Group Fixed Annuity Contract Uniform Standards for Employer Groups
Table of Contents
1. Date Adopted: December 3, 2023
2. Purpose and Scope: The purpose of this rule is to establish reasonable uniform standards for group immediate or deferred fixed annuity contracts that are issued to employers, or the trustees of a fund established by an employer pursuant to either a defined benefit or defined contribution plan, and are permitted in the jurisdiction where the contract is delivered or issued for delivery. These contracts may be used but are not limited to Pension Risk Transfers. The standards apply to annuity contracts that provide fixed annuity payments where funds are held in the general account or in a book value separate account where the amount of the benefits paid under the contract pursuant to the guarantees will not vary with the investment performance of the separate account. The insurance company guarantees all annuity payments purchased under the contract. The contract provisions reflect the provisions of the plan. The contracts may provide benefits to eligible plan participants who are annuitants and their beneficiaries or alternate payees. Separate additional standards apply to group annuity certificates.
3. Rules Repealed, Amended or Suspended by the Rule: None.
4. Statutory Authority: Among the IIPRC’s primary purposes and powers is to establish reasonable uniform standards for the insurance products covered in the Interstate Insurance Product Regulation Compact (‘Compact”), specifically pursuant to Article I §2, Article IV §2 and Article VII §1 of the Compact, as enacted into law by each IIPRC member state.
5. Required Findings: None.
6. Effective Date: April 1, 2024
Scope: These standards are intended to apply to paper or electronic group immediate or deferred fixed annuity contracts that are issued to employers, or the trustees of a fund established by an employer pursuant to either a defined benefit or defined contribution plan and are permitted in the jurisdiction where the contract is delivered or issued for delivery. These contracts may be used but not limited to Pension Risk Transfers. The standards apply to annuity contracts that provide fixed annuity payments where funds are held in the General Account or in a book value Separate Account where the amount of the benefits paid under the contract pursuant to the guarantees will not vary with the investment performance ofthe Separate Account. The insurance company guarantees all annuity payments purchased under the contract. The contract provisions reflect the provisions of the Plan. The contracts may provide benefits to eligible Plan participants who are Annuitants and their Beneficiaries or Alternate Payees. Separate additional standards apply to group annuity certificates.
Mix and Match: These standards are not available to be used in combination with State Product Components as described in Section 111(b) of the Operating Procedure for the Filing and Approval of Product Filings. These standards are available to be used in combination with IIPRC-approved group life insurance and annuity forms.
Self-Certification: These standards are not available to be filed using the Rule for the Self-Certification of Product Components Filed with the Interstate Insurance Product Regulation Commission.
Separate Accounts: Approval by the Interstate Insurance Product Regulation Commission of an insurance product filing in compliance with this Uniform Standard shall not be deemed as regulatory approval of the company’s use of Separate Accounts which are guaranteed in whole or in part by the General Account. Action from the Member State, both domiciliary state and if applicable, state of issue, may be required before an insurer may use an Interstate Insurance Product Regulation Commission approved contract or other product component backed by funds associated with a Separate Account. If the product contains Separate Accounts, all aspects of the Separate Account with respect to its operation, maintenance, insulation and producer licensing will be governed by applicable state law (both domiciliary and if applicable, state of issue). Upon a company receiving Interstate Insurance Product Regulation Commission approval that a policy or contract complies with the applicable Uniform Standards, the company shall ensure it has the necessary authorizations to use the Separate Account in the Compacting States based on state law requirements for Separate Accounts.
Drafting Note: The Interstate Insurance Product Regulation Commission will maintain a comprehensive listing of member states with requirements before an insurer may use an Interstate Insurance Product Regulation Commission approved contract or other product component with Separate Accounts which are guaranteed in whole or in part by the General Account.
As used in these standards the following definitions apply:
“Contract” means the group annuity contract issued to the contractholder, which may incorporate any riders, endorsements, amendments to the contract, schedules, exhibits, and tables.
“Contractholder” means the person or entity to whom the contract is issued.
“Pension Risk Transfer” - when a defined-benefit pension provider purchases a group annuity contract from an insurance company in exchange for a premium payment, in respect of some or all of its liability for pension benefits to plan participants.
§ 1. ADDITIONAL SUBMISSION REQUIREMENTS
The following additional filing submission requirements shall apply:
(1) All forms filed for approval shall be included with the filing. Changes to a previously approved form shall be highlighted.
(2) The filing shall indicate the respective contractholder, application if any, and Interstate Insurance Product Regulation Commission filed certificate to be used with the contract.
(3) Subsequent group fixed annuity form filings submitted for approval shall include only those forms being submitted for approval and should specify any other forms previously approved by the Interstate Insurance Product Regulation Commission that will be used with the subsequently filed forms.
(4) The specifications page of the contract, if any, shall be completed with hypothetical data that is realistic and consistent with the other contents of the contract.
(5) If a filing is being submitted on behalf of an insurance company, include a letter or other document authorizing the firm to file on behalf of the insurance company.
(6) If the filing contains an insert page, include an explanation of when the insert page will be used.
(7) If the contract contains variable items, include the Statement of Variability. The submission shall also include a certification that any change or modification to a variable item shall be administered in accordance with the requirements in the Variability of Information section, including any requirements for prior approval of a change or modification.
(8) Include a description of any innovative or unique features of each form and a statement that any such identified features satisfy § 2C. of these standards.
(9) If the contract includes a Separate Account, the contract shall explain any restrictions and/or limitations on transfers between/among the Separate Account and the General Account.
B. ACTUARIAL MEMORANDUM REQUIREMENTS
(1) An actuarial memorandum shall be prepared, dated and signed by the member of the American Academy of Actuaries who provides the following information:
(a) A description of the group annuity contract and contract provisions;
(b) A statement that the contract is exempt from compliance with the NAIC Annuity Nonforfeiture Model Regulation;
(1) Any information appearing in the contract that is variable shall be bracketed or otherwise marked to denote variability. The submission shall include a Statement of Variability that will discuss the conditions under which each variable item may change.
(2) Variability shall be limited to contract definitions, periods of time, percentages, numerical values, benefits available, benefit schedules and amounts, eligibility rules and other Plan parameters that are subject to the contractholder’s Plan design.
(3) Variability may not be used unilaterally by the insurance company to change or modify in-force group coverage if such change or modification would have the effect of increasing premiums or decreasing benefits, unless the contract reserves the right of the contractholder or the insurance company to effect such change or modification under the terms of the group coverage, or unless such change or modification is required by state or federal law.
(4) The Statement of Variability shall discuss:
(a) Variable items unrelated to Plan provisions. Both the conditions under which each variable item may change as well as alternative content to which the item may change shall be explained. The Statement of Variability shall present reasonable and realistic ranges for the item that may change. Any change to a range requires a re-filing for prior approval.
(b) Variable items related to Plan provisions. The Statement of Variability shall discuss the conditions under which the items may change, and if applicable, reasonable and realistic ranges for the item that may change.
(5) Notwithstanding paragraph (1) above, the following items may be denoted as variable and changed without notice or prior approval:
(a) Items such as the insurance department address and telephone number, insurance company address and telephone number, officer titles, and signatures of officers located in other areas of the contract; and
(b) Items that would be considered illustrative such as name of contractholder, and contract number, covered or eligible class, effective dates, the jurisdiction where the contract is delivered or issued for delivery.
§ 2. GENERAL FORM REQUIREMENTS
(1) With the exception of specifications pages, schedules and tables, the contract shall be presented in not less than 10 point type, 1 point leaded.
(2) The style, arrangement and overall appearance of the contract shall give no undue prominence to any portion of the text of the contract or to any riders, endorsements or amendments.
(3) The contract shall contain a table of contents or an index of its principal sections, if the contract has more than 3,000 words printed on three or fewer pages of text or if the contract has more than three pages regardless of the number of words.
(4) The contract shall include the provisions applicable to the contractholder and may or may not include the provisions applicable to the Annuitant or Beneficiary if such provisions are included in a separate certificate.
(5) The contract shall state that a certificate will be issued for each Annuitant for whom an annuity has been purchased.
(6) For Pension Risk Transfer contracts, the contract shall include the amount of the single or initial premium paid, information on data finalization dates if applicable, the type of payment (e.g. cash or cash equivalents, securities or a combination of cash and securities), and the date upon which the insurance company assumes responsibility for the annuity payment under such contract.
(1) The full corporate name, including city and state of the insurance company shall appear in prominent print on the cover page or first page of the contract.
(2) A marketing name or logo may also be used on the cover page or first page of the contract provided that the marketing name or logo does not mislead as to the identity of the insurance company.
(3) The insurance company’s complete mailing address for the home office or the office that will administer the benefit provisions of the contract shall appear on the cover page or first page of the contract. The cover page or first page of the contract shall include a telephone number of the insurance company and may also include some method of Internet communication.
(4) Two signatures of insurance company officers shall appear on the cover page of the contract.
(5) A form identification number shall appear at the bottom of the form in the lower left-hand corner of the contract. The form number shall be adequate to distinguish the form from all others used by the insurance company. The form number shall include a prefix of ICCxx (where xx represents the appropriate year the form was submitted for filing) to indicate it has been approved by the Interstate Insurance Product Regulation Commission.
(6) A brief description shall appear in prominent print on the cover page or first page of the contract or be visible without opening the contract. The brief description shall contain at least a caption of the type of annuity provided. The brief description of the contract shall also indicate whether the contract is participating or nonparticipating.
(7) The contract cover page or first page, or specifications page, shall identify:
(a) The name of the contractholder, the contract number, and the effective date of the contract; and
(b) The jurisdiction in which the contract is issued for delivery, and the contract shall state that the laws of such jurisdiction will govern the contract.
(8) The contract cover page or first page may include the contractholder signature in lieu of an application. If such a signature is used, the date signed, printed name of authorized signer and their title shall be included with the authorized signature.
The contract shall not contain inconsistent, ambiguous, unfair, inequitable or misleading clauses, provisions that are against public policy as determined by the Interstate Insurance Product Regulation Commission, or contain exceptions and conditions that unreasonably affect the risk purported to be assumed in the general coverage of the contract.
The contract shall define certain terms or describe concepts that, as used, will have specific meanings. If the contract includes the terms and concepts set forth below, the contract shall define the terms or describe the concepts in a manner consistent with the contractholder’s Plan and the insurance company’s underwriting guidelines. The terms and concepts included below reflect the parameters that are common in the group annuity market today, but may vary by insurance company and contractholder. Consequently, the terms included below are examples of language used but are not intended to prescribe how each insurance company and each contractholder should define their terms or describe their concepts. The insurance company may identify defined terms or concepts by initial capitalization, italicizing, bolding or other form of highlighting. The plural use of terms defined in the singular shall share the same meaning.
(1) “Alternate Payee” means a spouse, former spouse, child or other dependent of the Annuitant, or any other person allowed by law who is recognized by a Qualified Domestic Relations Order as having a right to receive any benefits payable under the contract.
(2) “Annuitant” means a person identified in the annuity schedule entitled to receive one or more annuity benefits. The term includes both immediate and Deferred Annuitants.
(3) “Annuity Start Date” means the date on which annuity payments purchased under the contract begin.
(4) “Beneficiary” means the person or entity designated to receive remaining annuity benefits as specified in the contract upon the death of the Annuitant.
(5) “Contingent Annuitant” means the person shown on the annuity schedule entitled to annuity benefits following the death of the Annuitant under a Joint and Survivor Form of Annuity.
(6) “Deferred Annuitant” means a person identified in the annuity schedule that has not yet elected to receive annuity payments.
(7) “Form of Annuity” means the types of annuities available to the Annuitant such as Life Annuity, Period Certain Annuity, Joint Annuity, and Joint and Survivor Annuity.
(8) “General Account” means an insurance company’s overall investment account that contains general corporate assets.
(9) “Joint Annuitant” means the person named by the Plan participant on a Joint annuity Form of Annuity to serve as the measuring life if still living following the death of the Annuitant.
(10) “Plan” means the retirement Plan specified in the contract.
(11) “Plan Administrator” means the person or entity designated by the Plan or by the employer to manage the retirement Plan.
(12) “Plan Sponsor” means the person or entity that establishes or maintains the Plan.
(13) “Separate Account” means an account established by the insurance company under the laws of the insurance company’s state of domicile. All aspects of its operation, maintenance, and the insulation of Separate Account assets will be governed by applicable state law (both domiciliary and if applicable, state of issue).
(1) The contract shall not provide for unilateral amendments that reduce or eliminate benefits or coverage, or impair or invalidate any right granted to the contractholder under the contract, except for amendments to conform to changes in any applicable provisions or requirements of the Internal Revenue Code.
B. ANNUITY SCHEDULE (Applicable for Pension Risk Transfer contracts only)
(1) The contract shall include schedule(s) listing at minimum:
(a) Each Annuitant;
(b) Annuitant’s identifying information such as date of birth and/or social security number, if applicable;
(c) Type of Annuitant, if applicable (immediate or Deferred);
(d) Type of annuity (Annuity Form);
(e) Annuity Start Date, if applicable;
(f) Amount of annuity payment; and
(g) Frequency of annuity payment.
(1) Only arbitration provisions that permit voluntary post-dispute binding arbitration shall be allowed in contract forms. If the contract includes an arbitration provision, the following guidelines apply:
(a) Arbitration shall be conducted in accordance with the rules of the American Arbitration Association (“AAA”) before a panel of three (3) neutral arbitrators who are knowledgeable in the field of life insurance and appointed from a panel list provided by the AAA.
(b) Arbitration shall be held in the city or county where the contractholder, Annuitant, Contingent Annuitant, Joint Annuitant or Beneficiary lives, depending on who has agreed to arbitration.
(c) The cost of arbitration shall be paid by the insurance company, to include any deposits or administrative fee required to commence a dispute in arbitration, as well as any other fee including the arbitrator’s fee.
(d) Where there is any inconsistency between these guidelines and AAA rules, these guidelines control.
(1) The contract may contain a provision that it cannot be assigned, pledged, sold or transferred without the consent of the insurer.
(2) The contract may specify that to the maximum extent permitted by applicable law, benefits under the contract are not subject to the claim of creditors.
(1) The contract may contain a Beneficiary provision. The contract shall not include any restriction on change of Beneficiary other than for purposes of satisfying applicable laws, regulations or Plan provisions.
(2) If the contract contains a Beneficiary provision, the contract shall state when changes in Beneficiary shall take effect, subject to any payments made or actions taken by the company prior to receipt of notice of a Beneficiary change.
(3) If irrevocable Beneficiaries are referenced in the contract, the contract shall explain that such a Beneficiary cannot be changed without the consent of the irrevocable Beneficiary.
F. COMMUTATION OF ANNUITY PAYMENTS
(1) The contract may contain a provision providing for the commutation of any life contingent or nonlife contingent annuity benefits payable under the contract.
(2) If the contract contains a commutation provision, the contract shall state that the commuted value shall be payable in a lump sum only.
G. CONFORMITY WITH INTERSTATE INSURANCE PRODUCT REGULATION
COMMISSION STANDARDS
(1) The contract shall state that it was approved under the authority of the Interstate Insurance Product Regulation Commission and issued under the Commission standards. The contract shall also state that any provision of the contract that on the provision’s effective date is in conflict with the applicable Interstate Insurance Product Regulation Commission standards for this product type in effect as of the provision’s effective date of Commission contract approval is hereby amended to conform to the Interstate Insurance Product Regulation Commission standards in effect as of the provision’s effective date of Commission contract approval.
(1) The contract may include a provision requiring the contractholder to provide the insurance company with all the data needed to compute premiums and administer the terms of the contract.
(2) The provision may give the insurance company the right to examine the contractholder insurance data at any time.
(3) The provision may state that if the insurance company or the contractholder makes an error in the data, an equitable adjustment to the premiums and/or benefits will be made according to the correct data. An error will not end insurance validly in effect, nor will it continue insurance validly ended.
(4) The contract may contain a misstatement of age, sex or other relevant data provision, describing what is done in the event data relevant to the contract is misstated.
(1) The contract shall state what happens upon death of the Annuitant.
(1) No contract may contain a provision:
(a) Purporting to reserve sole discretion to the insurance company to interpret the terms of a contract; or
(b) Specifying a standard of review upon which a court may review denial of a claim or any other decision made by an insurance company with respect to a certificateholder.
(1) The contract shall contain a provision regarding what constitutes the entire contract between the insurance company and the contractholder, which may incorporate any riders, endorsements, amendments to the contract, schedules, exhibits and tables. No document except pension plan documents may be included by reference.
(2) If an application is to be a part of the contract, the entire contract provision shall state that the application is a part of the contract if attached. All statements made by the applicant for the issuance of the contract shall, in the absence of fraud, be deemed representations and not warranties.
(1) The contract may provide the insurance company with the right to require proof that the Annuitant is living on any payment date.
(1) The contract shall identify the Forms of Annuity available to the Annuitant and a description of each Form of Annuity.
(2) If the contract includes Deferred Annuitants, the contract shall include information as applicable on the normal (default) form of annuity, any optional forms of annuity available to the Annuitant and impact on benefits in the event of early or deferred retirement or employment termination.
(1) A contract may include a legal action provision. If included, the provision shall state that a legal cause of action related to the contract shall comply with the laws of the state where the contract was delivered or issued for delivery.
If the contract is participating in the divisible surplus of the company, then the following shall apply:
(1) The conditions of the participation shall be stated in the contract.
(2) The contract shall provide that the company shall annually ascertain and apportion any divisible surplus.
(3) The contract shall describe the available dividend options. If the contract provides for more than one dividend option, the contract shall identify the automatic option.
(1) Whenever a death benefit is available under the contract, the contract may contain a provision that settlement of the death benefit proceeds shall be made upon receipt of due proof of death.
(1) The contract shall state that it will terminate when no further benefits are payable under the contract.
Effective on 04/1/2024
These standards shall apply to Group Fixed Annuity Contracts that are issued to employers, or the trustees of a fund established by an employer pursuant to either a defined benefit or defined contribution plan, and are permitted in the jurisdiction where the contract is delivered or issued for delivery.
Effective 4/1/2024
Active
These standards shall apply to Group Fixed Annuity Contracts that are issued to employers, or the trustees of a fund established by an employer pursuant to either a defined benefit or defined contribution plan, and are permitted in the jurisdiction where the contract is delivered or issued for delivery.
Effective 1/14/2020
to 3/31/2024
Inactive
The purpose of this rule is to establish reasonable uniform standards for group immediate or deferred single premium group fixed annuity contracts that are issued to employers, or the trustees of a fund established by an employer, and are permitted in the jurisdiction where the contract is delivered or issued for delivery. These contracts are used as part of a pension risk transfer. The standards apply to single premium, fixed payments where funds are held in the general or in a book value separate account where the amount of the benefits paid under the contract pursuant to the guarantees will not vary with the investment performance of the separate account. The insurance company guarantees all annuity payments purchased under the contract. The contract provisions reflect the provisions of the plan. The contracts may provide benefits to eligible plan participants who are annuitants and their beneficiaries or alternate payees. Separate additional standards apply to group annuity certificates.