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2370 VETOES
Life Insurance Policy Loans
FOR the purpose of permitting and setting guidelines for life
insurers to include in life insurance policies issued after
the effective date of this Act a provision for periodic
adjustment of policy loan interest rates; and generally
relating to life insurance policy loans.
BY adding to
Article 48A - Insurance Code
Section 394A
Annotated Code of Maryland
(1979 Replacement Volume and 1982 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:
Article 48A - Insurance Code
394A.
(A) (1) IN THIS SECTION, "PUBLISHED MONTHLY AVERAGE" MEANS:
(1) MOODY'S CORPORATE BOND YIELD AVERAGE - MONTHLY
AVERAGE CORPORATES AS PUBLISHED BY MOODY'S INVESTOR'S SERVICE,
INC. OR ITS SUCCESSOR; OR
(2) 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) LIFE INSURANCE POLICIES ISSUED ON OR AFTER JULY 1, 1983
SHALL PROVIDE FOR POLICY LOAN INTEREST RATES AS FOLLOWS EITHER:
(1) A PROVISION PERMITTING A MAXIMUM INTEREST RATE
THAT DOES NOT EXCEED AN EFFECTIVE ANNUAL RATE OF 8 PERCENT; OR
(2) A PROVISION PERMITTING AN ADJUSTABLE MAXIMUM
ANNUAL INTEREST RATE ESTABLISHED FROM TIME TO TIME BY THE LIFE
INSURER AS PERMITTED BY LAW.
(C) THE ANNUAL RATE OF INTEREST CHARGED ON A POLICY LOAN
MADE UNDER SUBSECTION (B)(2) OF THIS SECTION MAY NOT EXCEED THE
HIGHER OF:
(1) THE PUBLISHED MONTHLY AVERAGE FOR THE CALENDAR
MONTH ENDING 2 MONTHS BEFORE THE DATE ON WHICH THE RATE IS
DETERMINED; OR
(2) THE ANNUAL RATE USED TO COMPUTE THE CASH
SURRENDER VALUES UNDER THE POLICY DURING THE APPLICABLE PERIOD
PLUS 1 PERCENT.
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