New Jersey Statutes 17B:25-28. Determination of benefits
Terms Used In New Jersey Statutes 17B:25-28
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Contract: A legal written agreement that becomes binding when signed.
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
b. The amount of benefits calculated under sections 6 and 7 of this act on or after the stated or deemed maturity date shall not be reduced by any surrender charge. The amount of the benefits calculated under sections 6 and 7 of this act on or after the stated or deemed maturity date shall not be less than the greater of: (1) the present value of annuity benefits available on or after the maturity date, computed according to the assumptions stated in section 5 of this act; or (2) the amount available on or after the maturity date to be applied to the purchase of an annuity on a basis stated in a contract.
c. Contracts providing for flexible considerations may have separate surrender charge schedules associated with each consideration, provided that the nonforfeiture values are at least as great as they would be if each consideration had been a separate single consideration contract based on the requirements of subsection a. of section 4 of this act. For the purpose of determining the maturity date, the tenth anniversary of the contract shall be determined separately for each consideration.
d. (1) The difference between an annuity contract’s greater present value, utilized for determining any paid-up annuity benefit, and referred to as the contract’s accumulation value, and its lesser present value, utilized when an annuitant withdraws from the contract, and referred to as the contract’s withdrawal value, on or after the date of maturity, shall not be considered to be a surrender charge for the purposes of this section if:
(a) the accumulation value of the contract:
(i) is never available in a lump sum , and is paid out in substantially equal payments over a period of not less than five years or the surviving lifetime of the annuitant’s life, whichever period is shorter ; and
(ii) for the contract period prior to the date of maturity and during the period, on or after the date of maturity, of any annuity payments, credits a fixed rate of at least 1% more than the rate credited to the withdrawal value, or credits a rate that provides substantive participation in an equity indexed benefit with an estimated expected value of at least 1% more than the rate credited to the withdrawal value; and
(b) the separately defined withdrawal value of the contract:
(i) equals, at maturity, not less than the minimum value of the contract as defined in section 4 of P.L.2005, c.194 (C. 17B:25-24), plus any premium load; and
(ii) accumulates, from maturity and later, at the minimum rate as defined in section 4 of P.L.2005, c.194 (C. 17B:25-24).
(2) For the purpose of this subsection, the Department of Banking and Insurance may approve other methods of providing enhanced value to the accumulation value of a contract in comparison to the withdrawal value of the contract. Any method approved by the department shall be reasonably determined to provide an enhanced value to the contract’s accumulation value which is at least as favorable to the contract holder as the accumulation value provided by the provisions of this subsection.
The provisions of this section shall apply notwithstanding section 1 of P.L.2001, c.237 (C. 17B:25-18.4), shall take precedence over that section of law, and shall apply to annuity contracts regardless of whether the requirements of that section have been met.
L.2005, c.194, s.8; amended 2006, c.49, s.1.