1) written application for reinstatement;
(2) the production of evidence of insurability satisfactory to the insurer; and
(3) the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer on the policy, with interest on the premiums and other indebtedness at a specified rate not exceeding an effective rate of 6% per year compounded annually.
(b) The policy shall provide that reinstatement is not allowed if:
(1) the policy has been surrendered for its cash surrender value;
(2) the cash surrender value of the policy has been exhausted because of policy indebtedness; or
(3) any paid-up term insurance has expired.
Md. Code, Insurance § 16-211
(a) Each policy of life insurance shall contain a provision that when benefits become payable because of the death of the insured, settlement shall be made on receipt of proof of death and, at the insurer’s option, on surrender of the policy, proof of the interest of the claimant, or both.
(b) The provision also shall state that benefits include the refund of premiums paid after the month in which death occurred.
Md. Code, Insurance § 16-212
(a) (1) Each policy of life insurance shall have the name of the beneficiary designated on the policy, or in the application or another form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the policy is issued, unless the beneficiary is irrevocably designated.
(2) An insurer may include in the policy a provision that a designation or change of beneficiary is not binding on the insurer until endorsed on the policy or otherwise accepted by the insurer.
(b) (1) Subject to paragraph (2) of this subsection, a policy of life insurance may provide that the insurer may make a payment under the policy to:
(i) the estate of the insured;
(ii) any relative of the insured by blood, legal adoption, or connection by marriage; or
(iii) a person that appears to the insurer to be equitably entitled to the benefits because the person is a named beneficiary or has incurred expenses for the maintenance, medical attention, or burial of the insured.
(2) The insurer may make a payment under paragraph (1) of this subsection only if:
(i) within the period stated in the policy, which may not be less than 30 days after the death of the insured, the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with proof of death;
(ii) the beneficiary is the estate of the insured;
(iii) the beneficiary is a minor;
(iv) the beneficiary dies before the insured; or
(v) the beneficiary is not legally competent to give a valid release.
(3) A policy of life insurance may include a provision that is similar to that described in paragraphs (1) and (2) of this subsection and is applicable to any other payment due under the policy.
(4) A policy of industrial life insurance also may provide that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.
Md. Code, Insurance § 16-213
(a) A policy of life insurance other than a policy of group life insurance may not be delivered or issued for delivery in the State unless the policy has a legible and brief description of the policy on the first page of the policy.
(b) The brief description shall include:
(1) the title or type or plan of policy, including the term “industrial” or “wholesale” if applicable;
(2) how long premiums are to be paid;
(3) if and when the premium may change, except for a change because of a supplementary agreement;
(4) if the benefit is not level, the use of the term “graded benefit” or a similar term to so indicate;
(5) whether the policy is participating or nonparticipating;
(6) if the policy is written on a rated underwriting basis, the terms “substandard class” or “rated class” or a substantially similar term; and
(7) if the policy provides for the return of premiums as an additional benefit, the period during which the benefit is applicable.
(c) Notwithstanding subsections (a) and (b) of this section, the brief description need not contain the items of information described in subsection (b) of this section, except for the items described in subsection (b)(1) and (5) of this section, if in the opinion of the Commissioner any of those items are:
(1) already contained in and presented conspicuously in tabular form on the first page of the policy; or
(2) presented conspicuously elsewhere in the policy and referred to in the description on the first page of the policy.
Md. Code, Insurance § 16-214
A policy of life insurance may include a rider or supplemental policy provision that offers an insured or certificate holder reimbursement or payment for long-term home health care or long-term care in a nursing home or other related institution:
(1) instead of or in addition to benefits payable because of the death of the insured or certificate holder; or
(2) instead of all or part of the cash surrender or other nonforfeiture value of the policy.
Md. Code, Insurance § 16-215
(a) Except as otherwise provided in this section, a policy of life insurance may not be delivered or issued for delivery in the State if the policy excludes or restricts liability for death that is caused in a specified manner or occurs while the insured has a specified status.
(b) (1) Except as provided in paragraph (2) of this subsection, a policy of life insurance may contain a provision that excludes or restricts coverage for death under any of the following circumstances:
(i) death as a direct or indirect result of:
1. a declared or undeclared war;
2. action by military forces;
3. an act or hazard of a declared or undeclared war or of an action by military forces;
4. service in the military forces or in civilian forces auxiliary to the military forces; or
5. any cause while the insured is a member of the military forces of any country at war, declared or undeclared, or of any country engaged in an action by military forces;
(ii) death as a result of aviation or air travel;
(iii) death that occurs within 2 years after the date of issue of the policy as a result of a specified hazardous occupation or avocation;
(iv) death that occurs within 2 years after the date of issue of the policy while the insured resides outside of the continental United States and Canada; or
(v) death that occurs within 2 years after the date of issue of the policy as a result of suicide while sane or insane.
(2) A policy of life insurance may not be delivered or issued for delivery in the State if the policy excludes or restricts liability for death that is the result of an act of terrorism that the covered person did not commit and in which the covered person did not participate.
(3) If a policy contains an exclusion or restriction listed in this subsection, the policy also shall provide that, for death under the circumstances to which the exclusion or restriction applies, the insurer shall pay a determinable amount of at least:
(i) the reserve calculated in accordance with the Commissioner’s reserve valuation method on the basis of the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits; or
(ii) if the policy does not provide nonforfeiture benefits, the reserve calculated in accordance with a mortality table and interest rate determined by the insurer and specified in the policy.
(4) The table and interest rate used under paragraph (3) of this subsection must be acceptable as a standard for the valuation of the policy in accordance with Title 5, Subtitle 3 of this article with adjustment for indebtedness or dividend credit.
(c) This section does not apply to:
(1) group life insurance;
(2) reinsurance; or
(3) a provision in a policy of life insurance that relates to additional disability benefits or to additional benefits for death by accident or accidental means.
(d) This section does not prohibit any policy provision that in the opinion of the Commissioner is more favorable to the policyholder than a provision allowed by this section.
(e) Notwithstanding any other provision of law, in any newly issued policy of life insurance, the 2-year exclusion for death as a result of suicide allowed in subsection (b)(1)(v) of this section is deemed to begin on the date on which the insurer first issued a life insurance policy to the insured except that:
(1) the exclusion for death as a result of suicide may begin on the date of issue of the new policy if the prior policy terminates:
(i) before the date of issue of the new policy; or
(ii) more than 12 months after the date of issue of the new policy;
(2) if the newly issued policy provides death benefits in excess of the amount of death benefits payable under the prior policy, the exclusion for death as a result of suicide as to the excess amount of death benefits only may begin on the date of issue of the new policy; and
(3) for purposes of the exclusion for death as a result of suicide, if more than one prior policy is terminated within the 12-month period specified in item (1) of this subsection, the suicide exclusion period for the amount of death benefits represented by the terminated policies is deemed to have begun on the dates of issue of those policies.
Md. Code, Insurance § 16-216
(a) Subject to subsection (b) of this section, a policy of life insurance may not contain:
(1) a provision that the insurer may reduce or deny liability under the policy because the insured has previously obtained other insurance from the same insurer;
(2) a provision that gives the insurer the right to declare the policy void because the insured has had a disease or ailment, whether specified or not, or has received institutional, hospital, medical, or surgical treatment or attention; or
(3) a provision that gives the insurer the right to declare the policy void because the insured has been rejected for insurance, unless the right is conditioned on a showing by the insurer that knowledge of the rejection would have led to a refusal by the insurer to issue the policy.
(b) Subsection (a)(2) of this section does not prohibit a policy provision that gives the insurer the right to declare the policy void if:
(1) the insured has received institutional, hospital, medical, or surgical treatment or attention within 2 years before the policy was issued; and
(2) the insured or a claimant under the policy fails to show that the condition occasioning the treatment or attention was not serious or was not material to the risk.
Md. Code, Insurance § 16-217
A policy of wholesale life insurance may not be delivered or issued for delivery in the State unless:
(1) the policy contains the provisions and conforms to the requirements that the Commissioner sets by regulation; and
(2) a copy of the form for the policy has been filed under § 12-203 of this article and approved by the Commissioner.
Md. Code, Insurance § 16-218
A policy of life insurance may include a rider or supplemental policy provision that operates to safeguard the contract from lapse in the event of involuntary unemployment.
Md. Code, Insurance § 16-219
(a) (1) If a policy of universal or variable life insurance contains a provision that allows a policyholder to reduce the face amount of the policy, the insurer shall provide a written notice to the policyholder.
(2) The notice shall state:
(i) that the policyholder’s policy allows for a reduction of the face amount of the policy as an option to retain coverage;
(ii) the amount to be paid to prevent the policy from lapse; and
(iii) the insurer’s customer service telephone number.
(b) The notice shall be sent to a policyholder’s last known address:
(1) at the beginning of the grace period under § 16–202 of this subtitle; and
(2) at least 30 days before termination of coverage.
Md. Code, Insurance § 16-301
(a) This subtitle does not apply to:
(1) reinsurance;
(2) group life insurance;
(3) a pure endowment;
(4) an annuity contract or reversionary annuity contract;
(5) a term policy of a uniform amount that:
(i) does not provide guaranteed nonforfeiture or endowment benefits or provide for renewal;
(ii) is for 20 years or less and expires before the insured’s age 71; and
(iii) requires uniform premiums, payable during the entire term of the policy;
(6) a term policy of a decreasing amount:
(i) that does not provide guaranteed nonforfeiture or endowment benefits; and
(ii) on which the adjusted premium, calculated under the applicable provisions of §§ 16-307 through 16-309 of this subtitle, is less than the adjusted premium on a policy or renewal of a policy of a uniform amount if the policy of the uniform amount:
1. does not provide guaranteed nonforfeiture or endowment benefits;
2. is issued at the same age and for the same initial amount of insurance;
3. is for 20 years or less and expires before the insured’s age 71; and
4. requires uniform premiums, payable during the entire term of the policy; or
(7) a policy that:
(i) does not provide guaranteed nonforfeiture or endowment benefits; and
(ii) has a cash surrender value or present value for any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated under the applicable provisions of §§ 16-305 through 16-309 of this subtitle, that does not exceed 1.5% of the amount of insurance at the beginning of the same policy year.
(b) For purposes of determining the applicability of this subtitle, the age at expiry for a joint term life insurance policy is the age at expiry of the oldest life.
Md. Code, Insurance § 16-302
The operative date of this subtitle is:
(1) a date from June 2, 1947, to April 29, 1949, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subtitle on a date before April 30, 1949;
(2) a date from May 1, 1949, to January 1, 1950, both inclusive, if allowed by the Commissioner; or
(3) April 30, 1949.
Md. Code, Insurance § 16-303
(a) Subject to § 16-304(a) of this subtitle, a policy of life insurance may not be delivered or issued for delivery in the State on or after the operative date of this subtitle unless the policy contains in substance:
(1) each provision in subsections (b) through (g) of this section; or
(2) corresponding provisions that in the opinion of the Commissioner are at least as favorable to a defaulting or surrendering policyholder as the corresponding minimum requirements in subsections (b) through (g) of this section and that essentially comply with § 16-312 of this subtitle.
(b) (1) Each policy shall contain a provision that if a premium payment is in default after premiums have been paid for at least 1 year, on proper request under paragraph (2) of this subsection the insurer will grant:
(i) a paid-up nonforfeiture benefit on a plan specified in the policy of the amount required by this subtitle, effective as of the due date of the premium in default; or
(ii) an actuarially equivalent paid-up nonforfeiture benefit that provides a greater amount or longer period of death benefits or a greater amount or earlier payment of any endowment benefits.
(2) The request for a paid-up nonforfeiture benefit must be made to the insurer within 60 days after the due date of the premium in default.
(c) Each policy shall contain a provision that unless a person entitled to elect another available option within 60 days after the due date of the premium in default makes the election, the specified paid-up nonforfeiture benefit becomes effective.
(d) Each policy shall contain a provision that on surrender of a policy within 60 days after the due date of a premium in default, instead of a paid-up nonforfeiture benefit, the insurer will pay a cash surrender value as specified in the policy of the amount required by this subtitle after premiums have been paid for at least:
(1) 3 years for ordinary life insurance; or
(2) 5 years for industrial life insurance.
(e) Each policy shall contain a provision that on surrender of a policy within 30 days after the policy anniversary, the insurer will pay a cash surrender value as specified in the policy of the amount required by this subtitle if the policy:
(1) is paid-up by completion of all premium payments; or
(2) is continued under a paid-up nonforfeiture benefit that became effective on or after:
(i) the third policy anniversary for ordinary life insurance; or
(ii) the fifth policy anniversary for industrial life insurance.
(f) (1) If a policy provides for unscheduled changes in benefits or premiums on a basis guaranteed by the policy or provides an option for changes in benefits or premiums, other than a change to a new policy, the policy shall contain a statement of the mortality table, interest rate, and method used to calculate cash surrender values and paid-up nonforfeiture benefits available under the policy.
(2) (i) Each policy other than a policy described in paragraph (1) of this subsection shall contain:
1. a statement of the mortality table and interest rate used to calculate cash surrender values and paid-up nonforfeiture benefits available under the policy; and
2. a table that shows any cash surrender value and any paid-up nonforfeiture benefit available under the policy on each policy anniversary during the first 20 years of the policy or, if shorter, the term of the policy.
(ii) Cash surrender values and paid-up nonforfeiture benefits shall be calculated on the assumption that:
1. there are no dividends or paid-up additions credited to the policy; and
2. there is no indebtedness to the insurer on the policy.
(g) Each policy shall contain:
(1) a statement that cash surrender values and paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by this article;
(2) an explanation how cash surrender values and paid-up nonforfeiture benefits are altered due to paid-up additions credited to the policy or indebtedness to the insurer on the policy;
(3) a statement that the method of calculating cash surrender values and paid-up nonforfeiture benefits has been filed with the Commissioner if a detailed statement of the calculation method is not stated in the policy; and
(4) a statement of the method of calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary after the last anniversary for which the cash surrender values and paid-up nonforfeiture benefits are shown consecutively in the policy.
Md. Code, Insurance § 16-304
(a) Any provision required under § 16-303(b) through (g) of this subtitle may be omitted from a policy of life insurance to the extent that the provision does not apply under the insurance plan.
(b) The insurer shall reserve the right to defer the payment of any cash surrender value for up to 6 months after demand for payment with surrender of the policy.
Md. Code, Insurance § 16-305
(a) On default of a premium payment due on a policy anniversary, any cash surrender value available under the policy, regardless of whether the cash surrender value is required under § 16-303 of this subtitle, shall be at least:
(1) the present value of the future guaranteed benefits, calculated as of that policy anniversary, that would have been provided under the policy, including any existing paid-up additions; less
(2) the sum of:
(i) the present value of adjusted premiums, calculated as of that policy anniversary in accordance with the applicable provisions of §§ 16-307 through 16-309 of this subtitle, corresponding to premiums that would have fallen due on or after the anniversary; and
(ii) the amount of any indebtedness to the insurer on the policy.
(b) (1) This subsection applies only to a policy that:
(i) by rider or supplemental policy provision, provides supplemental life insurance or annuity benefits at the option of the insured for an identifiable additional premium; and
(ii) is issued on or after the operative date of § 16-309 of this subtitle.
(2) On a policy subject to this subsection, the cash surrender value referred to in subsection (a) of this section shall be at least the sum of:
(i) the cash surrender value for an otherwise similar policy issued at the same age without the rider or supplemental policy provision; and
(ii) the cash surrender value calculated under subsection (a) of this section for a policy that provides only the benefits otherwise provided by the rider or supplemental policy provision.
(c) (1) This subsection applies only to a family policy that:
(i) defines a primary insured and provides term insurance on the life of the spouse of the primary insured that expires before the spouse’s age 71; and
(ii) is issued on or after the operative date of § 16-309 of this subtitle.
(2) On a policy subject to this subsection, the cash surrender value referred to in subsection (a) of this section shall be at least the sum of:
(i) the cash surrender value calculated under subsection (a) of this section for an otherwise similar policy issued at the same age without term insurance on the life of the spouse; and
(ii) the cash surrender value calculated under subsection (a) of this section for a policy that provides only the benefits otherwise provided by term insurance on the life of the spouse.
(d) (1) This subsection applies to a policy of life insurance that is paid-up by completion of all premium payments or is continued under any paid-up nonforfeiture benefit, regardless of whether the cash surrender value is required under § 16-303 of this subtitle.
(2) On a policy subject to this subsection, the cash surrender value available within 30 days after a policy anniversary shall be at least the present value, calculated as of the policy anniversary, of the future guaranteed benefits, including any existing paid-up additions, reduced by any indebtedness to the insurer on the policy.
Md. Code, Insurance § 16-306
On default of a premium payment due on a policy anniversary, the present value of any paid-up nonforfeiture benefit available under the policy, calculated as of that policy anniversary:
(1) shall at least equal the cash surrender value provided under the policy, calculated as of that policy anniversary; or
(2) if no cash surrender value is provided, shall equal the cash surrender value that would have been required under this subtitle absent a condition that premiums shall have been paid for at least a specified period.
Md. Code, Insurance § 16-307
(a) This section does not apply to a policy of life insurance issued on or after the operative date of § 16-309 of this subtitle.
(b) (1) For purposes of this section, the date of issue of a policy is the date as of which the rated age of the insured is determined.
(2) Subject to subsection (d) of this section, the adjusted premiums for a policy shall be calculated on an annual basis and shall be a uniform percentage of the premiums specified in the policy for each policy year, excluding extra premiums on a substandard policy, so that the present value of the adjusted premiums, calculated as of the date of issue, shall equal the sum of:
(i) the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;
(ii) 2% of the amount of insurance if the insurance is a uniform amount or of the equivalent uniform amount of insurance, calculated under subsection (c) of this section, if the amount of insurance varies with the duration of the policy;
(iii) subject to paragraph (3) of this subsection, 40% of the adjusted premium for the first policy year; and
(iv) subject to paragraph (3) of this subsection, 25% of the lesser of:
1. the adjusted premium for the first policy year; or
2. the adjusted premium for a whole life policy of the same uniform amount or equivalent uniform amount with uniform premiums for the duration of the insured’s life, issued at the same age and for the same amount of insurance.
(3) In applying the percentages specified in paragraph (2)(iii) and (iv) of this subsection, adjusted premiums may not be considered to exceed 4% of the amount of insurance or of the equivalent uniform amount of insurance.
(c) (1) Subject to paragraph (2) of this subsection, if a policy has a variable amount of insurance over its duration, for purposes of subsection (b) of this section the equivalent uniform amount of insurance shall be based on the uniform amount of insurance provided by an otherwise similar policy that:
(i) contains the same endowment benefits;
(ii) is issued at the same age and for the same term;
(iii) has an amount of insurance that does not vary over the duration of the policy; and
(iv) provides benefits that have the same present value at the date of issue as the benefits under the policy that has the variable amount of insurance.
(2) If the policy that has a variable amount of insurance is issued on the life of a child under age 10, the equivalent uniform amount of insurance may be calculated as though the amount of insurance provided by the policy before age 10 was the amount provided by the policy at age 10.
(d) (1) Subject to paragraph (2) of this subsection, the adjusted premiums for a policy that provides term insurance benefits by rider or supplemental policy provision shall equal the sum of:
(i) the adjusted premiums for an otherwise similar policy issued at the same age without the term insurance benefits during the period for which premiums for the term insurance benefits are payable; and
(ii) the adjusted premiums for the term insurance during the period for which premiums for the term insurance are payable.
(2) Paragraph (1)(i) and (ii) of this subsection shall be calculated separately in accordance with subsections (b) and (c) of this section except that, for purposes of subsection (b)(2)(ii), (iii), and (iv) of this section, the amount of insurance or the equivalent uniform amount of insurance used in calculating the adjusted premiums in paragraph (1)(ii) of this subsection shall equal the corresponding amount determined for the entire policy less the amount used in calculating the adjusted premiums in paragraph (1)(i) of this subsection.
Md. Code, Insurance § 16-308
(a) This section does not apply to a policy of life insurance issued on or after the operative date of § 16–309 of this subtitle.
(b) (1) This subsection does not apply to a policy governed by subsection (c) or (d) of this section.
(2) (i) For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1941 Standard Ordinary Mortality Table.
(ii) Any differential based on sex shall reflect actuarial expectancies and is subject to the Commissioner’s approval.
(3) For policies of industrial life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the 1941 Standard Industrial Mortality Table.
(4) Adjusted premiums and present values shall be calculated at an interest rate, not exceeding a rate of 3.5% per year, specified in the policy for calculating cash surrender values and paid–up nonforfeiture values.
(5) In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed 130% of the rates of mortality according to the applicable table.
(6) In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be calculated based on another mortality table specified by the insurer and approved by the Commissioner.
(c) (1) This subsection applies to policies of ordinary life insurance issued:
(i) on or after January 1, 1966, but before the operative date of § 16–309 of this subtitle; or
(ii) on an operative date from June 2, 1959, to December 31, 1965, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subsection on a date before January 1, 1966.
(2) For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits.
(3) Adjusted premiums and present values shall be calculated at an interest rate specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits, not exceeding a rate of:
(i) 3.5% per year for policies issued on or before June 30, 1978;
(ii) 4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or
(iii) 5.5% per year for policies issued on or after July 1, 1980.
(4) Adjusted premiums and present values calculated for any category of ordinary life insurance issued on female risks may be calculated according to an age not more than 6 years younger than the actual age of the insured.
(5) In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates in the Commissioners 1958 Extended Term Insurance Table.
(6) In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be calculated based on another mortality table specified by the insurer and approved by the Commissioner.
(d) (1) This subsection applies to policies of industrial life insurance issued:
(i) on or after January 1, 1968, but before the operative date of § 16–309 of this subtitle; or
(ii) on an operative date from January 1, 1964, to December 31, 1967, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subsection on a date before January 1, 1968.
(2) For policies of industrial life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits.
(3) Adjusted premiums and present values shall be calculated at an interest rate specified in the policy for calculating cash surrender values and paid–up nonforfeiture benefits, not exceeding a rate of:
(i) 3.5% per year for policies issued on or before June 30, 1978;
(ii) 4% per year for policies issued from July 1, 1978, to June 30, 1980, both inclusive; or
(iii) 5.5% per year for policies issued on or after July 1, 1980.
(4) In the calculation of the present value of paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates in the Commissioners 1961 Industrial Extended Term Insurance Table.
(5) In the calculation of adjusted premiums and present values for insurance issued on a substandard basis, the adjusted premiums and present values may be based on another mortality table specified by the insurer and approved by the Commissioner.
Md. Code, Insurance § 16-309
(a) (1) In this section the following words have the meanings indicated.
(2) “Operative date of the valuation manual” has the meaning stated in § 5–201.1(a) of this article.
(3) “Valuation manual” has the meaning stated in § 5–201.1(a) of this article.
(b) This section applies to policies of life insurance issued:
(1) on or after January 1, 1989; or
(2) on or after an operative date that is before January 1, 1989, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this section on a date before January 1, 1989.
(c) (1) For purposes of this section, the date of issue of a policy is the date as of which the rated age of the insured is determined.
(2) Except as provided in subsection (h) of this section, and subject to paragraph (3) of this subsection, the adjusted premiums for a policy shall be calculated on an annual basis and shall be a uniform percentage of the premiums specified in the policy for each policy year so that the present value of the adjusted premiums shall equal the sum of:
(i) the present value of the future guaranteed benefits, calculated as of the date of issue, provided by the policy;
(ii) 1% of either:
1. the amount of insurance if the insurance is a uniform amount; or
2. the average amount of insurance at the beginning of each of the first 10 policy years; and
(iii) subject to paragraphs (4) and (5) of this subsection, 125% of the nonforfeiture net level premium.
(3) In calculating adjusted premiums, any extra premium for impairments or special hazards or any uniform annual contract charge or policy fee specified in the policy in a statement of the method used to calculate cash surrender values and paid–up nonforfeiture benefits is excluded.
(4) The nonforfeiture net level premium shall equal the present value of the guaranteed benefits, calculated as of the date of issue, provided by the policy divided by the present value of an annuity of 1 per year, calculated as of the date of issue, payable on the date of issue of the policy and on each anniversary on which a premium is due.
(5) In applying the percentage specified in paragraph (2)(iii) of this subsection, a nonforfeiture net level premium may not be considered to exceed 4% of:
(i) the amount of insurance if the insurance is a uniform amount; or
(ii) the average amount of insurance at the beginning of each of the first 10 policy years.
(d) (1) If a policy provides for unscheduled changes in benefits or premiums on a basis guaranteed by the policy or provides an option for changes in benefits or premiums, other than a change to a new policy, the adjusted premiums and present values initially shall be calculated on the assumption that future benefits and premiums will not change from those stipulated at the date of issue of the policy.
(2) When benefits or premiums are changed, the future adjusted premiums, nonforfeiture net level premiums, and present values shall be recalculated as of the date of the change in the policy in accordance with this section on the assumption that future benefits and premiums will not change from those stipulated by the policy immediately after the change.
(e) (1) Except as provided in subsection (h) of this section, the future adjusted premiums recalculated under subsection (d)(2) of this section shall be a uniform percentage of the future premiums specified in the policy for each policy year so that the present value of the future adjusted premiums, calculated as of the time of the change to the newly defined benefits or premiums, shall equal the remainder of:
(i) the sum of the present value of the future guaranteed benefits, calculated as of the time of the change to the newly defined benefits or premiums, provided by the policy and any additional expense allowance; less
(ii) any cash surrender value or the present value of any paid–up nonforfeiture benefit under the policy, calculated as of the time of the change to the newly defined benefits or premiums.
(2) In recalculating future adjusted premiums, any extra premium for impairments or special hazards or any uniform annual contract charge or policy fee specified in the policy in a statement of the method used to calculate cash surrender values and paid–up nonforfeiture benefits is excluded.
(f) The additional expense allowance, calculated as of the time of the change to the newly defined benefits or premiums, is the sum of:
(1) 1% of the remainder, if positive, of:
(i) the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change; less
(ii) the average amount of insurance before the change at the beginning of each of the first 10 policy years subsequent to the most recent previous change or, if there has not been a previous change, subsequent to the date of issue of the policy; and
(2) 125% of the increase, if positive, in the nonforfeiture net level premium.
(g) The recalculated nonforfeiture net level premium equals the quotient of:
(1) the sum of:
(i) the nonforfeiture net level premium applicable before the change multiplied by the present value of an annuity of 1 per year payable on each anniversary of the policy on or subsequent to the date of change on which a premium would have been due had the change not occurred; and
(ii) the present value of the increase in future guaranteed benefits provided by the policy; divided by
(2) the present value of an annuity of 1 per year payable on each anniversary of the policy on or after the date of change on which a premium is due.
(h) (1) This subsection applies only to policies issued on a substandard basis that provide reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on a standard basis that provides higher uniform amounts of insurance.
(2) Notwithstanding any other provision of this section, the adjusted premiums and present values for a substandard policy subject to this subsection may be calculated as if the policy was issued to provide the higher uniform amounts of insurance on the standard basis.
(i) (1) (i) For policies of ordinary life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on:
1. the Commissioners 1980 Standard Ordinary Mortality Table; or
2. at the election of the insurer for one or more specified life insurance plans, the Commissioners 1980 Standard Ordinary Mortality Table with 10–year select mortality factors.
(ii) For policies of industrial life insurance, the adjusted premiums and present values referred to in this subtitle shall be calculated based on the Commissioners 1961 Standard Industrial Mortality Table.
(2) Adjusted premiums and present values for policies issued in any calendar year shall be calculated based on an interest rate that does not exceed the nonforfeiture interest rate calculated under this section:
(i) for that calendar year; or
(ii) at the option of the insurer, for the immediately preceding calendar year.
(j) (1) Any cash surrender value available under a paid–up nonforfeiture benefit, including any paid–up dividend additions, regardless of whether required under § 16–303 of this subtitle, shall be calculated based on the mortality table and interest rate used to determine the amount of the paid–up nonforfeiture benefit and any paid–up dividend additions.
(2) An insurer may not calculate the amount of any guaranteed paid–up nonforfeiture benefit including any paid–up additions under the policy based on an interest rate lower than the rate specified in the policy for calculating cash surrender values.
(3) In calculating the present value of any paid–up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, an insurer may not assume a mortality rate greater than the mortality rates shown in:
(i) for policies of ordinary life insurance, the Commissioners 1980 Extended Term Insurance Table; and
(ii) for policies of industrial life insurance, the Commissioners 1961 Industrial Extended Term Insurance Table.
(4) The calculation of adjusted premiums and present values for insurance issued on a substandard basis may be based on appropriate modifications of the tables required under this section.
(5) (i) For policies issued before the operative date of the valuation manual, in determining the minimum nonforfeiture standard, an insurer may substitute any Commissioners standard ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulation of the Commissioner for the Commissioners 1980 Standard Ordinary Mortality Table, with or without 10–year select mortality factors or for the Commissioners 1980 Extended Term Insurance Table.
(ii) 1. Subject to subsubparagraph 2 of this subparagraph, for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for:
A. the Commissioners 1980 Standard Ordinary Mortality Table, with or without 10–year select mortality factors; or
B. the Commissioners 1980 Extended Term Insurance Table.
2. If the Commissioner approves by regulation any Commissioners standard ordinary mortality table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, the minimum nonforfeiture standard approved by the Commissioner supersedes the minimum nonforfeiture standard provided by the valuation manual.
(6) (i) For policies issued before the operative date of the valuation manual, in determining the minimum nonforfeiture standard, an insurer may substitute any Commissioners standard industrial mortality table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulation of the Commissioner for the Commissioners 1961 Standard Industrial Mortality Table or for the Commissioners 1961 Industrial Extended Term Insurance Table.
(ii) 1. Subject to subsubparagraph 2 of this subparagraph, for policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the Commissioners standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for:
A. the Commissioners 1961 Standard Industrial Mortality Table; or
B. the Commissioners 1961 Industrial Extended Term Insurance Table.
2. If the Commissioner approves by regulation any Commissioners standard industrial mortality table adopted by the NAIC for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual, the minimum nonforfeiture standard approved by the Commissioner supersedes the minimum nonforfeiture standard provided by the valuation manual.
(k) (1) For policies issued before the operative date of the valuation manual, the nonforfeiture interest rate per year for a policy issued during a calendar year shall equal the greater of:
(i) 4%; or
(ii) 125% of the calendar year statutory valuation interest rate for the policy, in accordance with the standard valuation law, set forth in Title 5, Subtitle 3 of this article, rounded to the nearest 0.25%.
(2) For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per year for a policy issued during a calendar year shall be the interest rate provided by the valuation manual.
(l) Notwithstanding any other provision of this article, an insurer that refiles nonforfeiture values or refiles the method of calculating nonforfeiture values for a policy form that has been previously approved need not refile any other provision of the policy form if the refiling only involves a change in the interest rate or mortality table used to calculate nonforfeiture values.
Md. Code, Insurance § 16-310
(a) This section applies to a plan of life insurance:
(1) that provides that the insurer will determine future premiums based on future experience estimates; or
(2) the minimum values of which cannot be determined under the applicable provisions of §§ 16-303 through 16-309 of this subtitle.
(b) The Commissioner must be satisfied that:
(1) the benefits provided under the plan described in subsection (a) of this section are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by §§ 16-303 through 16-309 of this subtitle; and
(2) the benefits and the pattern of premiums under the plan do not mislead prospective policyholders or insureds.
(c) The cash surrender values and paid-up nonforfeiture benefits provided by a plan subject to this section may not be less than the minimum values and benefits required for the plan calculated by a method consistent with the principles of this subtitle, as determined by regulations adopted by the Commissioner.
Md. Code, Insurance § 16-311
(a) On default of a premium payment due on a policy of life insurance at a time other than the policy anniversary, any cash surrender value and paid-up nonforfeiture benefit available under the policy shall be calculated with an allowance for the lapse of time and the payment of any fractional premiums since the immediately preceding policy anniversary.
(b) Values referred to in §§ 16-305 through 16-309 of this subtitle may be calculated on the assumption that a death benefit is payable at the end of the policy year of death.
(c) The net value of any paid-up additions, other than paid-up term additions, may not be less than the amounts used to provide the additions.
(d) Notwithstanding § 16-305 of this subtitle, the following additional benefits and premiums for the benefits shall be disregarded when calculating cash surrender values and nonforfeiture benefits required under this subtitle and need not be included in any paid-up nonforfeiture benefits:
(1) benefits payable for death by accident or accidental means;
(2) benefits payable for dismemberment or loss of sight;
(3) benefits payable for total and permanent disability;
(4) benefits payable as a reversionary annuity or deferred reversionary annuity benefits;
(5) benefits for long-term home health care and long-term care in a nursing home or similar institution;
(6) term insurance benefits provided by a rider or supplemental policy provision if this subtitle would not apply had the rider or supplemental policy provision been issued as a separate policy;
(7) term insurance benefits payable on the life of a child provided in a policy on the life of a parent of the child if the term insurance:
(i) expires before the child turns 26 years old;
(ii) is a uniform amount after the child is 1 year old;
(iii) has not become paid-up due to the death of a parent of the child; and
(8) other policy benefits additional to life insurance or endowment benefits.
Md. Code, Insurance § 16-312
(a) This section applies to policies of life insurance issued on or after January 1, 1986, and is in addition to any other applicable provisions of this subtitle.
(b) On default of a premium payment due on a policy anniversary, any cash surrender value available under the policy may not differ from the sum of the greater of the basic cash value calculated in accordance with subsection (c) of this section and zero and the present value of any existing paid-up additions less any indebtedness to the insurer on the policy by more than 0.2% of:
(1) the amount of insurance if the insurance is a uniform amount; or
(2) the average amount of insurance at the beginning of each of the first 10 policy years.
(c) The basic cash value on any anniversary equals the remainder of:
(1) the present value of the future guaranteed benefits, calculated as of the anniversary, that would have been provided by the policy, excluding any existing paid-up additions and before the deduction of any indebtedness to the insurer on the policy; less
(2) the present value of the nonforfeiture factors, calculated under subsection (e) of this section, corresponding to the premiums that would have fallen due on or after the anniversary.
(d) The effects on the basic cash value of supplemental life insurance, annuity benefits, or family coverage as described under the applicable provisions of §§ 16–305, 16–307, 16–308(b), and 16–309 of this subtitle shall be the same as the effects on cash surrender values under those applicable provisions.
(e) (1) The nonforfeiture factor for each policy year shall be equal to the percentage of the adjusted premium for that policy year calculated in accordance with the applicable provisions of § 16-307, § 16-308(b), or § 16-309 of this subtitle.
(2) Except as required under paragraph (4) of this subsection, the percentage of the adjusted premium shall be the same percentage for each policy year between:
(i) the second policy anniversary; and
(ii) the later of:
1. the fifth policy anniversary; or
2. the first policy anniversary when there is a cash surrender value available under the policy, excluding any paid-up additions but including any indebtedness on the policy, of at least 0.2% of the amount of insurance if the insurance is a uniform amount or of the average amount of insurance at the beginning of each of the first 10 policy years.
(3) The percentage of the adjusted premium after the later of the 2 policy anniversaries specified in paragraph (2) of this subsection shall apply for at least 5 consecutive policy years.
(4) The basic cash value may not be less than the value that would be obtained if the adjusted premiums for the policy calculated under the applicable provisions of § 16-307, § 16-308(b), or § 16-309 of this subtitle were substituted for the nonforfeiture factors in the calculation of the basic cash value.
(f) Adjusted premiums and present values referred to in this section shall be calculated for each policy on the same mortality and interest bases that are used to demonstrate compliance of the policy with other applicable provisions of this subtitle.
(g) Cash surrender values referred to in this section include endowment benefits provided by the policy.
(h) (1) Any cash surrender value available under a policy, other than on default of a premium due on a policy anniversary, and any paid-up nonforfeiture benefit available under a policy on default of a premium payment shall be determined in a manner consistent with the manner specified to determine the analogous minimum amounts under the applicable provisions of §§ 16-303 through 16-306, § 16-309, and § 16-311 of this subtitle.
(2) Any cash surrender value and any paid-up nonforfeiture benefits granted in connection with additional benefits similar to those under § 16-311(d)(1) through (7) of this subtitle shall conform to the principles of this section.
Md. Code, Insurance § 16-313
This subtitle is the Maryland Standard Nonforfeiture Law for Life Insurance.
Md. Code, Insurance § 16-401
(a) Except as otherwise provided in this section, an annuity contract or pure endowment contract may not be delivered or issued for delivery in the State unless it contains in substance each applicable provision required by §§ 16-402 through 16-407 of this subtitle.
(b) This section does not apply to:
(1) reversionary annuities or survivorship annuities;
(2) group annuities; or
(3) contracts for deferred annuities included in or on the lives of beneficiaries under policies of life insurance.
(c) To the extent that a provision required by this subtitle does not apply to a single premium annuity contract or single premium pure endowment contract, the provision need not be included in the annuity contract or pure endowment contract.
Md. Code, Insurance § 16-402
(a) Each annuity contract and each pure endowment contract shall contain a provision that a grace period of not less than 30 days shall be allowed within which any stipulated payment to the insurer due after the first may be made.
(b) The annuity contract or pure endowment contract continues in full force during the grace period.
(c) The insurer may charge interest on a payment made during the grace period at a rate specified in the annuity contract or pure endowment contract, not exceeding 6% per year, for the number of days that elapse in the grace period before the payment.
(d) If a claim arises under the annuity contract or pure endowment contract due to death during the grace period before the overdue payment to the insurer or any deferred payments of the current contract year are made, the amount of the payments, with interest on any overdue payments, may be deducted from any amount payable under the annuity contract or pure endowment contract in settlement.
Md. Code, Insurance § 16-403
(a) Subject to § 16-405 of this subtitle, if a statement, other than a statement about age, sex, or identity, is required as a condition to issuing an annuity contract or pure endowment contract, each annuity contract and each pure endowment contract shall contain a provision that the contract is incontestable, except for nonpayment of stipulated payments to the insurer, after the contract has been in force during the lifetime of the individual or individuals as to whom the statements are required for 2 years after its date of issue.
(b) At the option of the insurer, the contract may also except from the incontestability provision described in subsection (a) of this section provisions that relate to disability benefits or to additional benefits for death by accident or accidental means.
Md. Code, Insurance § 16-404
Each annuity contract and each pure endowment contract shall contain a provision that the contract, or the contract and the application for the contract if a copy of the application is endorsed on or attached to the contract when issued, constitute the entire contract between the parties.
Md. Code, Insurance § 16-405
(a) Each annuity contract and each pure endowment contract shall contain a provision that, if the age or sex of the individual or individuals on whose life or lives the contract is made, or of any of them, has been misstated, the amount payable or benefit accruing under the contract shall be the amount or benefit that the stipulated payment would have purchased had the correct age or sex been stated.
(b) Each contract also shall contain a provision that if the insurer makes or has made an overpayment because of a misstatement of age or sex, the amount of the overpayment, with interest at a rate specified in the contract but not exceeding 6% per year, may be charged against the current or next payment or payments to be made by the insurer under the contract.
Md. Code, Insurance § 16-406
(a) (1) Each participating annuity contract and each participating pure endowment contract shall contain a provision that:
(i) each year the insurer shall determine and apportion any divisible surplus under the contract that will accrue on the contract anniversary or other dividend date specified in the contract; and
(ii) the dividends arising from the apportionment shall be credited each year beginning not later than the end of the third contract year.
(2) The payment of any dividend payable on or after the end of the third contract year may not be made contingent on the payment of any consideration due on or after the date when the dividend becomes payable.
(b) (1) Each contract shall contain a provision that the party entitled to the dividend may elect to have the dividend paid in cash or applied to the payment of any consideration then due.
(2) Each contract shall contain a provision that a specified option becomes effective unless the party entitled to the dividend notifies the insurer in writing of election of a different option within 30 days after the date on which the dividend is payable.
(c) A deferred annuity contract need not provide for participation in surplus after annuity payments begin.
(d) This section does not prohibit an insurer from granting to the party entitled to the dividend the right to elect another dividend option offered by the insurer in addition to the options required by this section, whether or not the additional option is specified in the contract.
Md. Code, Insurance § 16-407
(a) Each annuity contract and each pure endowment contract shall contain a provision that, unless the cash surrender value has been paid, the contract may be reinstated, within 1 year after default in making stipulated payments to the insurer, on the payment of all overdue stipulated payments and the payment or reinstatement of any other indebtedness to the insurer on the contract, with interest on the payments and other indebtedness at a rate specified in the contract not exceeding 6% per year.
(b) If applicable, the insurer may require evidence of insurability satisfactory to the insurer.
Md. Code, Insurance § 16-408
(a) A contract for a reversionary or survivorship annuity may not be delivered or issued for delivery in the State unless it contains in substance each provision required by this section.
(b) (1) Except as provided in paragraph (2) of this subsection, each contract for a reversionary or survivorship annuity shall include each provision specified in §§ 16-402 through 16-406 of this subtitle.
(2) As to the provision required by § 16-402(d) of this subtitle, the insurer may provide for an equitable reduction of the amount of annuity payments in settlement of an overdue payment instead of providing for deduction of payments from an amount payable on settlement under the contract.
(c) Each contract for a reversionary or survivorship annuity shall contain a provision that the contract may be reinstated within 3 years after the date of default in making stipulated payments to the insurer, on:
(1) the production of evidence of insurability satisfactory to the insurer; and
(2) (i) the payment of all overdue payments and any indebtedness to the insurer on the contract with interest at a rate specified in the contract not exceeding 6% per year compounded annually; or
(ii) the reinstatement as indebtedness on the contract of the amount stated in item (i) of this item, if this amount is within the limits allowed by the then cash value of the contract.
(d) (1) This section does not apply to group annuities or to annuities included in policies of life insurance.
(2) To the extent that a provision required by this section does not apply to a single premium annuity, the provision need not be incorporated in the contract.
Md. Code, Insurance § 16-409
An annuity contract may include a rider or supplemental contract provision that offers a contract holder reimbursement or payment for long–term home health care or long–term care in a nursing home or other related institution:
(1) instead of or in addition to the annuity benefits payable under the contract; or
(2) instead of all or part of the cash surrender or other nonforfeiture value of the contract.
Md. Code, Insurance § 16-501
This subtitle does not apply to:
(1) reinsurance;
(2) a group annuity purchased under a retirement plan or deferred compensation plan established or maintained by an employer, including a partnership or sole proprietorship, or employee organization, or by both, other than a plan that provides individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code;
(3) a premium deposit fund;
(4) a variable annuity;
(5) an investment annuity;
(6) an immediate annuity;
(7) a deferred annuity contract after annuity payments have begun;
(8) a reversionary annuity; or
(9) an annuity contract that is delivered outside the State through an insurance producer or other representative of the insurer issuing the contract.
Md. Code, Insurance § 16-502
The operative date of this subtitle is:
(1) a date from July 2, 1980, to June 30, 1982, both inclusive, as specified by the insurer if the insurer filed with the Commissioner written notice of an election to comply with this subtitle on a date before July 1, 1982; or
(2) July 1, 1982.
Md. Code, Insurance § 16-503
(a) An annuity contract may not be delivered or issued for delivery in the State on or after the operative date of this subtitle unless the annuity contract contains:
(1) each applicable provision of subsections (b) through (g) of this section; or
(2) corresponding provisions that the Commissioner believes are at least as favorable to the contract holder after payment of considerations under the annuity contract stops.
(b) Each annuity contract shall contain a provision that when payment of considerations under the annuity contract stops or on the written request of the contract owner, the insurer will grant a paid-up annuity benefit on a plan stipulated in the annuity contract in compliance with §§ 16-505 through 16-509 of this subtitle.
(c) (1) Each annuity contract shall contain a provision that if the annuity contract provides for a lump-sum settlement at maturity or at any other time, on surrender of the annuity contract on or before the start of annuity payments, the insurer will pay a cash surrender benefit in accordance with §§ 16-505, 16-506, 16-508, and 16-509 of this subtitle instead of a paid-up annuity benefit.
(2) (i) The annuity contract may state that the insurer shall reserve the right to defer the payment of the cash surrender value for up to 6 months after demand for payment with surrender of the annuity contract.
(ii) 1. Before making a deferment under subparagraph (i) of this paragraph, the insurer shall make a written request to the Commissioner to make the deferment under subparagraph (i) of this paragraph.
2. The request under subsubparagraph 1 of this subparagraph shall address the necessity of the deferral and the equitability to all policyholders of the deferral.
(iii) After receiving written approval from the Commissioner on the request made under subparagraph (ii)1 of this paragraph, the insurer may defer the payment of the cash surrender value.
(d) Each annuity contract shall contain a statement of any mortality table and interest rates used to calculate any minimum paid-up annuity, cash surrender, or death benefits, guaranteed by the annuity contract and shall provide sufficient information to determine the benefit amounts.
(e) (1) Each annuity contract shall contain a statement that any paid-up annuity, cash surrender, or death benefits available under the annuity contract are not less than the minimum benefits required under this article.
(2) Each annuity contract shall contain an explanation of how benefits are altered due to any additional amount that the insurer credits to the annuity contract, any indebtedness to the insurer on the annuity contract, and any prior withdrawal from or partial surrender of the annuity contract.
(f) If an annuity contract does not provide cash surrender benefits or does not provide death benefits that equal at least the minimum nonforfeiture amount before the start of annuity payments, the annuity contract shall contain a provision that so states in a prominent place in the annuity contract.
(g) (1) Notwithstanding the requirements of this section, a deferred annuity contract may contain a provision that the insurer may terminate the contract by making a single payment calculated under paragraph (2) of this subsection if:
(i) no considerations have been received under the contract for 2 years; and
(ii) the part of the paid-up annuity benefit at maturity under the contract that is available from the considerations paid before termination would be less than $20 per month.
(2) The payment shall equal the present value of the part of the paid-up annuity benefit available under the contract, calculated as of the date of termination, based on any mortality table and interest rate specified in the contract for determining the paid-up annuity benefit.
(3) A payment by an insurer under this section shall relieve the insurer of any further obligation under the deferred annuity contract.
Md. Code, Insurance § 16-504
(a) The minimum values specified under §§ 16–505 through 16–509 of this subtitle of any paid–up annuity, cash surrender, or death benefits under an annuity contract shall be based on minimum nonforfeiture amounts calculated under this section.
(b) (1) At any time before or at the start of any annuity payments, the minimum nonforfeiture amount under an annuity contract shall equal the remainder of:
(i) the accumulation until that time, of the net considerations paid prior to that time, at an interest rate determined under subsection (c) of this section; less
(ii) the sum of:
1. any withdrawal from or partial surrender of the contract accumulated at the interest rate determined under subsection (c) of this section;
2. an annual contract charge of $50 accumulated at the interest rate determined under subsection (c) of this section;
3. any premium tax actually paid by the company for the contract, not to include a premium tax credited back to the company, accumulated at the interest rate determined under subsection (c) of this section; and
4. any indebtedness to the insurer on the contract, including interest due and accrued.
(2) The net considerations for a given contract year used to calculate the minimum nonforfeiture amount shall equal 87.5% of the gross considerations credited to the contract during that contract year.
(c) (1) The interest rate used to determine the minimum nonforfeiture amounts under subsection (b) of this section shall be an annual rate of interest that is equal to the lesser of:
(i) 3% per year; or
(ii) the 5–year constant maturity treasury rate reported by the Federal Reserve Board.
(2) The 5–year constant maturity treasury rate under paragraph (1)(ii) of this subsection shall be:
(i) 1. as of a date not more than 15 months before either the contract issue date or redetermination date; or
2. averaged over a period of not more than 15 months before the contract issue date or redetermination date; and
(ii) rounded to the nearest one–twentieth of 1% and then reduced by 125 basis points.
(3) The interest rate calculated under paragraphs (1) and (2) of this subsection may not be less than 0.15%.
(4) (i) The interest rate calculated under paragraphs (1) and (2) of this subsection:
1. shall apply to the initial contract period; and
2. may be redetermined for additional periods.
(ii) The contract shall state:
1. whether the interest rate will be redetermined; and
2. the interest rate redetermination date, basis, and period, if any.
(d) (1) During the period that a contract provides for substantive participation in an equity index benefit, the insurer may increase the 125 basis points under subsection (c)(2)(ii) of this section up to an additional 100 basis points to reflect the value of the equity index benefit.
(2) On the issue date of the contract, and on each redetermination date, the present value of the additional reduction may not exceed the market value of the equity index benefit.
(3) (i) The Commissioner may require the insurer to demonstrate that the present value of the additional reduction does not exceed the market value of the equity index benefit.
(ii) If the Commissioner finds that the demonstration under subparagraph (i) of this paragraph is inadequate, the Commissioner may disallow or limit the additional reduction.
(e) (1) The Commissioner may adopt regulations to implement the provisions of this section.
(2) The regulations under paragraph (1) of this subsection may provide for:
(i) adjustments to the calculation of the minimum nonforfeiture amount for contracts that provide substantive participation in an equity index benefit; and
(ii) adjustments for other contracts as determined by the Commissioner.
Md. Code, Insurance § 16-505
(a) Any paid-up annuity benefit available under an annuity contract shall be:
(1) the present value of the annuity benefit on the date annuity payments are to begin; and
(2) at least the minimum nonforfeiture amount on that date.
(b) The present value shall be calculated using any mortality table and the interest rate specified in the annuity contract to determine minimum paid-up annuity benefits guaranteed in the contract.
Md. Code, Insurance § 16-506
(a) This section applies only to annuity contracts that provide cash surrender benefits.
(b) Cash surrender benefits available before maturity under an annuity contract may not be less than the remainder of:
(1) the present value as of the surrender date of the part of the maturity value of the paid-up annuity benefit that would be provided at maturity from considerations paid before the surrender date and any existing additional amount credited by the insurer to the contract; less
(2) the appropriate amount that reflects prior withdrawals from or partial surrenders of the contract and any indebtedness to the insurer on the contract, including interest due and accrued.
(c) The present value under subsection (b)(1) of this section shall be calculated using an interest rate not more than 1% higher than the interest rate specified in the contract for accumulating net considerations to determine the maturity value.
(d) (1) A cash surrender benefit may not be less than the minimum nonforfeiture amount at the time of surrender.
(2) A death benefit under a contract subject to this section shall equal at least the cash surrender benefit.
Md. Code, Insurance § 16-507
(a) This section applies only to annuity contracts that do not provide cash surrender benefits.
(b) The present value of a paid-up annuity benefit available as a nonforfeiture option before maturity may not be less than the sum of:
(1) the present value of that part of the maturity value of the paid-up annuity benefit under the annuity contract from considerations paid before the contract is surrendered for or changed to a deferred paid-up annuity; and
(2) any existing additional amount credited by the insurer to the contract.
(c) (1) The present value under subsection (b)(1) of this section shall be calculated for the period before the maturity date using an interest rate specified in the annuity for accumulating the net considerations to determine the maturity value.
(2) If the contract does not provide a death benefit before the start of annuity payments, the present value shall be calculated using the interest rate and mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit.
(d) The present value of a paid-up annuity benefit may not be less than the minimum nonforfeiture amount at the time of surrender.
Md. Code, Insurance § 16-508
(a) This section applies to a determination of the benefits calculated under § 16-506 or § 16-507 of this subtitle for an annuity contract that allows an election to have annuity payments begin at optional maturity dates.
(b) The maturity date of an annuity contract described in subsection (a) of this section shall be deemed to be the latest date for which an election is allowed under the contract, but may not be later than the later of the contract anniversary immediately following the annuitant’s 70th birthday or the tenth anniversary of the contract.
Md. Code, Insurance § 16-509
(a) Any paid-up annuity, cash surrender, or death benefits available at any time other than on a contract anniversary under an annuity contract with fixed scheduled considerations shall be calculated with an allowance for the lapse of time and the payment of any scheduled considerations after the start of the contract year in which payment of considerations stops.
(b) (1) This subsection applies only to an annuity contract that provides by rider or supplemental contract provision both annuity benefits and life insurance benefits that exceed the greater of:
(i) the cash surrender benefits; or
(ii) a return of the gross considerations with interest.
(2) The minimum nonforfeiture benefits shall:
(i) be calculated separately as if the annuity benefits and life insurance benefits were provided under separate contracts; and
(ii) equal the sum of:
1. the minimum nonforfeiture benefits for the annuity part of the contract; and
2. the minimum nonforfeiture benefits for the life insurance part of the contract.
(c) Notwithstanding this section and §§ 16-505 through 16-508 of this subtitle, the following supplemental benefits and considerations for the benefits shall be disregarded when calculating the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits required under this subtitle:
(1) benefits payable for total and permanent disability;
(2) benefits payable as reversionary annuity or deferred reversionary annuity benefits; or
(3) other policy benefits additional to life insurance, endowment, and annuity benefits.
(d) Additional benefits under subsection (c) of this section need not be included in any paid-up benefits unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.
Md. Code, Insurance § 16-510
This subtitle is the Maryland Standard Nonforfeiture Law for Individual Deferred Annuities and shall be interpreted in a manner consistent with the Standard Nonforfeiture Model Law for Individual Deferred Annuities published by the National Association of Insurance Commissioners.
Md. Code, Insurance § 16-601
(a) (1) A stock insurer or mutual insurer may issue individual and group variable life insurance contracts that provide for payment varying directly with the investment experience of a segregated asset account if the stock insurer or mutual insurer:
(i) is authorized to issue life insurance contracts in the State; and
(ii) is authorized by the Commissioner to issue individual and group variable life insurance contracts.
(2) A stock insurer or mutual insurer may issue individual and group variable annuity contracts that provide for payment varying directly with the investment experience of a segregated asset account if the stock insurer or mutual insurer:
(i) is authorized to issue annuity contracts in the State; and
(ii) is authorized by the Commissioner to issue individual and group variable annuity contracts.
(b) To be authorized to issue variable contracts, a stock insurer or mutual insurer shall comply with regulations adopted by the Commissioner.
(c) The regulations of the Commissioner may include:
(1) requirements for a minimum capital and surplus in excess of the amount otherwise required for the issuance of life insurance contracts and annuity contracts that are not variable contracts; and
(2) other requirements that the Commissioner considers appropriate to safeguard the interests of variable contract holders, other policyholders, insurers, and the public.
Md. Code, Insurance § 16-602
(a) (1) A segregated asset account may invest in any investments contractually permitted for the segregated asset account and specified in a plan of operation, and the restrictions, limitations, and other provisions of this article relating to investments shall not apply to the investments contained in the segregated asset account, provided that prior to delivery or issuance for delivery in the State, the form of the policy or annuity contract and the plan of operation have been filed with and approved by the Commissioner.
(2) Preferred and common stock investments of amounts allocated to a segregated asset account may not be included in applying the 10% limitations under § 5–511(f) of this article.
(b) The investments of a segregated asset account shall comply with the regulations of the Commissioner.
(c) To the extent provided under the applicable contracts, the part of the assets of a segregated asset account equal to the reserves and other contract liabilities with respect to the account may not be chargeable with liabilities arising out of any other business that the insurer may conduct.
Md. Code, Insurance § 16-603
(a) A variable life insurance policy or variable annuity contract may not be delivered or issued for delivery in the State until the form of the policy or annuity contract has been filed with and approved by the Commissioner.
(b) By regulation, the Commissioner shall determine the grace, reinstatement, and nonforfeiture provisions and other required policy provisions that are appropriate to variable life insurance contracts and variable annuity contracts.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://mgaleg.maryland.gov/mgawebsite/Laws/StatutesFetched: 10/16/2026