Ch. 11

1996 LAWS OF MARYLAND

(I)      THE PUBLISHED MONTHLY AVERAGE FOR THE CALENDAR
MONTH ENDING 2 MONTHS BEFORE THE DATE THE RATE IS DETERMINED; OR

(II)     THE ANNUAL RATE USED TO CALCULATE THE CASH
SURRENDER VALUES UNDER THE POLICY DURING THE APPLICABLE PERIOD PLUS
1%.

(C)     FREQUENCY OF DETERMINATION OF RATE.

(1)      IF THE MAXIMUM RATE OF INTEREST IS DETERMINED UNDER
SUBSECTION (B)(2) OF THIS SECTION, THE POLICY SHALL INCLUDE PROVISIONS THAT
DISCLOSE THE FREQUENCY AT WHICH THE RATE WILL BE DETERMINED FOR THE
POLICY.

(2)     THE MAXIMUM ANNUAL INTEREST RATE FOR EACH POLICY WITH
AN ADJUSTABLE POLICY LOAN INTEREST RATE MUST BE DETERMINED AT REGULAR
INTERVALS AT LEAST ONCE EVERY 12 MONTHS, BUT NOT MORE THAN ONCE IN ANY
3-MONTH PERIOD.

(D)     INCREASING OR REDUCING RATE.

FOR A POLICY WITH AN ADJUSTABLE POLICY LOAN INTEREST RATE, AT THE
INTERVALS SPECIFIED IN THE POLICY:

(1)      THE INTEREST RATE MAY BE INCREASED IF THE CALCULATION
UNDER SUBSECTION (B)(2) OF THIS SECTION WOULD INCREASE THE ANNUAL RATE
BY AT LEAST 0.5%; AND

(2)      THE INTEREST RATE SHALL BE REDUCED IF THE CALCULATION
UNDER SUBSECTION (B)(2) OF THIS SECTION WOULD REDUCE THE ANNUAL RATE BY
AT LEAST 0.5%.

(E)     REQUIRED NOTICES TO POLICYHOLDERS.

(1)      THIS SUBSECTION APPLIES ONLY TO A POLICY WITH AN
ADJUSTABLE POLICY LOAN INTEREST RATE.

(2)      WHEN A CASH LOAN IS MADE, THE LIFE INSURER SHALL NOTIFY
THE POLICYHOLDER OF THE BEGINNING ANNUAL INTEREST RATE ON THE LOAN.

(3)      WHEN A PREMIUM LOAN IS MADE, THE LIFE INSURER SHALL
NOTIFY THE POLICYHOLDER AS SOON AS IS REASONABLY PRACTICAL AFTER
MAKING THE INITIAL LOAN OF THE BEGINNING ANNUAL INTEREST RATE ON THE
LOAN.

(4)      THE LIFE INSURER SHALL GIVE REASONABLE ADVANCE NOTICE TO
POLICYHOLDERS WITH OUTSTANDING LOANS OF ANY INCREASE IN INTEREST
RATES.

(5)      THE NOTICES REQUIRED UNDER THIS SUBSECTION SHALL INCLUDE
THE SUBSTANCE OF THE RELEVANT PROVISIONS OF SUBSECTIONS (B) AND (C)(2) OF
THIS SECTION.

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