PARRIS N. GLENDENING, Governor

Ch. 11

"Life insurance" § 1-101
"Policy" § 1-101
"Premium" § 1-101

16-208. POLICY LOAN INTEREST RATES.

(A)     DEFINITIONS.

(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)     IN GENERAL.

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:

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