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July 12, 2002 at 08:00 PM
NU Online News Service, July 12, 3:37 p.m. – Delaware Gov. Ruth Ann Minner, a Democrat, has signed H.B. 535, a bill that reduces, for a three-year period, the minimum interest rate on individual fixed annuity contract nonforfeiture provisions to 1.5%, from 3%. The new minimum rate is limited to contracts of three years or less.
The final version of the bill, which was introduced in the House by Rep. Donna Stone, R-Dover, and co-sponsored by Sen. Nancy Cook, D-Kenton, will amend Section 2929A(d)(1) of Title 18 of the Delaware Code. The section “requires insurers to include a provision in individual fixed annuity contracts specifying that the minimum interest rate for purposes of determining the nonforfeiture amount of such contracts is 3% per annum.”
The original minimum rate of 3% is based on the National Association of Insurance Commissioners Standard Nonforfeiture Model Law. The model was adopted in 1976, during an era when interest rates were much higher.
The reduced 1.5% minimum rate is more compatible with today’s low interest rates, according to life insurance industry trade groups.
