2005 Minnesota Statutes

CHAPTER 61A. Life insurance

GENERAL PROVISIONS

     61A.01 Life insurance company defined.  

    Every corporation or association, domestic or foreign, 
 operating upon any plan involving payment of money or other 
 thing of value to policy or certificate holders, or members, or 
 families, or representatives of either, conditioned upon the 
 continuance or cessation of human life, or for the payment of 
 endowments or annuities (except benevolent, fraternal, 
 cooperative or secret societies of orders for the sole purpose 
 of mutual welfare, protection and relief of their members and 
 the payment of stipulated amounts, or the proceeds of 
 assessments, to the families of deceased members), shall be 
 deemed a life insurance company, and wherever used in this 
 chapter, the terms "company," "life company," "corporation" or 
 "association" shall be construed to mean life insurance company 
 unless the context clearly indicates otherwise.  

    HIST: 1967 c 395 art 2 s 1 

     61A.011 Interest on unpaid benefits. 

    Subdivision 1.    General requirement.  Notwithstanding 
 any other provision of law, when any insurer, including a 
 fraternal benefit society, admitted to transact life insurance 
 in this state pays the proceeds of or payments under any policy 
 of life insurance, individual or group, such insurer shall pay 
 interest at a rate not less than the then current rate of 
 interest on death proceeds left on deposit with the insurer, 
 computed from the insured's death until the date of payment, on 
 any such proceeds or payments payable to a beneficiary residing 
 in this state, or to a beneficiary under a policy issued in this 
 state, or to a beneficiary under a policy insuring a person 
 resident in this state at the time of death.  If the insurer has 
 no established current rate of interest for death proceeds left 
 on deposit with the insurer, then the rate of interest to be 
 paid under this subdivision shall be the rate of interest 
 charged by the insurer to policy holders for loans under the 
 insurer's policies. 

    Subd. 2.    Requirement for certain insurers.  
 Notwithstanding the provisions of subdivision 1, if an insurer 
 admitted to transact life insurance in this state does not pay 
 within 60 days after receipt of due proof of death of the 
 insured, the proceeds or payments under any policy of life 
 insurance, individual or group, such insurer shall pay interest 
 at an annual rate that is two percent more than the rate of 
 interest provided for in subdivision 1.  Such interest shall be 
 computed from the date of the insured's death until the date of 
 payment, on any such proceeds or payments payable to a 
 beneficiary residing in this state, or to a beneficiary under a 
 policy issued in this state or to a beneficiary under a policy 
 insuring a person resident in this state at the time of death. 
 Interest payments under this subdivision shall be in lieu of 
 interest payments required under subdivision 1. 

    Subd. 3.    Notice.  In any case in which interest on 
 the proceeds of, or payments under, any policy of life insurance 
 becomes payable pursuant to this section, the insurer shall 
 enclose with the payment a notice stating that interest is being 
 paid and specifying the rate of interest and the amount paid. 

    Subd. 4.    Payment not required.  This section shall 
 not require the payment of interest in any case in which:  (a) 
 the beneficiary or policy owner elects in writing delivered to 
 the insurer to receive the proceeds of, or payments under, the 
 policy by any means other than a lump sum payment thereof, 
 provided that the effective date of the policy settlement option 
 shall not be later than 60 days after the date of the insured's 
 death; (b) the terms of the policy insure an indebtedness owed 
 by the insured and the proceeds include postdeath interest on 
 the indebtedness; or (c) the beneficiary resides in a 
 jurisdiction which has a law requiring the payment of interest 
 to beneficiaries residing in that jurisdiction. 

    Nothing in this subdivision shall be construed to preclude 
 the payment of interest required under subdivisions 1 or 2 on 
 any proceeds remaining after extinguishment of the insured's 
 indebtedness. 

    Subd. 5.    Application.  This section shall apply only 
 to deaths of insureds which occur on or after August 1, 1977. 

    Subd. 6.    Definition.  For the purposes of this 
 section "to pay" means to issue a check for payment and "date of 
 payment" means the date on which the insurer issues a check to 
 transfer the amount in question to the beneficiaries or to 
 deposit that amount: 

    (a) with the district court of this state in accordance 
 with rule 67, Minnesota Rules of Civil Procedure for the 
 district courts; 

    (b) with the courts of any foreign jurisdiction as 
 authorized by the laws of that jurisdiction; or 

    (c) in a trust account in any bank or trust company 
 operating under the laws of this state or in any foreign bank, 
 provided that the insurer keeps records of the account and makes 
 these records open to inspection by the commissioner of commerce.

    Subd. 7.    Accidental death benefits.  Payments of 
 accidental death benefits under an individual or group policy, 
 whether payable in connection with a separate policy issued 
 solely to provide that type of coverage or otherwise, are 
 subject to this section.  If the applicable rate of interest 
 cannot be determined as provided in this section, the rate of 
 interest for purposes of subdivision 1 is the rate provided in 
 section 549.09, subdivision 1, paragraph (c). 

    Subd. 8. Repealed, 1993 c 13 art 1 s 17 

    HIST: 1977 c 353 s 1; 1983 c 289 s 114 subd 1; 1984 c 655 art 
 1 s 92; 1989 c 330 s 4; 1992 c 520 s 1; 1992 c 564 art 1 s 29 

CONTRACTS

     61A.02 Forms of policy. 

    Subdivision 1.    Prohibited.  So-called coupon policies 
 shall not be issued or delivered by any company to any residents 
 of this state.  

    Subd. 2.    Approval required.  Except as otherwise 
 authorized pursuant to subdivision 2a, no policy or certificate 
 of life insurance or annuity contract, issued to an individual, 
 group, or multiple employer trust, nor any rider of any kind or 
 description which is made a part thereof shall be issued or 
 delivered in this state, or be issued by a life insurance 
 company organized under the laws of this state, until the form 
 of the same has been approved by the commissioner.  In making a 
 determination under this section, the commissioner may require 
 the insurer to provide rates and advertising materials related 
 to policies or contracts, certificates, or similar evidence of 
 coverage issued or delivered in this state.  

    Subdivisions 1 to 5 apply to a policy, certificate of 
 insurance, or similar evidence of coverage issued to a Minnesota 
 resident or issued to provide coverage to a Minnesota resident.  
 Subdivisions 1 to 5 do not apply to a certificate of insurance 
 or similar evidence of coverage that meets the conditions of 
 section 61A.093, subdivision 2. 

    Subd. 2a.    Expedited procedure for life or annuity 
 contracts; form and rate filing reviews.  (a) An insurer may 
 file a life or annuity contract, rates, or forms and all related 
 riders of any kind or description with the commissioner for a 
 review under this subdivision.  Any review must be completed 
 within 60 days of receipt of a completed filing.  The cost of 
 any actuarial review must be paid by the insurer submitting the 
 filing under this subdivision. 

    (b) If a filing has been disapproved and is resubmitted, 
 the cover letter must note the disapproval and any changes made 
 since the earlier filing, with an explanation of why the new 
 filing should be approved.  Resubmission of disapproved forms 
 should, where possible, be made within 90 days of disapproval. 

    (c) The filer may request a hearing within ten days of 
 receiving a final disapproval.  Within 20 days of the receipt of 
 the request, the commissioner shall schedule a date for the 
 hearing, which must occur within 30 days of the scheduling.  At 
 least ten days' written notice of the hearing must be given to 
 all interested parties.  All hearings must be conducted in 
 accordance with chapter 14.  

    (d) The hearing officer may order a prehearing conference 
 for the resolution or simplification of issues, to be held no 
 less than three days before the scheduled date of a hearing. 

    (e) All actuaries used by the commissioner to review 
 filings submitted by insurers pursuant to this subdivision, 
 whether employed by the department or secured by contract, must 
 be members of the American Academy of Actuaries.  The 
 commissioner may contract with actuaries to review filings 
 submitted by insurers under this subdivision, and shall assess 
 the applicant for the costs of this review.  Payments received 
 by the commissioner under this subdivision shall be deposited in 
 the revolving fund established under section 60A.03. 

    (f) Except for the change in timing for the review of 
 completed filings found in paragraph (a) and the expedited 
 hearing procedures found in paragraph (c), nothing in this 
 subdivision shall be construed as changing the statutory and 
 regulatory standards for approval or disapproval of filings. 

    Subd. 3.    Disapproval.  The commissioner shall, within 
 60 days after the filing of any form, disapprove the form:  

    (1) if the benefits provided are unreasonable in relation 
 to the premium charged; 

    (2) if the safety and soundness of the company would be 
 threatened by the offering of an excess rate of interest on the 
 policy or contract; 

    (3) if it contains a provision or provisions which are 
 unlawful, unfair, inequitable, misleading, or encourages 
 misrepresentation of the policy; or 

    (4) if the form, or its provisions, is otherwise not in the 
 public interest.  It shall be unlawful for the company to issue 
 any policy in the form so disapproved.  If the commissioner does 
 not within 60 days after the filing of any form, disapprove or 
 otherwise object, the form shall be deemed approved.  

    For purposes of clause (2), an excess rate of interest is a 
 rate of interest exceeding the rate of interest determined by 
 subtracting three percentage points from Moody's corporate bond 
 yield average as most recently available. 

    Subd. 4.    Withdrawal of approval.  The commissioner 
 may at any time withdraw approval of any policy or form upon the 
 grounds stated in subdivision 3.  It is unlawful for the insurer 
 to issue the form or use it in connection with any policy after 
 the effective date of the withdrawal of approval.  

    Subd. 5.    Hearing.  Notification of disapproval or 
 withdrawal of approval must be made to the insurer in writing, 
 specifying the grounds for the disapproval.  Upon written 
 request made by the insurer, the commissioner shall grant a 
 hearing within 30 days after receipt of the request.  All 
 hearings must be conducted in accordance with chapter 14. 
 Following the hearing, the commissioner may affirm, reverse, or 
 modify the previous determination made with respect to the 
 subject policy or form.  

    Subd. 6.    Filing by domestic insurers for purposes of 
 complying with another state's filing requirements.  A 
 domestic insurer may file with the commissioner for 
 informational purposes only a policy, certificate of insurance, 
 or annuity contract that is not intended to be offered or sold 
 within this state.  This subdivision only applies to the filing 
 in Minnesota of a policy, certificate of insurance, or annuity 
 contract issued to an insured, certificate holder, or annuitant 
 located outside of this state when the filing is for the express 
 purpose of complying with the law of the state in which the 
 insured, certificate holder, or annuitant resides.  In no event 
 may a policy, certificate of insurance, or annuity contract 
 filed under this subdivision for out-of-state use be issued or 
 delivered in Minnesota unless and until the policy, certificate 
 of insurance, or annuity contract is approved under subdivision 
 2. 

    HIST: 1967 c 395 art 2 s 2; 1984 c 592 s 44; 1993 c 319 s 1,2; 
 1994 c 485 s 16; 1996 c 446 art 1 s 9,10; 2005 c 74 s 9,10 

     61A.021 Sale of life insurance and annuity as single 
  policy prohibited. 

    Subdivision 1.    Sale as single policy prohibited.  The 
 sale of a life insurance product and an annuity as a single 
 policy, whether in the form of a life insurance policy with an 
 annuity rider or otherwise, is prohibited in this state.  This 
 subdivision does not prohibit the simultaneous sale of these 
 products, but the sale must involve two separate and distinct 
 policies. 

    Subd. 2.    Tying prohibited.  The tying of the sale of 
 a life insurance product and an annuity is expressly prohibited. 
 The sale of one policy cannot be conditioned upon the sale of a 
 second policy.  A violation of subdivision 1 is an unfair and 
 deceptive trade practice under chapter 72A. 

    Subd. 3.    Exemption.  The commissioner may exempt by 
 order such a product from this section if it is in the public 
 interest. 

    Subd. 4.    Implementation.  This section applies to all 
 sales where applications are completed on or after July 1, 1985. 

    HIST: 1Sp1985 c 10 s 56 

     61A.03 Required provisions; life insurance policies. 

    Subdivision 1.    Generally.  No policy of life 
 insurance may be issued in this state or by a life insurance 
 company organized under the laws of this state unless it 
 contains the following provisions: 

    (a)    Premium.  A provision that all premiums are 
 payable in advance either at the home office of the company, or 
 to an agent of the company, upon delivery of a receipt signed by 
 one or more officers named in the policy and countersigned by 
 the agent, but a policy may contain a provision that the policy 
 itself is a receipt for the first premium; 

    (b)    Grace period.  A provision for a one month grace 
 period for the payment of every premium after the first, during 
 which the insurance will continue in force.  The provision may 
 subject the late payment to a finance charge and contain a 
 stipulation that if the insured dies during the grace period, 
 the overdue premium will be deducted in any settlement under the 
 policy; 

    (c)    Entire contract.  A provision that the policy 
 constitutes the entire contract between the parties and is 
 incontestable after it has been in force during the lifetime of 
 the insured for two years from its date, except for nonpayment 
 of premiums and except for violations of the conditions of the 
 policy relating to naval and military services in time of war; 
 that at the option of the company, provisions relative to 
 benefits in the event of total and permanent disability and 
 provisions which grant additional insurance specifically against 
 death by accident, may be excepted; and that a special form of 
 policy may be issued on the life of a person employed in an 
 occupation classified by the company as extra hazardous or as 
 leading to hazardous employment, which provides that service in 
 certain designated occupations may reduce the company's 
 liability under the policy to a certain designated amount not 
 less than the full policy reserve; 

    (d)    Representations and warranties.  A provision 
 that, in the absence of fraud, all statements made by the 
 insured are representations and not warranties, and that no 
 statement voids the policy unless it is contained in a written 
 application and a copy of the application is endorsed upon or 
 attached to the policy when issued; 

    (e)    Misstatement of age.  A provision that if the age 
 of the insured is understated the amount payable under the 
 policy will be the amount the premium would have purchased at 
 the correct age; 

    (f)    Dividends on participating policies.  A provision 
 that the policy will participate in the surplus of the company 
 and that, beginning not later than the end of the third policy 
 year, the company will annually determine and account for the 
 portion of the divisible surplus accruing on the policy, and 
 that the owner of the policy has the right, each year after the 
 fifth, to have the current dividend arising from the 
 participation paid in cash.  If the policy provides other 
 dividend options, it must specify which option is effective if 
 the owner of the policy does not elect an option.  The provision 
 may condition any dividends payable during the first five years 
 of the policy upon the payment of the next ensuing annual 
 premium.  This provision is not required in nonparticipating 
 policies, in policies issued on under-average lives, or in 
 insurance in exchange for lapsed or surrendered policies; 

    (g)    Policy loans.  A provision (1) that after three 
 full years' premiums have been paid, the company at any time 
 while the policy is in force, will advance, on proper assignment 
 of the policy, and on the sole security thereof, at a specified 
 rate of interest, not to exceed eight percent per annum, or at 
 an adjustable rate of interest as otherwise provided for in this 
 section, a sum equal to, or, at the option of the owner of the 
 policy, less than the loan value thereof; (2) that the loan 
 value is the cash surrender value thereof at the end of the 
 current policy year; (3) that the loan, unless made to pay 
 premiums, may be deferred for not more than six months after the 
 application for it is made; (4) that the company will deduct 
 from the loan value any existing indebtedness on the policy and 
 any unpaid balance of the premium for current policy year, and 
 may collect interest in advance on the loan to the end of the 
 current policy year; (5) that the failure to repay an advance or 
 to pay interest does not void the policy unless the total 
 indebtedness thereon to the company equals or exceeds the loan 
 value at the time of the failure, nor until one month after 
 notice has been mailed by the company to the last known address 
 of the insured and of the assignee of record at the home office 
 of the company; and (6) that no condition other than those 
 provided in this section will be exacted as a prerequisite to an 
 advance.  This provision is not required in term insurance; 

    (h)    Reinstatement.  A provision that if, in event of 
 default in premium payments, the nonforfeiture value of the 
 policy is applied to the purchase of other insurance, and if 
 that insurance is in force and the original policy has not been 
 surrendered to the company and canceled, the policy may be 
 reinstated within three years after the default upon evidence of 
 insurability satisfactory to the company and payment of arrears 
 of premiums with interest; 

    (i)    Payment of claims.  A provision that, when a 
 policy becomes a claim by the death of the insured, settlement 
 will be made within two months after receipt of due proof of 
 death; 

    (j)    Settlement option.  A table showing the amount of 
 installments in which the policy may provide its proceeds may be 
 payable; 

    (k)    Description of policy.  A title on the face and 
 on the back of the policy briefly and correctly describing the 
 policy in bold letters stating its general character, dividend 
 periods, and other particulars, so that the holder will not be 
 able to mistake the nature and scope of the contract; 

    (l)    Form number.  A form number in the lower 
 left-hand corner of the first page of each form, including 
 riders and endorsements. 

    Any of the foregoing provisions or portions thereof 
 relating to premiums not applicable to single premium policies 
 must not be incorporated therein.  

    Subd. 2.    Interest rates on policy loans.  (a) A life 
 insurance policy which provides for policy loans must contain a 
 provision concerning maximum policy loan interest rates as 
 follows:  

    (1) a provision permitting a maximum interest rate of not 
 more than eight percent per annum; or 

    (2) a provision permitting an adjustable maximum interest 
 rate established from time to time by the life insurer as 
 permitted by this subdivision.  

    (b) No life insurer may issue policies with a policy loan 
 provision providing for an adjustable maximum interest rate 
 under paragraph (a), clause (2), unless the insurer also makes 
 available policies with a policy loan provision providing for a 
 fixed rate of interest under paragraph (a), clause (1).  

    (c) The rate of interest charged on a policy loan made 
 under paragraph (a), clause (2), may not exceed the higher of 
 the following:  

    (1) the rate used to compute the cash surrender values 
 under the policy during the applicable period plus one percent 
 per annum; or 

    (2) the monthly average of the composite yield on seasoned 
 corporate bonds as published by Moody's Investors Service, 
 Incorporated, or any successor thereto, for the calendar month 
 ending two months before the date on which the rate is 
 determined.  If the monthly average is no longer published, the 
 commissioner shall substitute a substantially similar average by 
 rule.  

    (d) If the maximum rate of interest is determined pursuant 
 to paragraph (a), clause (2), the policy must contain a 
 provision setting forth the frequency at which the rate is to be 
 determined for that policy.  

    (e) The maximum rate referred to in paragraph (d) must be 
 determined at regular intervals at least once every 12 months, 
 but not more frequently than once in any three-month period.  At 
 the intervals specified in the policy:  

    (1) The rate being charged may be increased whenever the 
 increase as determined under paragraph (c) would increase that 
 rate by one-half percent or more per annum; and 

    (2) The rate being charged must be reduced whenever the 
 reduction as determined under paragraph (c) would decrease that 
 rate by one-half percent or more per annum.  

    (f) The life insurer shall:  

    (1) notify the policyholder at the time a policy loan, 
 other than a premium loan, is made, of the initial rate of 
 interest on the loan, that the interest rate on the loan is 
 adjustable and that the policyholder will be notified of any 
 increase in the interest rate; 

    (2) notify the policyholder with respect to premium loans 
 of the initial rate of interest on the loan as soon as it is 
 reasonably practical to do so after making the initial loan. 
 Notice need not be given to the policyholder when a further 
 premium loan is added, except as provided in clause (3); 

    (3) send reasonable advance notice of any increase in the 
 rate to the policyholder with loans; and 

    (4) include in the notices required by this paragraph the 
 substance of the pertinent provisions of paragraphs (a) and (d), 
 a summary of the plan required by paragraph (h), and the effect 
 of the policy loan on the policyholder's net cost of insurance 
 per $1,000 of coverage based on that plan.  

    (g) The loan value of the policy must be determined in a 
 manner consistent with section 61A.24 or 61A.245, but no policy 
 may terminate as the sole result of a change in the interest 
 rate during that policy year, and the life insurer shall 
 maintain coverage during that policy year until the time at 
 which it would otherwise have terminated if there had been no 
 change during that policy year.  

    (h) Prior to offering insurance policies with an adjustable 
 policy loan interest rate or offering to add a provision for an 
 adjustable policy loan interest rate to existing policyholders, 
 the insurer shall file a written plan setting forth the manner 
 in which policyholders will receive a reasonable benefit in the 
 form of price reductions, increased amounts of insurance, or 
 increased dividends from the increased earnings of the insurer 
 resulting from the use of the adjustable rate and, if 
 applicable, the effect of a policy loan on dividends and 
 dividend rates.  A summary of this plan must be made available 
 upon request to each policyholder and must be provided to each 
 applicant for a policy before the initial premium is received.  

    (i) The pertinent provisions of paragraphs (a) and (e) must 
 be set forth in substance in the policies to which they apply.  

    (j) For the purposes of this subdivision:  

    (1) The rate of interest on policy loans permitted under 
 this subdivision includes the interest rate charged on 
 reinstatement of policy loans for the period during and after 
 any lapse of a policy.  

    (2) The term "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 they fell due.  

    (3) The term "policyholder" includes the owner of the 
 policy or the person designated to pay premiums as shown on the 
 records of the life insurer.  

    (4) The term "policy" includes certificates issued by a 
 fraternal benefit society and annuity contracts which provide 
 for policy loans.  

    Subd. 2a.    Satisfaction of filing requirement.  No 
 life insurer subject to this section is required to file more 
 than one policy with a policy loan provision providing for a 
 fixed rate of interest.  

    Subd. 3.    Applicability to policies.  The provisions 
 of subdivision 2 do not apply to any insurance policy issued 
 before January 1, 1984, unless the insurer provides the 
 policyholder with a summary of the plan required by subdivision 
 2, paragraph (h), and thereafter the policyholder agrees in 
 writing to the applicability of those provisions.  Upon election 
 of policies providing adjustable policy loan interest rates, the 
 cash surrender values of any policies subject to the provisions 
 of this section shall be determined in accordance with section 
 61A.24 or 61A.245 at the time of the election.  The provisions 
 of subdivision 2 shall not apply to any insurance policy that 
 the commissioner determines provides insufficient benefits to 
 the policyholder to justify loan interest rates in excess of 
 those provided in subdivision 1.  

    Subd. 4.    Nonapplication of usury.  Neither section 
 334.01 nor any other law of this state which regulates rates of 
 interest applies to policy loans governed by this section.  

    Subd. 5.    Rules.  The commissioner may adopt rules 
 pursuant to chapter 14 to further implement and administer the 
 provisions of this section.  

    HIST: 1967 c 395 art 2 s 3; 1983 c 292 s 1; 1984 c 592 s 45; 
 1995 c 258 s 15 

     61A.031 Suicide provisions. 

    The sanity or insanity of a person shall not be a factor in 
 determining whether a person committed suicide within the terms 
 of an individual or group life insurance policy regulating the 
 payment of benefits in the event of the insured's suicide.  This 
 section shall not be construed to alter present law but is 
 intended to clarify present law. 

    HIST: 1981 c 286 s 1 

     61A.04 Spendthrift provisions.  

    In addition to the provisions now required by law to be in 
 the standard form of life insurance policies issued or delivered 
 in this state, there shall be, when such policy provides for the 
 payment to the beneficiary the proceeds thereof, in either 
 monthly, quarterly, semiannual or annual installments, to 
 continue during the lifetime of the beneficiary, or for a 
 stipulated number of years, whenever requested by the insured 
 under the policy, the following provisions: 

    All rights of the beneficiary to commute, change time of 
 payment or amount of installments, surrender for cash, borrow 
 against or assign for any purpose, are hereby withdrawn and 
 those parts of this policy giving the beneficiary such rights 
 are hereby declared inoperative and void; it being the intent 
 hereof that the beneficiary shall have no right under this 
 contract except to receive the installments at such times and in 
 such amounts as stated in this policy, and all the provisions of 
 this policy in conflict herewith are hereby declared to be 
 inoperative.  

    This provision may be attached to any policy in the form of 
 a rider thereon, and, when so attached, shall become a part of 
 and form a part of the contract of insurance, evidenced by the 
 policy to all intents and purposes as if set forth at length 
 therein.  

    HIST: 1967 c 395 art 2 s 4 

     61A.05 Life policies to contain entire contract.  

    Every policy of insurance issued or delivered within this 
 state on or after the first day of January, 1908, by any life 
 insurance corporation doing business within the state, shall 
 contain the entire contract between the parties.  

    Every policy which contains a reference to the application, 
 either as a part of the policy or as having any bearing thereon, 
 shall have a copy of such application attached thereto or set 
 out therein.  

    HIST: 1967 c 395 art 2 s 5 

     61A.06 Aviation and war risk exclusion permitted.  

    Policies of life insurance may be delivered or issued for 
 delivery in this state which limit the amount to be paid in the 
 event of death occurring as a result of travel or flight in, or 
 descent from or with, any kind of aircraft if the insured (1) is 
 a pilot, officer or member of the crew of such aircraft, or is 
 participating in aeronautic or aviation training during such 
 flight, or (2) is in the military, naval or air forces of any 
 country and is being transported in a military, naval or air 
 force aircraft.  Such amount shall not be less than the reserve 
 on the policy plus any dividends standing to the credit of the 
 policy and the reserve for any paid-up additions, less any 
 indebtedness to the company on the policy.  Such limitation may 
 be made by a provision in the policy or by a rider made a part 
 thereof provided, that no such limitation shall be effective 
 unless and until the insured or applicant shall agree in writing 
 thereto; and provided, further, that except in case of policies 
 issued on the lives of persons who have received aeronautic or 
 aviation training or whose occupation entails duty aboard 
 aircraft in flight, such limitation shall apply only in event 
 death occurs within five years after date of issue of the policy.
 This section shall not affect the validity of provisions which 
 limit the amount to be paid in the event of death of the insured 
 while in the military, naval or air forces of any country at 
 war, or of provisions relative to benefits in the event of total 
 and permanent disability, or of provisions which grant 
 additional insurance specifically against death by accident.  
 Policies issued by life insurance companies organized under the 
 laws of this state for delivery in any other state, territory, 
 district, or country may contain any provisions limiting the 
 amount to be paid in the event of death which are permitted by 
 the laws of such other state, territory, district, or country.  

    HIST: 1967 c 395 art 2 s 6 

     61A.07 Prohibited provisions. 

    No policy of life insurance shall be issued or delivered in 
 this state, or be issued by a life insurance company organized 
 under the laws of this state, if it contains a provision: 

    (1) for forfeiture of the policy for failure to repay any 
 loan on the policy or to pay interest on such loan while the 
 total indebtedness on the policy is less than the loan value 
 thereof; or for forfeiture for failure to repay any such loan or 
 to pay interest thereon, unless such provision contain a 
 stipulation that no such forfeiture shall occur until at least 
 one month after notice shall have been mailed by the company to 
 the last known address of the insured and of the assignee, if 
 any, notice of whose address and contract of the assignment has 
 been filed with the company, at its home office; or 

    (2) in a life policy or annuity contract, limiting the time 
 within which any action at law or in equity may be commenced to 
 less than five years after the cause of action shall accrue; or 

    (3) by which the policy shall purport to be issued or to 
 take effect more than six months before the original application 
 for the insurance was made; or 

    (4) for any mode of settlement at maturity of less value 
 than the amount insured on the face of the policy plus any 
 dividend additions, less any indebtedness to the company on the 
 policy, and less any premium that may be deducted by the terms 
 of the policy.  

    HIST: 1967 c 395 art 2 s 7; 1994 c 485 s 17 

     61A.071 Applications. 

    No individual life insurance policy shall be issued or 
 delivered in this state to a person age 65 or older unless a 
 signed and completed copy of the application for insurance is 
 left with the applicant at the time application is made.  This 
 requirement will not apply to life insurers who mail a copy of 
 the signed, completed application to the applicant within 24 
 hours of receiving the application.  However, where an 
 individual life policy is marketed on a direct response basis, a 
 copy of any application signed by the applicant shall be 
 delivered to the insured along with, or as part of, the policy. 

    HIST: 1983 c 263 s 7; 1994 c 485 s 18; 1995 c 258 s 16 

     61A.072 Policies with accelerated benefits. 

    Subdivision 1.    Disclosure.  A life insurance contract 
 or supplemental contract that contains a provision to permit the 
 accelerated payment of benefits as authorized under section 
 60A.06, subdivision 1, clause (4), must contain the following 
 disclosure:  "This is a life insurance policy which pays 
 accelerated death benefits at your option under conditions 
 specified in the policy.  This policy is not a long-term care 
 policy meeting the requirements of sections 62A.46 to 62A.56 or 
 chapter 62S."  

    Subd. 2. Repealed, 2005 c 132 s 38 

    Subd. 3. Repealed, 1995 c 258 s 67 

    Subd. 4.    Long-term care expenses.  If the right to 
 receive accelerated benefits is contingent upon the insured 
 receiving long-term care services, the contract or supplemental 
 contract shall include the following provisions:  

    (1) the minimum accelerated benefit shall be $1,200 per 
 month if the insured is receiving nursing facility services and 
 $750 per month if the insured is receiving home services with a 
 minimum lifetime benefit limit of $50,000; 

    (2) coverage is effective immediately and benefits shall 
 commence with the receipt of services as defined in section 
 62A.46, subdivision 3, 4, or 5, or 62S.01, subdivision 25, but 
 may include a waiting period of not more than 90 days, provided 
 that no more than one waiting period may be required per benefit 
 period as defined in section 62A.46, subdivision 11; 

    (3) premium shall be waived during any period in which 
 benefits are being paid to the insured during confinement to a 
 nursing home facility; 

    (4) coverage may not be canceled or renewal refused except 
 on the grounds of nonpayment of premium; 

    (5) coverage must include preexisting conditions during the 
 first six months of coverage if the insured was not diagnosed or 
 treated for the particular condition during the 90 days 
 immediately preceding the effective date of coverage; 

    (6) coverage must include mental or nervous disorders which 
 have a demonstrable organic cause such as Alzheimer's and 
 related dementias; 

    (7) no prior hospitalization requirement shall be allowed 
 unless a similar requirement is allowed by section 62A.48, 
 subdivision 1, or 62S.06; and 

    (8) the contract shall include a cancellation provision 
 that meets the requirements of section 62A.50, subdivision 2, or 
 62S.07. 

    Subd. 5.    Exclusion.  Subdivision 4 does not apply to 
 contracts or supplemental contracts granting the right to 
 receive accelerated benefits if (1) one of the options for 
 payment provides for lump-sum payment; (2) no conditions or 
 restrictions are imposed on the use of the funds by the insured; 
 and (3) the offeree or insured is given written notice at the 
 time the contract or supplemental contract is offered or sold 
 that (i) Minnesota law sets minimum requirements for life 
 insurance contracts where the right to receive accelerated 
 benefits is contingent upon the insured receiving long-term care 
 services, and (ii) the contract or supplemental contract being 
 offered or sold does not meet those minimum requirements. 

    Subd. 6.    Accelerated benefits.  (a) "Accelerated 
 benefits" covered under this section are benefits payable under 
 the life insurance contract: 

    (1) to a policyholder or certificate holder, during the 
 lifetime of the insured, upon the occurrence of a specified 
 life-threatening or catastrophic condition as defined by the 
 policy or rider; 

    (2) that reduce the death benefit otherwise payable under 
 the life insurance contract; and 

    (3) that are payable upon the occurrence of a single 
 qualifying event that results in the payment of a benefit amount 
 fixed at the time of acceleration. 

    (b) "Qualifying event" means one or more of the following: 

    (1) a medical condition that would result in a drastically 
 limited life span as specified in the contract; 

    (2) a medical condition that has required or requires 
 extraordinary medical intervention, such as, but not limited to, 
 major organ transplant or continuous artificial life support 
 without which the insured would die; 

    (3) a condition that requires continuous confinement in an 
 eligible institution as defined in the contract if the insured 
 is expected to remain there for the rest of the insured's life; 

    (4) a long-term care illness or physical condition that 
 results in cognitive impairment or the inability to perform the 
 activities of daily life or the substantial and material duties 
 of any occupation; or 

    (5) other qualifying events that the commissioner approves 
 for a particular filing. 

    HIST: 1989 c 125 s 3; 1990 c 507 s 1,2; 1996 c 446 art 1 s 11; 
 1997 c 71 art 2 s 1,2; 2001 c 215 s 8; 1Sp2003 c 14 art 2 s 1 

     61A.073 Life insurance for the benefit of charity. 

    Subdivision 1.    Charitable beneficiary or owner 
 permitted.  Subject to the terms of the policy, an 
 organization described in section 170(c) of the Internal Revenue 
 Code of 1986, as amended through December 31, 1991, shall have 
 an insurable interest in the life of an individual insured under 
 a life insurance policy, if the organization: 

    (1) has become the beneficiary or owner of a previously 
 issued policy insuring the life of the individual; or 

    (2) is the original beneficiary or original owner of a 
 newly issued policy insuring the life of the individual, if the 
 individual signs the application or consents in writing to the 
 issuance of the policy. 

    Subd. 2.    Applicability.  This section applies to life 
 insurance policies issued by life companies and fraternal 
 benefit societies. 

    HIST: 1992 c 483 s 1 

     61A.074 Insurable interests. 

    Subdivision 1.    Corporation or trustee.  A corporation 
 or the trustee of a trust providing life, annuity, health, 
 disability, retirement, or similar benefits to employees of one 
 or more corporations, and acting in a fiduciary capacity with 
 respect to the employees, retired employees, or their dependents 
 or beneficiaries, has an insurable interest in the lives of 
 employees for whom the benefits are to be provided.  The written 
 consent of the insured is required if the insurance purchased 
 under this subdivision is payable to the corporation or to the 
 trustee. 

    Subd. 2.    Other insurable interests.  Subdivision 1 
 does not limit the right of a corporation or trustee to insure 
 the life of an individual that is otherwise insurable under 
 common law or any statute.  This section shall not be 
 interpreted as in any way modifying the common law doctrine of 
 insurable interest, except as expressly provided in subdivision 
 1. 

    HIST: 1992 c 483 s 2; 1994 c 485 s 19 

     61A.08 Exceptions. 

    Sections 61A.02, 61A.03, 61A.07, 61A.23, and 61A.25 shall 
 not, except as expressly provided in this chapter, apply to 
 industrial or group term policies, or to corporations or 
 associations operating on the assessment or fraternal plan, but 
 every contract issued prior to the operative date specified in 
 section 61A.245 containing a provision for a deferred annuity on 
 the life of the insured only, unless paid for by a single 
 premium, shall provide that, in event of the nonpayment of any 
 premium after three full years' premium shall have been paid, 
 the annuity shall automatically become converted into a paid-up 
 annuity for that proportion of the original annuity as the 
 number of completed years' premiums paid bears to the total 
 number of premiums required under the contract. 

    HIST: 1967 c 395 art 2 s 8; 1978 c 662 s 1; 1994 c 485 s 20 

     61A.09 Group life insurance. 

    Subdivision 1.    Filing requirement.  No group life 
 insurance policy or group annuity shall be issued for delivery 
 in this state until the form thereof and the form of any 
 certificates issued thereunder have been filed in accordance 
 with and subject to the provisions of section 61A.02.  Each 
 person insured under such a group life insurance policy 
 (excepting policies which insure the lives of debtors of a 
 creditor or vendor to secure payment of indebtedness) shall be 
 furnished a certificate of insurance issued by the insurer and 
 containing the following: 

    (a) name and location of the insurance company; 

    (b) a statement as to the insurance protection to which the 
 certificate holder is entitled, including any changes in such 
 protection depending on the age of the person whose life is 
 insured; 

    (c) any and all provisions regarding the termination or 
 reduction of the certificate holder's insurance protection; 

    (d) a statement that the master group policy may be 
 examined at a reasonably accessible place; 

    (e) the maximum rate of contribution to be paid by the 
 certificate holder; 

    (f) beneficiary and method required to change such 
 beneficiary; 

    (g) a statement that alternative methods for the payment of 
 group life policy proceeds of $15,000 or more must be offered to 
 beneficiaries in lieu of a lump sum distribution, at their 
 request.  Alternative payment methods which must be offered at 
 the request of the beneficiaries must include, but are not 
 limited to, a life income option, an income option for fixed 
 amounts or fixed time periods, and the option to select an 
 interest-bearing account with the company with the right to 
 select another option at a later date; 

    (h) in the case of a group term insurance policy if the 
 policy provides that insurance of the certificate holder will 
 terminate, in case of a policy issued to an employer, by reason 
 of termination of the certificate holder's employment, or in 
 case of a policy issued to an organization of which the 
 certificate holder is a member, by reason of termination of 
 membership, a provision to the effect that in case of 
 termination of employment or membership, or in case of 
 termination of the group policy, the certificate holder shall be 
 entitled to have issued by the insurer, without evidence of 
 insurability, upon application made to the insurer within 31 
 days after the termination, and upon payment of the premium 
 applicable to the class of risk to which that person belongs and 
 to the form and amount of the policy at that person's then 
 attained age, a policy of life insurance only, in any one of the 
 forms customarily issued by the insurer except term insurance, 
 in an amount equal to the amount of the life insurance 
 protection under such group insurance policy at the time of such 
 termination; and shall contain a further provision to the effect 
 that upon the death of the certificate holder during such 31-day 
 period and before any such individual policy has become 
 effective, the amount of insurance for which the certificate 
 holder was entitled to make application shall be payable as a 
 death benefit by the insurer.  

    This section applies to a policy, certificate of insurance, 
 or similar evidence of coverage issued to a Minnesota resident 
 or issued to provide coverage to a Minnesota resident.  This 
 section does not apply to a certificate of insurance or similar 
 evidence of coverage that meets the conditions of section 
 61A.093, subdivision 2. 

    Subd. 2.    Assignment of interests.  Any or all of the 
 interests of a certificate holder under any group life insurance 
 policy (excepting policies which insure the lives of debtors of 
 a creditor or vendor to secure payment of indebtedness) may be 
 assigned by an assignment executed by the owner of such interest 
 and delivered to the insurer if the provisions of the policy so 
 permit or if both the insurer and the master policyholder agree 
 to such assignment.  

    An assignment of interests of a certificate holder valid 
 hereunder may transfer to the assignee any or all the rights, 
 privileges, and incidents of ownership of the certificate holder 
 in the group life insurance policy and group certificate 
 thereunder, including, but not limited to the rights to 
 designate beneficiaries and to have an individual policy issued 
 in accordance with subdivision 1, clause (g).  

    Any assignment in accordance with this subdivision shall 
 entitle the insurer to deal with the assignee in accordance with 
 the terms of the assignment until the insurer has received at 
 its home office written notice of a subsequent assignment made 
 by such assignee; provided, however, that the insurer shall not 
 be prejudiced by any payment made or action taken inconsistent 
 with the terms of any assignment before the insurer has received 
 and had reasonable time to act on written notice of such 
 assignment.  

    This subdivision declares and codifies without modifying 
 the existing right of assignment of interests of certificate 
 holders under group life insurance policies by the persons 
 owning such interests.  An assignment otherwise valid shall not 
 be invalid because it was made prior to the enactment of this 
 subdivision.  

    Subd. 3.    Mortgage loans; certain debtor groups.  
 Group life insurance policies may be issued to cover groups of 
 not less than ten debtors of a creditor written under a master 
 policy issued to a creditor to insure its debtors in connection 
 with real estate mortgage loans, in an amount not to exceed the 
 actual amount of their indebtedness plus an amount equal to two 
 monthly payments or scheduled amount of their indebtedness, plus 
 an amount equal to two monthly payments, whichever is greater.  
 If the mortgage loan provides for a variable rate of finance 
 charge or interest, the initial rate or the scheduled rates 
 based on the initial index must be used in determining the 
 scheduled amount of indebtedness.  Each application for group 
 mortgage insurance offered prior to or at the time of loan 
 closing shall contain a clear and conspicuous notice that the 
 insurance is optional and is not a condition for obtaining the 
 loan.  Each person insured under a group insurance policy issued 
 under this subdivision shall be furnished a certificate of 
 insurance which conforms to the requirements of section 62B.06, 
 subdivision 2, and which includes a conversion privilege 
 permitting an insured debtor to convert, without evidence of 
 insurability, to an individual policy of decreasing term 
 insurance within 30 days of the date the insured debtor's group 
 coverage is terminated for any reason other than the nonpayment 
 of premiums.  The initial amount of coverage under the 
 individual policy shall be an amount equal to the amount of 
 coverage terminated under the group policy and shall decrease 
 over a term that corresponds with the scheduled term of the 
 insured debtor's mortgage loan.  The premium for the individual 
 policy shall be the same premium the insured debtor was paying 
 under the group policy.  

    HIST: 1967 c 395 art 2 s 9; 1973 c 439 s 1; 1986 c 444; 1989 c 
 330 s 5; 1994 c 485 s 21; 1995 c 116 s 1; 1995 c 171 s 65; 1996 
 c 446 art 1 s 12 

     61A.091 Employee group life insurance plans. 

    Subdivision 1.    Mandatory participation.  No employer 
 who makes available or otherwise sponsors a group life insurance 
 plan that provides life insurance benefits to more than five 
 employees of that employer, whether through insurance policies, 
 self-insurance, or any combination of these arrangements, may 
 require an employee to participate in the life insurance plan as 
 a condition of employment, unless the employer pays the full 
 cost of the plan.  No employer may discharge any employee who 
 pursuant to this section refuses to contribute to an employee 
 group life insurance plan, nor shall the employer discriminate 
 or otherwise retaliate against the employee who pursuant to this 
 section refuses to contribute to an employee group life 
 insurance plan.  An employee may bring an action against an 
 employer for recovery of any wages withheld in violation of this 
 section.  This remedy shall be in addition to any other remedy 
 provided by law.  For the purposes of this section, "employer" 
 means any natural person, company, corporation, partnership, 
 association or firm which employs any employee.  "Employee" is 
 an individual as defined by section 62E.02, subdivision 8.  This 
 section does not apply where a collectively bargained contract 
 provides for mandatory participation in a group life insurance 
 plan.  This section does not apply to any insurance purchased or 
 carried for the purpose of buying or selling any part of 
 employer, its shares, its assets or its business.  This section 
 does not apply to any insurance purchased or carried by any 
 pension, profit sharing or other retirement plan or trust. 

    Subd. 2.    Continuation of waiver of premiums for those 
 otherwise eligible following termination of insurance.  All 
 group life insurance policies covering employees of an employer 
 containing a waiver of premium benefits upon total disability of 
 the employee shall provide that termination of the master 
 policy, for any reason whatsoever, will be without prejudice to 
 the claim of any covered employee who is suffering from a 
 disability, as defined in the group life policy waiver of 
 premium section at the time of the termination.  This 
 subdivision may be superseded by a rule promulgated by the 
 commissioner of commerce.  

    HIST: 1977 c 192 s 1; 1980 c 376 s 1; 1983 c 289 s 114 subd 1; 
 1984 c 655 art 1 s 92; 1986 c 444 

     61A.092 Continuation of coverage for life insurance. 

    Subdivision 1.    Continuation of coverage.  Every group 
 insurance policy issued or renewed within this state after 
 August 1, 1987, providing coverage for life insurance benefits 
 shall contain a provision that permits covered employees who are 
 voluntarily or involuntarily terminated or laid off from their 
 employment, if the policy remains in force for any active 
 employee of the employer, to elect to continue the coverage for 
 themselves and their dependents. 

    An employee is considered to be laid off from employment if 
 there is a reduction in hours to the point where the employee is 
 no longer eligible for coverage under the group life insurance 
 policy.  Termination does not include discharge for gross 
 misconduct. 

    Subd. 2.    Responsibility of employee.  Every covered 
 employee electing to continue coverage shall pay the employee's 
 former employer, on a monthly basis, the cost of the continued 
 coverage.  In no event shall the amount of premium charged 
 exceed 102 percent of the cost to the plan for such period of 
 coverage for other similarly situated employees with respect to 
 whom neither termination nor layoff has occurred, without 
 respect to whether such cost is paid by the employer or 
 employee.  The employee is eligible to continue the coverage 
 until the employee obtains coverage under another group policy, 
 or for a period of 18 months after the termination or layoff 
 from employment, whichever is shorter. 

    Subd. 3.    Notice of options.  Upon termination of or 
 layoff from employment of a covered employee, the employer shall 
 inform the employee of: 

    (1) the employee's right to elect to continue the coverage; 

    (2) the amount the employee must pay monthly to the 
 employer to retain the coverage; 

    (3) the manner in which and the office of the employer to 
 which the payment to the employer must be made; and 

    (4) the time by which the payments to the employer must be 
 made to retain coverage. 

    The employee has 60 days within which to elect coverage.  
 The 60-day period shall begin to run on the date coverage would 
 otherwise terminate or on the date upon which notice of the 
 right to coverage is received, whichever is later. 

    If the covered employee or covered dependent dies during 
 the 60-day election period and before the covered employee makes 
 an election to continue or reject continuation, then the covered 
 employee will be considered to have elected continuation of 
 coverage.  The estate of the former employee or covered 
 dependent would then be entitled to a death benefit equal to the 
 amount of insurance that could have been continued less any 
 unpaid premium owing as of the date of death.  

    Notice must be in writing and sent by first class mail to 
 the employee's last known address which the employee has 
 provided to the employer. 

    A notice in substantially the following form is 
 sufficient:  "As a terminated or laid off employee, the law 
 authorizes you to maintain your group insurance benefits, in an 
 amount equal to the amount of insurance in effect on the date 
 you terminated or were laid off from employment, for a period of 
 up to 18 months.  To do so, you must notify your former employer 
 within 60 days of your receipt of this notice that you intend to 
 retain this coverage and must make a monthly payment of 
 $............ at ............. by the ............. of each 
 month." 

    Subd. 4.    Responsibility of employer and insurer.  If 
 the employer fails to notify a covered employee of the options 
 set forth in subdivision 3, or if after timely receipt of the 
 monthly payment from a covered employee the employer fails to 
 make the payment to the insurer, with the result that the 
 employee's coverage is terminated, the employer is still liable 
 for the employee's coverage to the same extent as the insurer 
 would be if the coverage were still in effect. 

    Subd. 5.    Conversion to individual policy.  A group 
 insurance policy that provides posttermination or layoff 
 coverage as required by this section must also include a 
 provision allowing a covered employee, surviving spouse, or 
 dependent at the expiration of the posttermination or layoff 
 coverage provided by subdivision 2 to obtain from the insurer 
 offering the group policy, at the employee's, spouse's, or 
 dependent's option and expense, without further evidence of 
 insurability and without interruption of coverage, an individual 
 policy of insurance contract providing the same or substantially 
 similar benefits. 

    A policy providing reduced benefits at a reduced premium 
 rate may be accepted by the employee, the spouse, or a dependent 
 in lieu of the coverage otherwise required by this subdivision.  

    Subd. 6.    Application.  This section applies to a 
 policy, certificate of insurance, or similar evidence of 
 coverage issued to a Minnesota resident or issued to provide 
 coverage to a Minnesota resident.  This section does not apply 
 to:  (1) a certificate of insurance or similar evidence of 
 coverage that meets the conditions of section 61A.093, 
 subdivision 2; or (2) a group life insurance policy that 
 contains a provision permitting the certificate holder, upon 
 termination or layoff from employment, to retain the coverage 
 provided under the group policy by paying premiums directly to 
 the insurer, provided that the employer shall give the employee 
 notice of the employee's and each related certificate holder's 
 right to continue the insurance by paying premiums directly to 
 the insurer.  The insurer may reserve the right to increase 
 premium rates after the first 18 months of continued coverage 
 provided for under clause (2).  A related certificate holder is 
 an insured spouse or dependent child of the employee.  Upon 
 termination of this group policy or at the option of the insured 
 who has continued coverage under clause (2), each covered 
 employee, spouse, and dependent child is entitled to have issued 
 to them a life conversion policy as prescribed in section 
 61A.09, subdivision 1, paragraph (h). 

    HIST: 1987 c 337 s 42; 1989 c 330 s 6; 1994 c 485 s 22; 1995 c 
 258 s 17,18; 2000 c 483 s 10; 2002 c 307 art 2 s 1; 2002 c 330 s 
 7 

     61A.093 Certificate of insurance. 

    Subdivision 1.    Coverage.  A certificate of insurance 
 or similar evidence of coverage issued to a Minnesota resident 
 shall provide coverage for all benefits required to be covered 
 in group policies in Minnesota by this chapter. 

    This subdivision supersedes any inconsistent provision of 
 this chapter. 

    A policy of life insurance that is issued or delivered in 
 this state and that covers a person residing in another state 
 may provide coverage or contain provisions that are less 
 favorable to that person than required by this chapter.  Less 
 favorable coverages or provisions must meet the requirements 
 that the state in which the person resides would have required 
 had the policy been issued or delivered in that state. 

    Subd. 2.    Nonapplication.  Subdivision 1 does not 
 apply to certificates issued in regard to a master policy issued 
 outside the state of Minnesota if all of the following are true: 

    (1) the policyholder or certificate holder exists primarily 
 for purposes other than to obtain insurance; 

    (2) the policyholder or certificate holder is not a 
 Minnesota corporation and does not have its principal office in 
 Minnesota; 

    (3) the policy or certificate covers fewer than 25 persons 
 who are residents of Minnesota and the Minnesota residents 
 represent less than 25 percent of all covered persons; and 

    (4) on request of the commissioner, the issuer files with 
 the commissioner a copy of the policy and a copy of each form of 
 certificate. 

    Subd. 3.    Relation to other law.  Section 60A.08, 
 subdivision 4, shall not be construed as requiring a certificate 
 of insurance or similar evidence of insurance that meets the 
 conditions of subdivision 2 to comply with this chapter. 

    HIST: 1994 c 485 s 23 

     61A.10 Extension of time for payment of premiums.  

    Parties to any policy of life insurance now or hereafter 
 issued shall have the right at any time to mutually agree, in 
 writing, for an extension of time in which to pay a second or 
 subsequent premium on the policy, upon condition that the 
 failure to pay the amount agreed upon at the time agreed, shall 
 lapse the policy as of the date mutually agreed upon in the 
 writing; provided, no such agreement shall impair any right to 
 extended or paid-up insurance which the insured may have under 
 the policy, nor any right to have the premiums, any part 
 thereof, or the amount payable for the extension charged against 
 the policy under the terms of the policy.  No such agreement 
 need be attached to or made a part of the insurance policy so 
 affected.  

    HIST: 1967 c 395 art 2 s 10 

     61A.11 Misstatement, when not to invalidate policy.  

    In any claim upon a policy issued in this state without 
 previous medical examination, or without the knowledge or 
 consent of the insured, or, in case of a minor, without the 
 consent of a parent, guardian, or other person having legal 
 custody, the statements made in the application as to the age, 
 physical condition, and family history of the insured shall be 
 valid and binding upon the company, unless willfully false or 
 intentionally misleading.  

    HIST: 1967 c 395 art 2 s 11; 1986 c 444 

     61A.12 Beneficiaries. 

    Subdivision 1.    Proceeds of life policy or annuity, who 
 entitled to.  When any insurance is effected in favor of 
 another, the beneficiary shall be entitled to its proceeds 
 against the creditors and representatives of the person 
 effecting the same.  All premiums paid for insurance in fraud of 
 creditors, with interest thereon, shall inure to their benefit 
 from the proceeds of the policy, if the company be specifically 
 notified thereof, in writing, before payment. 

    Subd. 2.    Exemption in favor of family.  Every policy 
 made payable to, or for the benefit of, the spouse of the 
 insured, or after its issue assigned to or in trust for a 
 spouse, shall inure to that person's separate use and that of 
 the children of the insured or the insured's spouse, subject to 
 the provisions of this section. 

    Subd. 3.  Repealed, 1973 c 725 s 91 

    Subd. 4.    Change of beneficiary.  The person applying 
 for and procuring a policy may change the beneficiary or 
 beneficiaries, if the consent of the beneficiary or 
 beneficiaries named in the policy is obtained, or if a power so 
 to do is reserved in the contract of insurance or in case of the 
 death of the beneficiary, or in the case of the dissolution of a 
 marriage between the insured and the beneficiary subject to any 
 limitations on the power to change beneficiaries imposed as a 
 condition of the dissolution. 

    Subd. 5.    Substitution.  When a creditor requires 
 credit life insurance, credit accident and health insurance, or 
 both, as additional security for an indebtedness, the debtor 
 shall be given the option of furnishing the required amount of 
 insurance through existing policies of insurance owned or 
 controlled by the debtor or procuring and furnishing the 
 required coverage through any insurer authorized to transact 
 insurance business in this state.  If this subdivision is 
 applicable, the debtor shall be informed by the creditor of the 
 right to provide alternative coverage before the transaction is 
 completed. 

    HIST: 1967 c 395 art 2 s 12; 1976 c 121 s 1,2; 1977 c 382 s 5; 
 1986 c 444; 1994 c 485 s 24 

CONTRACTS -- VARIABLE BASIS

     61A.13 Definitions.  

    Subdivision 1.    Contract on a variable basis.  When 
 used in sections 61A.13 to 61A.21, "contract on a variable basis"
 means any contract on either a group or an individual basis 
 issued by a life insurance company providing for the dollar 
 amount of benefits or other contractual payments or values 
 thereunder to vary so as to reflect investment results of a 
 separate account in which amounts have been placed in connection 
 with any such contracts.  Such contracts may also provide 
 benefits or values incidental thereto payable in fixed or 
 variable dollar amounts, or both.  

    Subd. 2.  Repealed, 1969 c 752 s 18 

    HIST: 1967 c 395 art 2 s 13; 1969 c 752 s 1; 1973 c 480 s 1 

     61A.14 Companies entitled to issue contracts; accounts; 
  investments. 

    Subdivision 1.    Separate accounts.  Any domestic life 
 insurance company may, by or pursuant to resolution of its 
 governing body, establish and operate one or more separate 
 accounts and issue contracts on a variable basis, subject to the 
 provisions of sections 61A.13 to 61A.21.  

    Subd. 2.    Allocations to account.  Except as may be 
 otherwise specifically provided by the contract concerned, all 
 amounts received by a life insurance company in connection with 
 any contract on a variable basis shall be allocated to the 
 appropriate separate account. The income, if any, and gains or 
 losses, realized or unrealized on each such account may be 
 credited to or charged against the amount allocated to such 
 account in accordance with such contract, without regard to the 
 other income, gains, or losses of the company.  

    Subd. 3.    Investments.  Except as hereinafter 
 provided, amounts allocated to any separate account and 
 accumulations thereon may be invested and reinvested without 
 regard to any requirements or limitations prescribed by the laws 
 of this state governing the investments of life insurance 
 companies; provided, that to the extent that the company's 
 reserve liability with regard to (a) benefits guaranteed as to 
 amount and duration, and (b) funds guaranteed as to principal 
 amount or stated rate of interest is maintained in any separate 
 account, a portion of the assets of such separate account at 
 least equal to such reserve liability shall be, except as the 
 commissioner may otherwise approve, invested in accordance with 
 the laws of this state governing the investments of life 
 insurance companies and shall be segregated from the other 
 assets in the separate account.  

    Subd. 4.    Other investments.  For purposes of 
 determining whether the capital, surplus and other funds of a 
 domestic life insurance company, other than assets held in a 
 separate account pursuant to this section, are invested in 
 accordance with sections 61A.28 to 61A.31, and 60L.01 to 60L.15, 
 assets held by the company in a separate account in accordance 
 with this section shall be disregarded. 

    Subd. 5.    Account ownership.  The assets held in a 
 separate account pursuant to this section shall be owned by the 
 company, and the company shall not be, nor hold itself out to 
 be, a trustee with respect to such amounts.  If and to the 
 extent so provided under the applicable contracts or as required 
 pursuant to the Federal Investment Company Act of 1940 that 
 portion of the assets of any such separate account equal to 
 reserves and other contract liabilities with respect to such 
 account shall not be chargeable with liabilities arising out of 
 any other business the company may conduct, but shall be held 
 and applied exclusively for the benefit of the holders of those 
 contracts on a variable basis for which the separate account has 
 been established, provided, however, that the assets shall 
 always be at least equal to the reserves and other contract 
 liabilities with respect to such account.  

    Subd. 6.    Compliance with laws.  To the extent such 
 company deems it necessary to comply with any applicable federal 
 or state laws, such company, with respect to any separate 
 account, including without limitation any separate account which 
 is a management investment company or a unit investment trust, 
 may provide for persons having an interest therein appropriate 
 voting and other rights and special procedures for the conduct 
 of the business of such account, including without limitation 
 special rights and procedures relating to investment policy, 
 investment advisory services, selection of independent public 
 accountants, and the selection of a committee, the members of 
 which need not be otherwise affiliated with such company, to 
 manage the business of such account.  

    Subd. 7.    Valuation of assets.  Unless otherwise 
 approved by the commissioner, assets allocated to a separate 
 account shall be valued at their market value on the date of 
 valuation, or if there is no readily available market, then as 
 provided under the terms of the contract or the rules or other 
 written agreement applicable to such separate account; provided, 
 that unless otherwise approved by the commissioner, a portion of 
 the assets of such separate account equal to the company's 
 reserve liability with regard to the guaranteed benefits and 
 funds referred to in clauses (a) and (b) of subdivision 3, if 
 any, shall be valued in accordance with the rules otherwise 
 applicable to the company's assets.  

    Subd. 8.    Transfer of assets.  No sale, exchange or 
 other transfer of assets may be made by a company between any of 
 its separate accounts or between any other investment account 
 and one or more of its separate accounts unless, (a) in case of 
 a transfer into a separate account, such transfer is made solely 
 to establish the account or to support the contractual 
 obligations of the company with respect to the separate account 
 to which the transfer is made, or (b) in case of a transfer from 
 a separate account, such transfer would not cause the remaining 
 assets of the account to become less than the reserves and other 
 contract liabilities with respect to such separate account.  
 Such transfer, whether into or from a separate account, shall be 
 made by a transfer of cash, or by a transfer of securities 
 having a readily determinable market value, provided that such 
 transfer of securities is approved by the commissioner.  The 
 commissioner may approve other transfers among such accounts if, 
 in the commissioner's opinion, such transfers would not be 
 inequitable.  Where a company transfers assets into a separate 
 account for the purpose of establishing such account, such 
 transfer shall be in the form of cash and, except as the 
 commissioner may otherwise approve, shall be made only from its 
 surplus, provided that not more than five percent of its surplus 
 may be so invested in such accounts.  

    Subd. 9.    Life insurance companies.  A domestic life 
 insurance company having a separate account or accounts pursuant 
 to this section in connection with variable contracts or other 
 separate account products may indemnify a person who is serving 
 or has served as a member of the managing committee of that 
 separate account, and may purchase and maintain insurance for 
 that purpose, in accordance with section 302A.521. 

    HIST: 1967 c 395 art 2 s 14; 1969 c 7 s 21-23; 1969 c 752 s 
 2-8; 1973 c 480 s 2; 1986 c 444; 1998 c 319 s 16; 2005 c 69 art 
 2 s 10 

*   NOTE:  Subdivision 9, as added by Laws 2005, chapter 69, 
*article 2, section 10, is effective August 1, 2006.  Laws 2005, 
*chapter 69, article 4, section 2.

     61A.15 Contract provisions.  

    Subdivision 1.    Variable annuity.  All annuity 
 contracts on a variable basis issued in this state shall 
 stipulate the expense, mortality, and investment-increment 
 factors to be used in computing (1) in the case of individual 
 contracts, the dollar amount of variable benefits or other 
 contractual payments or values, and (2) in the case of group 
 contracts, the dollar amount payable with respect to a unit of 
 variable benefits purchased thereunder.  All such contracts 
 shall guarantee that expenses shall not affect such dollar 
 amounts adversely.  In computing the dollar amount of variable 
 benefits or other contractual payments or values under an 
 individual contract on a variable basis, (a) the annual net 
 investment increment assumption shall not exceed five percent, 
 except with the approval of the commissioner, and (b) to the 
 extent that the level of benefits may be affected by mortality 
 results, the mortality factor shall be determined from the 
 Annuity Mortality Table for 1949, Ultimate, or any modification 
 of that table not having a higher mortality rate at any age, or, 
 if approved by the commissioner, from another table.  The term 
 "expense," as used in this section, may exclude some or all 
 taxes as stipulated in the contracts and may also exclude any 
 investment management fee which is subject to change with the 
 approval by vote of the holders of such contracts.  

    Subd. 2.    Variable life insurance.  Any life 
 insurance contract on a variable basis delivered or issued for 
 delivery in this state shall stipulate the investment increment 
 factor to be used in computing the dollar amount of variable 
 benefits or other variable contractual payments or values 
 thereunder and shall guarantee that expense and mortality 
 results shall not adversely affect such dollar amounts.  

    HIST: 1967 c 395 art 2 s 15; 1969 c 752 s 9; 1973 c 480 s 3 

     61A.16 Contract provisions.  

    Any contract on a variable basis providing benefits payable 
 in variable amounts delivered or issued for delivery in this 
 state shall contain a statement of the essential features of the 
 procedures to be followed by the insurance company in 
 determining the dollar amount of such variable benefits.  Any 
 such contract, including a group contract and any certificate in 
 evidence of variable benefits issued thereunder, shall state the 
 manner in which such dollar amounts will vary and shall contain 
 on its first page a statement to the effect that the benefits 
 thereunder are on a variable basis.  

    HIST: 1967 c 395 art 2 s 16; 1969 c 752 s 10 

     61A.17 Filing of contracts.  

    No contract on a variable basis shall be issued in this 
 state until a copy of the form thereof (and, in the case of a 
 group contract, the form of any certificate evidencing variable 
 benefits issued pursuant thereto) and any form of application 
 for such contract shall have been filed with the commissioner.  
 No life insurance contract on a variable basis shall be filed 
 for issuance in Minnesota or issued in Minnesota before the 
 commissioner has promulgated rules under section 61A.20 
 regarding life insurance contracts on a variable basis.  

    HIST: 1967 c 395 art 2 s 17; 1969 c 752 s 11; 1973 c 480 s 7; 
 1974 c 203 s 1; 1985 c 248 s 70 

     61A.18 Disapproval of contracts.  

    The commissioner shall have the power at any time to 
 disapprove any contract form, application, or certificate (1) if 
 it does not comply with the provisions of sections 61A.13 to 
 61A.21; or (2) if it contains provisions which are unjust, 
 unfair, inequitable, ambiguous, or misleading.  After the 
 commissioner shall have notified a company of disapproval, it 
 shall be unlawful for that company to issue or use the contract, 
 application or certificate in the form so disapproved. 

    HIST: 1967 c 395 art 2 s 18; 1969 c 752 s 12; 1986 c 444 

     61A.19 Company requirements. 

    No company shall deliver or issue for delivery within this 
 state contracts on a variable basis unless it is licensed or 
 organized to do a life insurance or annuity business in this 
 state, and the commissioner is satisfied that its condition or 
 method of operation in connection with the issuance of such 
 contracts will not render its operation hazardous to the public 
 or its policyholders in this state.  In this connection, the 
 commissioner shall consider among other things: 

    (a) the history and financial condition of the company; 

    (b) the character, responsibility and fitness of the 
 officers and directors of the company; and 

    (c) the law and regulation under which the company is 
 authorized in the state of domicile to issue such contracts.  
 The state of entry of an alien company shall be deemed to be 
 state of domicile for this purpose.  

    HIST: 1967 c 395 art 2 s 19; 1969 c 752 s 13; 1973 c 480 s 4; 
 1995 c 214 s 14 

     61A.20 Rules.  

    Notwithstanding any other provision of law, the 
 commissioner shall have sole and exclusive authority to regulate 
 the issuance and sale of contracts on a variable basis and to 
 provide for licensing of persons selling such contracts, and to 
 issue such reasonable rules as may be appropriate to carry out 
 the purposes and provisions of sections 61A.13 to 61A.21.  

    HIST: 1967 c 395 art 2 s 20; 1969 c 7 s 24; 1969 c 752 s 14; 
 1985 c 248 s 70 

     61A.21 Application of other laws. 

    Sections 61A.07, clause (4), and 61A.245 shall not apply to 
 contracts on a variable basis.  All other appropriate provisions 
 of this chapter shall apply to separate accounts and contracts 
 on a variable basis except those which are inconsistent with the 
 provisions contained in sections 61A.13 to 61A.20.  Any contract 
 on a variable basis, delivered or issued for delivery in this 
 state, shall contain in substance provisions for grace, 
 settlement option, loan or withdrawal and nonforfeiture 
 appropriate to such a contract and a life insurance contract on 
 a variable basis should also contain in substance a provision 
 for reinstatement appropriate to such a contract.  The reserve 
 liability for contracts on a variable basis shall be established 
 in accordance with actuarial procedures that recognize the 
 variable nature of the benefits provided and any mortality 
 guarantees. 

    HIST: 1967 c 395 art 2 s 21; 1969 c 752 s 15; 1973 c 480 s 5; 
 1978 c 662 s 2 

CONTRACTS -- MISCELLANEOUS

     61A.22 Contracts to specify benefits and consideration.  

    No life insurance company shall make any insurance, 
 guaranty, contract, or pledge in this state, or to or with any 
 citizen or resident thereof, which does not distinctly specify 
 the amount and manner of payment of benefits and the 
 consideration therefor, except that contracts on a variable 
 basis need not specify the amount of benefits thereunder or 
 consideration after the initial premium.  

    HIST: 1967 c 395 art 2 s 22; 1973 c 480 s 6 

     61A.23 Provisions in policies; laws of other states.  

    The policies of a life insurance company, not organized 
 under the laws of this state, may contain any provision which 
 the laws of the state, territory, district, or country under 
 which the company is organized, prescribe shall be in such 
 policies, and the policies of a life insurance company organized 
 under the laws of this state may, when issued or delivered in 
 any other state, territory, district, or country, contain any 
 provision required by the laws of the state, territory, 
 district, or country in which the same are issued, anything in 
 this section and sections 61A.02, 61A.03, 61A.07, 61A.08, and 
 61A.25 to the contrary notwithstanding.  

    HIST: 1967 c 395 art 2 s 23 

STANDARD NONFORFEITURE LAW

     61A.24 Standard Nonforfeiture Law for Life Insurance. 

    Subdivision 1.    Citation.  This section shall be known 
 as the Standard Nonforfeiture Law for Life Insurance. 

    Subd. 2.    Policy provisions.  No policy of life 
 insurance, except as stated in subdivision 14, shall be 
 delivered or issued for delivery in this state unless it 
 contains in substance the following provisions, or corresponding 
 provisions which in the opinion of the commissioner are at least 
 as favorable to the defaulting or surrendering policyholder as 
 are the minimum requirements specified below and are essentially 
 in compliance with subdivision 15: 

    (1) That, in the event of default in a premium payment, the 
 company will grant, upon proper request not later than 60 days 
 after the date of the premium in default, a paid-up 
 nonforfeiture benefit on a plan stipulated in the policy, 
 effective as of the due date, of the amount as may be 
 hereinafter specified.  In lieu of the stipulated paid-up 
 nonforfeiture benefit, the company may substitute, upon proper 
 request not later than 60 days after the due date of the premium 
 in default, an actuarially equivalent alternative paid-up 
 nonforfeiture benefit which provides a greater amount or longer 
 period of death benefits or, if applicable, a greater amount or 
 earlier payment of endowment benefits.  

    (2) That, upon surrender of the policy within 60 days after 
 the due date of a premium payment in default after premiums have 
 been paid for at least three full years in the case of ordinary 
 insurance or five full years in the case of industrial 
 insurance, the company will pay, in lieu of a paid-up 
 nonforfeiture benefit, a cash surrender value of an amount as 
 may be hereinafter specified. 

    (3) That a specified paid-up nonforfeiture benefit shall 
 become effective as specified in the policy unless the person 
 entitled to make the election elects another available option 
 not later than 60 days after the due date of the premium in 
 default. 

    (4) That, if the policy becomes paid-up by completion of 
 all premium payments or if it is continued under a paid-up 
 nonforfeiture benefit which became effective on or after the 
 third policy anniversary in the case of ordinary insurance or 
 the fifth policy anniversary in the case of industrial 
 insurance, the company will pay, upon surrender of the policy 
 within 30 days after any policy anniversary, a cash surrender 
 value of an amount as may be hereinafter specified. 

    (5) In the case of a policy which causes, on a basis 
 guaranteed in the policy, unscheduled changes in benefits or 
 premiums, or which provides an option for changes in benefits or 
 premiums other than a change to a new policy, a statement of the 
 mortality table, interest rate, and method used in calculating 
 cash surrender values and the paid-up nonforfeiture benefits 
 available under the policy.  In the case of any other policy, a 
 statement of the mortality table and interest rate used in 
 calculating the cash surrender values and the paid-up 
 nonforfeiture benefits available under the policy, and a table 
 showing the cash surrender value, if any, and paid-up 
 nonforfeiture benefit, if any, available under the policy on 
 each policy anniversary either during the first 20 policy years 
 or during the term of the policy, whichever is shorter, the 
 values and benefits to be calculated upon the assumption that 
 there are no dividends or paid-up additions credited to the 
 policy and that there is no indebtedness to the company on the 
 policy. 

    (6) A statement that the cash surrender values and the 
 paid-up nonforfeiture benefits available under the policy are 
 not less than the minimum values and benefits required by or 
 pursuant to the insurance laws of the state in which the policy 
 is delivered; an explanation of the manner in which the cash 
 surrender values and the paid-up nonforfeiture benefits are 
 altered by the existence of any paid-up additions credited to 
 the policy or any indebtedness to the company on the policy; if 
 a detailed statement of the method of computation of the values 
 and benefits shown in the policy is not stated therein, a 
 statement that the method of computation has been filed with the 
 insurance supervisory official of the state in which the policy 
 is delivered; and a statement of the method to be used in 
 calculating the cash surrender value and paid-up nonforfeiture 
 benefit available under the policy on any policy anniversary 
 beyond the last anniversary for which the values and benefits 
 are consecutively shown in the policy. 

    Subd. 3.    Exception; deferred payment.  Any provision 
 or portion of subdivision 2 not applicable by reason of the plan 
 of insurance may be omitted from the policy.  The company shall 
 reserve the right to defer the payment of any cash surrender 
 value for a period of six months after demand therefor with 
 surrender of the policy. 

    Subd. 4.    Cash surrender value.  (a) Except as 
 otherwise provided by paragraphs (b) and (c), the cash surrender 
 value available under the policy in the event of default in a 
 premium payment due on a policy anniversary, whether or not 
 required by subdivisions 2 and 3, shall be an amount not less 
 than the excess of the present value on the anniversary of the 
 future guaranteed benefits which would have been provided for by 
 the policy, including any existing paid-up additions, if there 
 had been no default, over the sum of (1) the then present value 
 of the adjusted premiums as prescribed in subdivisions 6 to 12, 
 corresponding to premiums which would have fallen due on and 
 after the anniversary, and (2) the amount of any indebtedness to 
 the company on the policy.  

    (b) For a policy issued on or after the operative date of 
 subdivision 12 which provides supplemental life insurance or 
 annuity benefits at the option of the insured and for an 
 identifiable additional premium by rider or supplemental policy 
 provision, the cash surrender value referred to in paragraph (a) 
 shall be an amount not less than the sum of the cash surrender 
 value as defined in that paragraph for an otherwise similar 
 policy issued at the same age without the rider or supplemental 
 policy provision and the cash surrender value as defined in that 
 paragraph for a policy which provides only the benefits 
 otherwise provided by the rider or supplemental policy provision.

    (c) For a family policy issued on or after the operative 
 date of subdivision 12 which defines a primary insured and 
 provides term insurance on the life of the spouse of the primary 
 insured expiring before the spouse becomes 71 years old, the 
 cash surrender value referred to in paragraph (a) shall be an 
 amount not less than the sum of the cash surrender value as 
 defined in that paragraph for an otherwise similar policy issued 
 at the same age without the term insurance on the life of the 
 spouse and the cash surrender value as defined in that paragraph 
 for a policy which provides only the benefits otherwise provided 
 by the term insurance on the life of the spouse.  

    The cash surrender value available within 30 days after a 
 policy anniversary under a policy paid-up by completion of all 
 premium payments or a policy continued under a paid-up 
 nonforfeiture benefit, whether or not required by subdivisions 2 
 and 3, shall be an amount not less than the present value on the 
 anniversary of the future guaranteed benefits provided for by 
 the policy, including any existing paid-up additions, decreased 
 by any indebtedness to the company on the policy. 

    Subd. 5.    Paid-up nonforfeiture benefit.  Any paid-up 
 nonforfeiture benefit available under the policy in the event of 
 default in a premium payment due on any policy anniversary shall 
 be such that its present value as of such anniversary shall be 
 at least equal to the cash surrender value then provided for by 
 the policy or, if none is provided for, that cash surrender 
 value which would have been required by this section in the 
 absence of the condition that premiums shall have been paid for 
 at least a specified period. 

    Subd. 6.    Calculation of adjusted premiums; general.  
 Except as provided in subdivision 8, the adjusted premiums for a 
 policy shall be calculated on an annual basis and shall be the 
 uniform percentage of the respective premiums specified in the 
 policy for each policy year, excluding extra premiums on a 
 substandard policy.  The present value, at the date of issue of 
 the policy, of all adjusted premiums shall be equal to the sum 
 of (1) the then present value of the future guaranteed benefits 
 provided for by the policy; (2) two percent of the amount of 
 insurance, if the insurance is uniform in amount, or of the 
 equivalent uniform amount, as hereinafter defined, if the amount 
 of insurance varies with duration of the policy; (3) 40 percent 
 of the adjusted premium for the first policy year; (4) 25 
 percent of either the adjusted premium for the first policy year 
 or the adjusted premium for a whole life policy of the same 
 uniform or equivalent uniform amount with uniform premiums for 
 the whole of life issued at the same age for the same amount of 
 insurance, whichever is less.  In applying the percentages 
 specified in clauses (3) and (4), no adjusted premiums shall be 
 deemed to exceed four percent of the amount of insurance or 
 uniform amount equivalent thereto.  The date of issue of a 
 policy for the purpose of this section is the date as of which 
 the rated age of the insured is determined. 

    This subdivision does not apply to policies issued on or 
 after the operative date of subdivision 12. 

    Subd. 7.    Adjusted premiums; varying amount of 
 insurance.  In the case of a policy providing an amount of 
 insurance varying with duration of the policy, the equivalent 
 uniform amount thereof for the purpose of subdivisions 6 to 11 
 is the uniform amount of insurance provided by an otherwise 
 similar policy containing the same endowment benefit or benefits 
 issued at the same age and for the same term, the amount of 
 which does not vary with duration and the benefits under which 
 have the same present value at the date of issue as the benefits 
 under the policy; provided, however, that in the case of a 
 policy providing a varying amount of insurance issued on the 
 life of a child under age ten, the equivalent uniform amount may 
 be computed as though the amount of insurance provided by the 
 policy prior to the attainment of age ten were the amount 
 provided by such policy at age ten. 

    Subd. 8.    Adjusted premiums; supplemental term 
 insurance.  The adjusted premiums for any policy providing 
 term insurance benefits by rider or supplemental policy 
 provision shall be equal to (a) the adjusted premiums for an 
 otherwise similar policy issued at the same age without such 
 term insurance benefits, increased, during the period for which 
 premiums for such term insurance benefits are payable, by (b) 
 the adjusted premiums for such term insurance, the foregoing 
 items (a) and (b) being calculated separately and as specified 
 in subdivisions 6 and 7 except that, for the purposes of (2), 
 (3) and (4) of subdivision 6, the amount of insurance or 
 equivalent uniform amount of insurance used in the calculation 
 of the adjusted premiums referred to in (b) shall be equal to 
 the excess of the corresponding amount determined for the entire 
 policy over the amount used in the calculation of the adjusted 
 premiums in (a). 

    Subd. 9.    Adjusted premiums; ordinary insurance.  In 
 the case of ordinary policies hereafter issued all adjusted 
 premiums and present values referred to in this section shall be 
 calculated on the basis of the Commissioners 1958 Standard 
 Ordinary Mortality Table and the rate of interest specified in 
 the policy for calculating cash surrender values and paid-up 
 nonforfeiture benefits.  The rate of interest shall not exceed 
 3-1/2 percent per annum for policies issued prior to April 11, 
 1974.  A rate of interest not exceeding 4 percent per annum may 
 be used for policies issued on or after April 11, 1974 and prior 
 to August 1, 1978.  A rate of interest not exceeding 5-1/2 
 percent per annum may be used for policies issued on or after 
 August 1, 1978, except that for any single premium whole life or 
 endowment insurance policy a rate of interest not exceeding 
 6-1/2 percent per annum may be used.  For any category of 
 ordinary insurance issued on female risks, adjusted premiums and 
 present values may be calculated according to an age not more 
 than six years younger than the actual age of the insured.  
 However, in calculating the present value of any paid-up term 
 insurance with the accompanying pure endowment, if any, offered 
 as a nonforfeiture benefit, the rates of mortality assumed may 
 be not more than those shown in the Commissioners 1958 Extended 
 Term Insurance Table.  Provided, further, that for insurance 
 issued on a substandard basis, the calculation of adjusted 
 premiums and present values may be based on any other table of 
 mortality specified by the company and approved by the 
 commissioner. 

    This subdivision does not apply to ordinary policies issued 
 on or after the operative date of subdivision 12.  

    Subd. 10.    Adjusted premiums; industrial insurance.  
 Except as otherwise provided in subdivisions 11 and 11a, all 
 adjusted premiums and present values referred to in this section 
 shall for all policies of industrial insurance be calculated on 
 the basis of the 1941 Standard Industrial Mortality Table.  All 
 calculations shall be made on the basis of the rate of interest, 
 not exceeding 3-1/2 percent per annum, specified in the policy 
 for calculating cash surrender values and paid-up nonforfeiture 
 benefits.  In calculating the present value of paid-up term 
 insurance with accompanying pure endowment, if any, offered as a 
 nonforfeiture benefit, the rates of mortality assumed may be not 
 more than 130 percent of the rates of mortality according to the 
 applicable table.  For insurance issued on a substandard basis, 
 the calculation of adjusted premiums and present values may be 
 based on any table of mortality specified by the company and 
 approved by the commissioner. 

    Subd. 11.    Adjusted premiums; industrial insurance.  
 In the case of industrial policies issued on or after the 
 operative date of this subdivision as defined in subdivision 
 11a, all adjusted premiums and present values referred to in 
 this section shall be calculated on the basis of the 
 Commissioners 1961 Standard Industrial Mortality Table and the 
 rate of interest specified in the policy for calculating cash 
 surrender values and paid-up nonforfeiture benefits.  The rate 
 of interest shall not exceed 3-1/2 percent per annum for 
 policies issued prior to April 11, 1974.  A rate of interest not 
 exceeding four percent per annum may be used for policies issued 
 on or after April 11, 1974 and prior to August 1, 1978.  A rate 
 of interest not exceeding 5-1/2 percent per annum may be used 
 for policies issued on or after August 1, 1978, except that for 
 any single premium whole life or endowment insurance policy a 
 rate of interest not exceeding 6-1/2 percent per annum may be 
 used.  In calculating the present value of any paid-up term 
 insurance with accompanying pure endowment, if any, offered as a 
 nonforfeiture benefit, the rates of mortality assumed may be not 
 more than those shown in the Commissioners 1961 Industrial 
 Extended Term Insurance Table.  For insurance issued on a 
 substandard basis, the calculations of adjusted premiums and 
 present values may be based on any other table of mortality 
 specified by the company and approved by the commissioner. 

    This subdivision shall not apply to industrial policies 
 issued on or after the operative date of subdivision 12.  

    Subd. 11a.    Operative date of subdivision 11.  After 
 April 9, 1963, a company may file with the commissioner a 
 written notice of its election to comply with the provisions of 
 subdivision 11 after a specified date before January 1, 1968.  
 After the filing of the notice, then upon the specified date, 
 which shall be the operative date of subdivision 11 for the 
 company, subdivision 11 shall become operative with respect to 
 the industrial policies thereafter issued by the company.  If a 
 company makes no election, the operative date of subdivision 11 
 for the company shall be January 1, 1968. 

    Subd. 12.    Calculation of adjusted premiums by the 
 nonforfeiture net level premium method.  (a) This subdivision 
 applies to all policies issued on or after its operative date. 
 Except as provided in paragraph (g), the adjusted premiums for a 
 policy shall be calculated on an annual basis and shall be the 
 uniform percentage of the respective premiums specified in the 
 policy for each policy year, excluding amounts payable as extra 
 premiums to cover impairments or special hazards and also 
 excluding any uniform annual contract charge or policy fee 
 specified in the policy in a statement of the method to be used 
 in calculating the cash surrender values and paid-up 
 nonforfeiture benefits, that the present value, at the date of 
 issue of the policy, of all adjusted premiums shall be equal to 
 the sum of (1) the then present value of the future guaranteed 
 benefits provided for by the policy; (2) one percent of either 
 the amount of insurance, if the insurance is uniform in amount, 
 or the average amount of insurance at the beginning of each of 
 the first ten policy years; and (3) 125 percent of the 
 nonforfeiture net level premium as hereinafter defined.  In 
 applying the percentage specified in clause (3), no 
 nonforfeiture net level premium shall be deemed to exceed four 
 percent of either the amount of insurance, if the insurance is 
 uniform in amount, or the average amount of insurance at the 
 beginning of each of the first ten policy years.  The date of 
 issue of a policy for the purpose of this section is the date as 
 of which the rated age of the insured is determined.  

    (b) The nonforfeiture net level premium shall be equal to 
 the present value, at the date of issue of the policy, of the 
 guaranteed benefits provided for by the policy divided by the 
 present value, at the date of issue of the policy, of an annuity 
 of one per annum payable on the date of issue of the policy and 
 on each anniversary of the policy on which a premium falls due.  

    (c) In the case of a policy which causes, on a basis 
 guaranteed in the policy, unscheduled changes in benefits or 
 premiums, or which provides an option for changes in benefits or 
 premiums other than a change to a new policy, the adjusted 
 premiums and present values shall initially be calculated on the 
 assumption that future benefits and premiums do not change from 
 those stipulated at the date of issue of the policy.  At the 
 time of the change in the benefits or premiums the future 
 adjusted premiums, nonforfeiture net level premiums, and present 
 values shall be recalculated on the assumption that future 
 benefits and premiums do not change from those stipulated by the 
 policy immediately after the change.  

    (d) Except as otherwise provided in paragraph (g), the 
 recalculated future adjusted premiums for a policy shall be the 
 uniform percentage of the respective future premiums specified 
 in the policy for each policy year, excluding amounts payable as 
 extra premiums to cover impairments and special hazards, and 
 also excluding any uniform annual contract charge or policy fee 
 specified in the policy in a statement of the method to be used 
 in calculating the cash surrender values and paid-up 
 nonforfeiture benefits, that the present value, at the time of 
 change to the newly defined benefits or premiums, of all future 
 adjusted premiums shall be equal to the excess of:  (1) the sum 
 of the then present value of the then future guaranteed benefits 
 provided for by the policy, and the additional expense 
 allowance, if any, over; (2) the then cash surrender value, if 
 any, or present value of any paid-up nonforfeiture benefit under 
 the policy.  

    (e) The additional expense allowance, at the time of the 
 change to the newly defined benefits or premiums, shall be the 
 sum of:  (1) one percent of the excess, if positive, of the 
 average amount of insurance at the beginning of each of the 
 first ten policy years subsequent to the change over the average 
 amount of insurance prior to the change at the beginning of each 
 of the first ten policy years subsequent to the time of the most 
 recent previous change, or, if there has been no previous 
 change, the date of issue of the policy; and (2) 125 percent of 
 the increase, if positive, in the nonforfeiture net level 
 premium.  

    (f) The recalculated nonforfeiture net level premium shall 
 be equal to the result obtained by dividing clause (1) by clause 
 (2) where clause (1) equals the sum of the nonforfeiture net 
 level premium applicable prior to the change times the present 
 value of an annuity of one per annum payable on each anniversary 
 of the policy on or subsequent to the date of the change on 
 which a premium would have fallen due had the change not 
 occurred, and the present value of the increase in future 
 guaranteed benefits provided for by the policy; and clause (2) 
 equals the present value of an annuity of one per annum payable 
 on each anniversary of the policy on or subsequent to the date 
 of change on which a premium falls due.  

    (g) Notwithstanding any other provisions of this 
 subdivision to the contrary, in the case of a policy issued on a 
 substandard basis which provides reduced graded amounts of 
 insurance so that, in each policy year, the policy has the same 
 tabular mortality cost as an otherwise similar policy issued on 
 the standard basis which provides higher uniform amounts of 
 insurance, adjusted premiums and present values for the 
 substandard policy may be calculated as if it were issued to 
 provide the higher uniform amounts of insurance on the standard 
 basis.  

    (h) All adjusted premiums and present values referred to in 
 this subdivision shall:  for all policies of ordinary insurance 
 be calculated on the basis of the Commissioners 1980 Standard 
 Ordinary Mortality Table, or at the election of the company for 
 any one or more specified plans of life insurance, the 
 Commissioners 1980 Standard Ordinary Mortality Table with 
 Ten-Year Select Mortality Factors; for all policies of 
 industrial insurance be calculated on the basis of the 
 Commissioners 1961 Standard Industrial Mortality Table; and for 
 all policies issued in a particular calendar year be calculated 
 on the basis of a rate of interest not exceeding the 
 nonforfeiture interest rate as defined in this section for 
 policies issued in that calendar year.  However:  

    (1) at the option of the company, calculations for all 
 policies issued in a particular calendar year may be made on the 
 basis of a rate of interest not exceeding the nonforfeiture 
 interest rate, as defined in this subdivision, for policies 
 issued in the immediately preceding calendar year; 

    (2) under a paid-up nonforfeiture benefit, including any 
 paid-up dividend additions, any cash surrender value available, 
 whether or not required by subdivision 2, shall be calculated on 
 the basis of the mortality table and rate of interest used in 
 determining the amount of the paid-up nonforfeiture benefit and 
 paid-up dividend additions, if any; 

    (3) a company may calculate the amount of a guaranteed 
 paid-up nonforfeiture benefit including any paid-up additions 
 under the policy on the basis of an interest rate no lower than 
 that specified in the policy for calculating cash surrender 
 values; 

    (4) in calculating the present value of paid-up term 
 insurance with accompanying pure endowment, if any, offered as a 
 nonforfeiture benefit, the rates of mortality assumed may be not 
 more than those shown in the commissioners 1980 Extended Term 
 Insurance Table for policies of ordinary insurance and not more 
 than the Commissioners 1961 Industrial Extended Term Insurance 
 Table for policies of industrial insurance; 

    (5) for insurance issued on a substandard basis, the 
 calculation of any adjusted premiums and present values may be 
 based on appropriate modifications of these tables; 

    (6) any ordinary mortality tables, including any adopted 
 after 1980 by the National Association of Insurance 
 Commissioners, that are approved by rule adopted by the 
 commissioner for use in determining the minimum nonforfeiture 
 standard may be substituted for the Commissioners 1980 Standard 
 Ordinary Mortality Table with or without Ten-Year Select 
 Mortality Factors or for the Commissioners 1980 Extended Term 
 Insurance Table; and 

    (7) any industrial mortality tables, including any adopted 
 after 1980 by the National Association of Insurance 
 Commissioners, that are approved by rule adopted by the 
 commissioner for use in determining the minimum nonforfeiture 
 standard may be substituted for the Commissioners 1961 Standard 
 Industrial Mortality Table or the Commissioners 1961 Industrial 
 Extended Term Insurance Table.  

    (i) The nonforfeiture interest rate per annum for a policy 
 issued in a particular calendar year shall be equal to 125 
 percent of the calendar year statutory valuation interest rate 
 for the policy as defined in section 61A.25, rounded to the 
 nearer one-quarter of one percent.  

    (j) Notwithstanding any other provision in this chapter to 
 the contrary, a refiling of nonforfeiture values or their 
 methods of computation for any previously approved policy form 
 which involves only a change in the interest rate or mortality 
 table used to compute nonforfeiture values shall not require 
 refiling of any other provisions of that policy form.  

    (k) After August 1, 1982, a company may file with the 
 commissioner a written notice of its election to comply with the 
 provision of this section after a specified date before January 
 1, 1989, which shall be the operative date of this subdivision 
 for the company.  If a company makes no election, the operative 
 date of this subdivision for the company shall be January 1, 
 1989.  

    Subd. 12a.    Nonforfeiture benefits; plans not covered by 
 other subdivisions.  In the case of a plan of life insurance 
 which is of a nature that minimum values cannot be determined by 
 the methods described in subdivisions 2 to 12:  

    (a) the commissioner must be satisfied that the benefits 
 provided under the plan are substantially as favorable to 
 policyholders and insureds as the minimum benefits otherwise 
 required by subdivisions 2 to 12; 

    (b) the commissioner must be satisfied that the benefits 
 and the pattern of premiums of that plan are not likely to 
 mislead prospective policyholders or insureds; and 

    (c) the cash surrender values and paid-up nonforfeiture 
 benefits provided by the plan must not be less than the minimum 
 values and benefits required for the plan computed by a method 
 consistent with the principles of this section, as determined by 
 rules adopted by the commissioner.  

    Subd. 13.    Default in premium payment.  A cash 
 surrender value and a paid-up nonforfeiture benefit, available 
 under the policy in the event of default in a premium payment 
 due at a time other than on the policy anniversary, shall be 
 calculated with allowance for the lapse of time and the payment 
 of fractional premiums beyond the last preceding policy 
 anniversary.  All values referred to in subdivisions 4 to 12 may 
 be calculated upon the assumption that any death benefit is 
 payable at the end of the policy year of death.  The net value 
 of any paid-up additions, other than paid-up term additions, 
 shall be not less than the amounts used to provide the 
 additions.  Notwithstanding the provisions of subdivision 4, 
 additional benefits payable (1) in the event of death or 
 dismemberment by accident or accidental means, (2) in the event 
 of total and permanent disability, (3) as reversionary annuity 
 or deferred reversionary annuity benefits, (4) as term insurance 
 benefits provided by a rider or supplemental policy provisions 
 to which, if issued as a separate policy, this section would not 
 apply, (5) as term insurance on the life of a child or on the 
 lives of children provided in a policy on the life of a parent 
 of the child, if the term insurance expires before the child's 
 age is 26, is uniform in amount after the child's age is one, 
 and has not become paid-up by reason of the death of a parent of 
 the child, and (6) as other policy benefits additional to life 
 insurance and endowment benefits, and premiums for all 
 additional benefits, shall be disregarded in ascertaining cash 
 surrender values and nonforfeiture benefits required by this 
 section, and no additional benefits shall be required to be 
 included in paid-up nonforfeiture benefits. 

    Subd. 14.    Application.  Subdivisions 1 to 13 do not 
 apply to any of the following:  

    (a) reinsurance; 

    (b) group insurance; 

    (c) a pure endowment; 

    (d) an annuity or reversionary annuity contract; 

    (e) a term policy of uniform amount, which provides no 
 guaranteed nonforfeiture or endowment benefits, or renewal 
 thereof, of 20 years or less expiring before age 71, for which 
 uniform premiums are payable during the entire term of the 
 policy; 

    (f) a term policy of decreasing amount, which provides no 
 guaranteed nonforfeiture or endowment benefits, on which each 
 adjusted premium, calculated as specified in subdivisions 6 to 
 12, is less than the adjusted premium so calculated, on a term 
 policy of uniform amount, or renewal thereof, which provides no 
 guaranteed nonforfeiture or endowment benefits, issued at the 
 same age and for the same initial amount of insurance and for a 
 term of 20 years or less expiring before age 71, for which 
 uniform premiums are payable during the entire term of the 
 policy; 

    (g) a policy, which provides no guaranteed nonforfeiture or 
 endowment benefits, for which no cash surrender value, if any, 
 or present value of any paid-up nonforfeiture benefit, at the 
 beginning of any policy year, calculated as specified in 
 subdivisions 4 to 12, exceeds 2-1/2 percent of the amount of 
 insurance at the beginning of the same policy year; or 

    (h) a policy delivered outside this state through an agent 
 or other representative of the company issuing the policy. 

    For purposes of determining the applicability of this 
 section, the age at expiry for a joint term life insurance 
 policy shall be the age at expiry of the oldest life.  

    Subd. 15.    Consistency of progression of cash surrender 
 values with increasing policy duration.  (a) This subdivision, 
 in addition to all other applicable subdivisions of this 
 section, applies to all policies issued on or after January 1, 
 1985.  Any cash surrender value available under the policy in 
 the event of default in a premium payment due on a policy 
 anniversary shall be in an amount which does not differ by more 
 than two-tenths of one percent of either the amount of 
 insurance, if the insurance is uniform in amount, or the average 
 amount of insurance at the beginning of each of the first ten 
 policy years, from the sum of (1) the greater of zero and the 
 basic cash value hereinafter specified, and (2) the present 
 value of any existing paid-up additions less the amount of any 
 indebtedness to the company under the policy.  

    (b) The basic cash value shall be equal to the present 
 value, on the anniversary, of the future guaranteed benefits 
 which would have been provided for by the policy, excluding any 
 existing paid-up additions and before deduction of any 
 indebtedness to the company, if there had been no default, less 
 the then present value of the nonforfeiture factors, as 
 hereinafter defined, corresponding to premiums which would have 
 fallen due on and after the anniversary; provided, however, that 
 the effects on the basic cash value of supplemental life 
 insurance or annuity benefits or of family coverage, as 
 described in subdivision 4 or 6, whichever is applicable, shall 
 be the same as are the effects specified in subdivision 4 or 6, 
 whichever is applicable, on the cash surrender values defined in 
 those subdivisions.  

    (c) The nonforfeiture factor for each policy year shall be 
 an amount equal to a percentage of the adjusted premium for the 
 policy year, as defined in subdivision 6 or 12, whichever is 
 applicable.  Except as is required by paragraph (d), the 
 percentage:  

    (1) must be the same percentage for each policy year 
 between the second policy anniversary and the later of the fifth 
 policy anniversary or the first policy anniversary at which 
 there is available under the policy a cash surrender value in an 
 amount, before including any paid-up additions and before 
 deducting any indebtedness, of at least two-tenths of one 
 percent of either the amount of insurance, if the insurance be 
 uniform in amount, or the average amount of insurance at the 
 beginning of each of the first ten policy years; and 

    (2) must be such that no percentage after the later of the 
 two policy anniversaries specified in clause (1) may apply to 
 fewer than five consecutive policy years.  

    (d) No basic cash value may be less than the value which 
 would be obtained if the adjusted premiums for the policy, as 
 defined in subdivision 6 or 12, whichever is applicable, were 
 substituted for the nonforfeiture factors in the calculation of 
 the basic cash value.  

    (e) All adjusted premiums and present values referred to in 
 this subdivision shall for a particular policy be calculated on 
 the same mortality and interest bases as are used in 
 demonstrating the policy's compliance with the other 
 subdivisions of this section.  The cash surrender values 
 referred to in this subdivision shall include any endowment 
 benefits provided for by the policy.  

    (f) The cash surrender value available other than in the 
 event of default in a premium payment due on a policy 
 anniversary, and the amount of a paid-up nonforfeiture benefit 
 available under the policy in the event of default in a premium 
 payment shall be determined in manners consistent with the 
 manners specified for determining the analogous minimum amounts 
 in subdivisions 2, 3, 4, 5, 12 and 13.  The amounts of cash 
 surrender values and of paid-up nonforfeiture benefits granted 
 in connection with additional benefits such as those listed in 
 subdivision 13, clauses (1) to (6), shall conform with the 
 principles of this subdivision.  

    HIST: 1967 c 395 art 2 s 24; 1974 c 433 s 1,2; 1978 c 662 s 
 3-5; 1982 c 589 s 3-14 

     61A.245 Standard Nonforfeiture Law for Individual 
  Deferred Annuities. 

    Subdivision 1.    Title.  This section shall be known as the 
 Standard 
 Nonforfeiture Law for Individual Deferred Annuities. 

    Subd. 2.    Nonapplication.  This section shall not apply to any 
 reinsurance, 
 group annuity purchased under a retirement plan or plan of 
 deferred compensation established or maintained by an employer, 
 including but not limited to a partnership or sole 
 proprietorship, or by an employee organization, or by both, 
 other than a plan providing individual retirement accounts or 
 individual retirement annuities under section 408 of the 
 Internal Revenue Code, as amended, premium deposit fund, 
 variable annuity, investment annuity, immediate annuity, any 
 deferred annuity contract after annuity payments have commenced, 
 or reversionary annuity, nor to any contract which shall be 
 delivered outside this state through an agent or other 
 representative of the company issuing the contract. 

    Subd. 3.    Required contract provisions.  (a) In the case of 
 contracts issued on or after 
 the operative date specified in subdivision 12, no contract of 
 annuity, except as stated in subdivision 2, shall be delivered 
 or issued for delivery in this state unless it contains in 
 substance the following provisions, or corresponding provisions 
 which in the opinion of the commissioner are at least as 
 favorable to the contract holder, upon cessation of payment of 
 considerations under the contract: 

    (1) that upon cessation of payment of considerations under 
 a contract, or upon the written request of the contract owner, 
 the company shall grant a paid-up annuity benefit on a plan 
 stipulated in the contract of the value specified in 
 subdivisions 5, 6, 7, 8 and 10; 

    (2) if a contract provides for a lump sum settlement at 
 maturity, or at any other time, that upon surrender of the 
 contract at or prior to the commencement of any annuity 
 payments, the company shall pay in lieu of any paid-up annuity 
 benefit a cash surrender benefit of the amount specified in 
 subdivisions 5, 6, 8 and 10.  The company may reserve the right 
 to defer the payment of the cash surrender benefit for a period 
 not to exceed six months after demand therefor with surrender of 
 the contract after making a written request and receiving 
 written approval of the commissioner.  The request must address 
 the necessity and equitability to all contract holders of the 
 deferral; 

    (3) a statement of the mortality table, if any, and 
 interest rates used in calculating any minimum paid-up annuity, 
 cash surrender or death benefits that are guaranteed under the 
 contract, together with sufficient information to determine the 
 amounts of the benefits; and 

    (4) a statement that any paid-up annuity, cash surrender or 
 death benefits that may be available under the contract are not 
 less than the minimum benefits required by any statute of the 
 state in which the contract is delivered and an explanation of 
 the manner in which the benefits are altered by the existence of 
 any additional amounts credited by the company to the contract, 
 any indebtedness to the company on the contract or any prior 
 withdrawals from or partial surrenders of the contract. 

    (b) Notwithstanding the requirements of this subdivision, 
 any deferred annuity contract may provide that if no 
 considerations have been received under a contract for a period 
 of two full years and the portion of the paid-up annuity benefit 
 at maturity on the plan stipulated in the contract arising from 
 considerations paid prior to that period would be less than $20 
 monthly, the company may at its option terminate the contract by 
 payment in cash of the then present value of the portion of the 
 paid-up annuity benefit, calculated on the basis of the 
 mortality table, if any, and interest rate specified in the 
 contract for determining the paid-up annuity benefit, and by the 
 payment shall be relieved of any further obligation under the 
 contract. 

    Subd. 4.    Minimum values.  The minimum values as specified in 
 subdivisions 
 5, 6, 7, 8 and 10 of any paid-up annuity, cash surrender or 
 death benefits available under an annuity contract shall be 
 based upon minimum nonforfeiture amounts as defined in this 
 subdivision. 

    (a) The minimum nonforfeiture amount at any time at or 
 prior to the commencement of any annuity payments shall be equal 
 to an accumulation up to that time at rates of interest as 
 indicated in paragraph (b) of the net considerations, as defined 
 in this subdivision, paid prior to that time, decreased by the 
 sum of clauses (1) through (4): 

    (1) any prior withdrawals from or partial surrenders of the 
 contract accumulated at rates of interest as indicated in 
 paragraph (b); 

    (2) an annual contract charge of $50, accumulated at rates 
 of interest as indicated in paragraph (b); 

    (3) any premium tax paid by the company for the contract 
 and not subsequently credited back to the company, such as upon 
 early termination of the contract, in which case this decrease 
 must not be taken, accumulated at rates of interest as indicated 
 in paragraph (b); and 

    (4) the amount of any indebtedness to the company on the 
 contract, including interest due and accrued. 

    The net considerations for a given contract year used to 
 define the minimum nonforfeiture amount shall be an amount equal 
 to 87.5 percent of the gross considerations credited to the 
 contract during that contract year. 

    (b) The interest rate used in determining minimum 
 nonforfeiture amounts must be an annual rate of interest 
 determined as the lesser of three percent per annum and the 
 following, which must be specified in the contract if the 
 interest rate will be reset: 

    (1) the five-year constant maturity treasury rate reported 
 by the Federal Reserve as of a date, or average over a period, 
 rounded to the nearest 1/20 of one percent, specified in the 
 contract no longer than 15 months prior to the contract issue 
 date or redetermination date under clause (4); 

    (2) reduced by 125 basis points; 

    (3) where the resulting interest rate is not less than one 
 percent; and 

    (4) the interest rate shall apply for an initial period and 
 may be redetermined for additional periods.  The redetermination 
 date, basis, and period, if any, shall be stated in the 
 contract.  The basis is the date or average over a specified 
 period that produces the value of the five-year constant 
 maturity treasury rate to be used at each redetermination date. 

    (c) During the period or term that a contract provides 
 substantive participation in an equity indexed benefit, it may 
 increase the reduction described in clause (2) by up to an 
 additional 100 basis points to reflect the value of the equity 
 index benefit.  The present value at the contract issue date, 
 and at each redetermination date thereafter, of the additional 
 reduction must not exceed the market value of the benefit.  The 
 commissioner may require a demonstration that the present value 
 of the additional reduction does not exceed the market value of 
 the benefit.  Lacking such a demonstration that is acceptable to 
 the commissioner, the commissioner may disallow or limit the 
 additional reduction. 

    Subd. 5.    Computation of paid-up annuity benefit.  Any paid-up 
 annuity benefit available under a 
 contract shall be such that its present value on the date 
 annuity payments are to commence is at least equal to the 
 minimum nonforfeiture amount on that date.  The present value 
 shall be computed using the mortality table, if any, and the 
 interest rates specified in the contract for determining the 
 minimum paid-up annuity benefits guaranteed in the contract. 

    Subd. 6.    Contracts with cash surrender benefits; present value 
 of benefit available.  For contracts which provide cash surrender 
 benefits, the cash surrender benefits available prior to 
 maturity shall not be less than the present value as of the date 
 of surrender of that portion of the maturity value of the 
 paid-up annuity benefit which would be provided under the 
 contract at maturity arising from considerations paid prior to 
 the time of cash surrender reduced by the amount appropriate to 
 reflect any prior withdrawals from or partial surrenders of the 
 contract, the present value being calculated on the basis of an 
 interest rate not more than one percent higher than the interest 
 rate specified in the contract for accumulating the 
 considerations to determine the maturity value, decreased by the 
 amount of any indebtedness to the company on the contract, 
 including interest due and accrued, and increased by any 
 existing additional amounts credited by the company to the 
 contract. In no event shall any cash surrender benefit be less 
 than the minimum nonforfeiture amount at that time.  The death 
 benefit under the contracts shall be at least equal to the cash 
 surrender benefit. 

    Subd. 7.    Contracts with no cash surrender benefits; present 
 value of benefit available.  For contracts which do not provide cash 
 surrender 
 benefits, the present value of any paid-up annuity benefit 
 available as a nonforfeiture option at any time prior to 
 maturity shall not be less than the present value of that 
 portion of the maturity value of the paid-up annuity benefit 
 provided under the contract arising from considerations paid 
 prior to the time the contract is surrendered in exchange for, 
 or changed to, a deferred paid-up annuity, the present value 
 being calculated for the period prior to the maturity date on 
 the basis of the interest rate specified in the contract for 
 accumulating the net considerations to determine the maturity 
 value, and increased by any existing additional amounts credited 
 by the company to the contract.  For contracts which do not 
 provide any death benefits prior to the commencement of any 
 annuity payments, the present values shall be calculated on the 
 basis of the interest rate referred to in this subdivision and 
 the mortality table specified in the contract for determining 
 the maturity value of the paid-up annuity benefit.  However, in 
 no event shall the present value of a paid-up annuity benefit be 
 less than the minimum nonforfeiture amount at that time.  

    Subd. 8.    Optional maturity date contracts.  For the purpose 
 of determining the benefits 
 calculated under subdivisions 6 and 7, in the case of annuity 
 contracts under which an election may be made to have annuity 
 payments commence at optional maturity dates, the maturity date 
 shall be deemed to be the latest date for which election shall 
 be permitted by the contract, but shall not be deemed to be 
 later than the anniversary of the contract next following the 
 annuitant's seventieth birthday or the tenth anniversary of the 
 contract, whichever is later. 

    Subd. 9.    Contracts providing benefits less than nonforfeiture 
 amount before annuity payments; statement.  Any contract which does 
 not provide cash 
 surrender benefits or does not provide death benefits at least 
 equal to the minimum nonforfeiture amount prior to the 
 commencement of any annuity payments shall include a statement 
 in a prominent place in the contract that the benefits are not 
 provided. 

    Subd. 10.    Fixed scheduled considerations; benefit calculations. 
  Any paid-up annuity, cash surrender or death 
 benefits available at any time, other than on the contract 
 anniversary under any contract with fixed scheduled 
 considerations, shall be calculated with allowance for the lapse 
 of time and the payment of any scheduled considerations beyond 
 the beginning of the contract year in which cessation of payment 
 of considerations under the contract occurs. 

    Subd. 11.    Minimum nonforfeiture benefits of contracts providing 
 excess annuity benefits and life insurance benefits.  For any contract 
 which provides, within the same 
 contract by rider or supplemental contract provision, both 
 annuity benefits and life insurance benefits that are in excess 
 of the greater of cash surrender benefits or a return of the 
 gross considerations with interest, the minimum nonforfeiture 
 benefits shall be equal to the sum of the minimum nonforfeiture 
 benefits for the annuity portion and the minimum nonforfeiture 
 benefits, if any, for the life insurance portion computed as if 
 each portion were a separate contract.  Notwithstanding the 
 provisions of subdivisions 5, 6, 7, 8 and 10, additional 
 benefits payable (a) in the event of total and permanent 
 disability, (b) as reversionary annuity or deferred reversionary 
 annuity benefits, or (c) as other policy benefits additional to 
 life insurance, endowment, and annuity benefits, and 
 considerations for all the additional benefits, shall be 
 disregarded in ascertaining the minimum nonforfeiture amounts, 
 paid-up annuity, cash surrender and death benefits that may be 
 required by this section.  The inclusion of the additional 
 benefits shall not be required in any paid-up benefits, unless 
 the additional benefits separately would require minimum 
 nonforfeiture amounts, paid-up annuity, cash surrender and death 
 benefits. 

    Subd. 12.    Notice of election to comply; effective date.  
 After August 1, 2003, a company may elect to 
 apply its provisions to annuity contracts on a contract 
 form-by-contract form basis before August 1, 2005.  In this 
 instance, the operative date of Laws 2003, chapter 51, sections 
 10 to 14, is the date elected for the contract form.  In all 
 other instances, Laws 2003, chapter 51, sections 10 to 14, apply 
 to annuity contracts issued by the company after August 1, 2005, 
 which then becomes the operative date of Laws 2003, chapter 51, 
 sections 10 to 14. 

    HIST: 1978 c 662 s 6; 1979 c 50 s 8-10; 2003 c 51 s 10-14 

STANDARD VALUATION LAW

     61A.25 Standard Valuation Law. 

    Subdivision 1.    Citation.  This section shall be known 
 as the Standard Valuation Law. 

    Subd. 2.    Valuation of reserves.  The commissioner 
 shall cause to be valued annually the reserve liabilities, 
 hereinafter called reserves, for all outstanding life insurance 
 policies and annuity and pure endowment contracts of every life 
 insurance company doing business in this state, except that in 
 the case of a foreign or alien insurer such valuation shall be 
 limited to its insurance transactions in the United States, and 
 may certify the amount of any such reserves, specifying the 
 mortality table or tables, rate or rates of interest and methods 
 (net level premium method or other) used in calculation of such 
 reserves.  In calculating such reserves, the commissioner may 
 use group methods and approximate averages for fractions of a 
 year or otherwise.  In lieu of the valuation of the reserves 
 herein required of any foreign or alien company, the 
 commissioner may accept any valuation made, or caused to be 
 made, by the insurance supervisory official of any state or 
 other jurisdiction when such valuation complies with the minimum 
 standard herein provided and if the official of such state or 
 jurisdiction accepts as sufficient and valid for all legal 
 purposes the certificate of valuation of the commissioner when 
 such certificate states the valuation to have been made in a 
 specified manner according to which the aggregate reserves would 
 be at least as large as if they had been computed in the manner 
 prescribed by the law of that state or jurisdiction.  In the 
 case of insurance issued by a domestic insurer upon the lives of 
 residents of a foreign country, the commissioner may vary the 
 mortality standard to a standard applicable to that country. 

    Subd. 2a.    Actuarial opinion of reserves; general.  (a)
 Every life insurance company doing business in this state shall 
 annually submit the opinion of a qualified actuary as to whether 
 the reserves and related actuarial items held in support of the 
 policies and contracts specified by the commissioner by rule are 
 computed appropriately, are based on assumptions which satisfy 
 contractual provisions, are consistent with prior reported 
 amounts, and comply with applicable laws of this state.  The 
 commissioner may by rule define the specifics of this opinion 
 and add any other items considered to be necessary to its 
 scope.  The opinion must be included in the company's annual 
 statement. 

    (b) The requirement to annually submit the opinion of a 
 qualified actuary applies to service plan corporations licensed 
 under chapter 62C, to legal service plans licensed under chapter 
 62G, and to all fraternal benefit societies except those 
 societies paying only sick benefits not exceeding $250 in any 
 one year, or paying funeral benefits of not more than $350, or 
 aiding those dependent on a member not more than $350, nor any 
 subordinate lodge or council which is, or whose members are, 
 assessed for benefits which are payable by a grand body. 

    (c) The opinion applies to all business in force, including 
 individual and group health insurance plans, and must be based 
 on standards adopted by the Actuarial Standards Board.  The 
 opinion must be acceptable to the commissioner in both form and 
 substance.  

    (d) In the case of an opinion required to be submitted by a 
 foreign or alien company, the commissioner may accept the 
 opinion filed by that company with the insurance supervisory 
 official of another state if the commissioner determines that 
 the opinion reasonably meets the requirements applicable to a 
 company domiciled in this state.  

    (e) For the purposes of this section, "qualified actuary"  
 means a member in good standing of the American Academy of 
 Actuaries who meets the requirements specified in the 
 regulations. 

    (f) The board of directors of every insurer subject to this 
 section shall appoint a qualified actuary to sign its actuarial 
 opinion.  The appointment of the qualified actuary shall be 
 approved by the commissioner.  The qualified actuary so 
 appointed may be an employee of the insurer.  Notice of the 
 appointment, including a copy of the board of directors' 
 resolution, and the date of appointment shall be filed with the 
 commissioner.  The notice may be filed before or at the time the 
 actuarial opinion is submitted.  The notice shall state the 
 qualifications of the actuary.  If the board appoints a new 
 actuary to sign actuarial opinions during the year, the 
 commissioner shall be notified of the new appointment and the 
 reason for change.  

    (g) Except in cases of fraud or willful misconduct, the 
 qualified actuary is not liable for damages to any person, other 
 than the insurance company and the commissioner, for any act, 
 error, omission, decision, or conduct with respect to the 
 actuary's opinion. 

    (h) A memorandum, in form and substance acceptable to the 
 commissioner based on standards adopted by the Actuarial 
 Standards Board and on additional standards as the commissioner 
 may by rule prescribe, must be prepared to support each 
 actuarial opinion. 

    (i) If the insurance company fails to provide a supporting 
 memorandum at the request of the commissioner within a period 
 specified by the commissioner, or the commissioner determines 
 that the supporting memorandum provided by the insurance company 
 fails to meet the standards based on standards adopted by the 
 Actuarial Standards Board and on additional standards as the 
 commissioner may by rule prescribe or is otherwise unacceptable 
 to the commissioner, the commissioner may engage a qualified 
 actuary at the expense of the company to review the opinion and 
 the basis for the opinion and prepare the required supporting 
 memorandum.  

    (j) Any memorandum in support of the opinion, and any other 
 material provided by the company to the commissioner in 
 connection with the memorandum, must be kept confidential by the 
 commissioner and must not be made public and is not subject to 
 subpoena, other than for the purpose of defending an action 
 seeking damages from any person by reason of any action required 
 by this section or by rules promulgated under this section.  The 
 memorandum or other material may otherwise be released by the 
 commissioner (1) with the written consent of the company or (2) 
 to the American Academy of Actuaries upon request stating that 
 the memorandum or other material is required for the purpose of 
 professional disciplinary proceedings and setting forth 
 procedures satisfactory to the commissioner for preserving the 
 confidentiality of the memorandum or other material.  Once any 
 portion of the confidential memorandum is cited by the company 
 in its marketing or is cited before any governmental agency 
 other than a state insurance department or is released by the 
 company to the news media, all portions of the confidential 
 memorandum are no longer confidential.  

    Subd. 2b.    Actuarial analysis.  (a) Every life 
 insurance company, except as exempted by or pursuant to 
 regulation, shall also annually include in the opinion required 
 under subdivision 2a, paragraph (a), an opinion of the same 
 qualified actuary as to whether the reserves and related 
 actuarial items, including page 3, line 10, of the annual 
 statement, held in support of the policies and contracts 
 specified by the commissioner, when considered in light of the 
 assets held by the company with respect to the reserves and 
 related actuarial items, including but not limited to the 
 investment earnings on the assets and the considerations 
 anticipated to be received and retained under the policies and 
 contracts, make adequate provision for the company's obligations 
 under the policies and contracts, including but not limited to 
 the benefits under and expenses associated with the policies and 
 contracts. 

    (b) The commissioner may provide by rule for a transition 
 period for establishing any higher reserves which the qualified 
 actuary may consider necessary in order to give the opinion 
 required under subdivision 2a. 

    Subd. 3.    Minimum standards of valuation generally.  
 Except as otherwise provided in subdivisions 3a and 3b, the 
 minimum standard for the valuation of the policies and contracts 
 issued prior to the operative date of Laws 1947, chapter 182, 
 shall be that provided by the laws in effect immediately prior 
 to that date.  Except as otherwise provided in subdivisions 3a 
 and 3b, the minimum standard for the valuation of the policies 
 and contracts issued on or after the operative date of Laws 
 1947, chapter 182, shall be the commissioners reserve valuation 
 methods described in subdivisions 4, 4a and 7, 3-1/2 percent 
 interest, or in the case of policies and contracts, other than 
 annuity and pure endowment contracts, issued on or after April 
 11, 1974, four percent interest for policies issued prior to 
 August 1, 1978, 5-1/2 percent interest for single premium life 
 insurance policies and 4-1/2 percent interest for other policies 
 issued on or after August 1, 1978, and the following tables: 

    (a) For all ordinary policies of life insurance issued on 
 the standard basis, excluding any disability and accidental 
 death benefits in the policies, the Commissioners 1941 Standard 
 Ordinary Mortality Table for the policies issued prior to the 
 operative date of section 61A.24, subdivision 9 and the 
 Commissioners 1958 Standard Ordinary Mortality Table for the 
 policies issued on or after the operative date of section 
 61A.24, subdivision 9, and prior to the operative date of 
 section 61A.24, subdivision 12; provided, that for any category 
 of the policies issued on female risks all modified net premiums 
 and present values referred to in Laws 1959, chapter 26, may be 
 calculated according to an age not more than six years younger 
 than the actual age of the insured; and for policies issued on 
 or after the operative date of section 61A.24, subdivision 12:  

    (1) the Commissioners 1980 Standard Ordinary Mortality 
 Table; (2) at the election of the company for any one or more 
 specified plans of life insurance, the Commissioners 1980 
 Standard Ordinary Mortality Table with Ten-Year Select Mortality 
 Factors; or (3) any ordinary mortality table, including any 
 adopted after 1980 by the National Association of Insurance 
 Commissioners, that is approved by rule adopted by the 
 commissioner for use in determining the minimum standard of 
 valuation for the policies. 

    (b) For all industrial life insurance policies issued on 
 the standard basis, excluding any disability and accidental 
 death benefits in the policies, the 1941 Standard Industrial 
 Mortality Table for the policies issued prior to the operative 
 date of section 61A.24, subdivision 11 and for the policies 
 issued on or after the operative date, the Commissioners 1961 
 Standard Industrial Mortality Table or any industrial mortality 
 table, including any adopted after 1980 by the National 
 Association of Insurance Commissioners, that is approved by rule 
 adopted by the commissioner for use in determining the minimum 
 standard of valuation for the policies. 

    (c) For individual annuity and pure endowment contracts, 
 excluding any disability and accidental death benefits in the 
 policies, the 1937 Standard Annuity Mortality Table or, at the 
 option of the company, the Annuity Mortality Table for 1949, 
 ultimate, or any modification of either of these tables approved 
 by the commissioner. 

    (d) For group annuity and pure endowment contracts, 
 excluding any disability and accidental death benefits in the 
 policies, the Group Annuity Mortality Table for 1951, any 
 modification of the table approved by the commissioner, or at 
 the option of the company, any of the tables or modifications of 
 tables specified for individual annuity and pure endowment 
 contracts. 

    (e) For total and permanent disability benefits in or 
 supplemental to ordinary policies or contracts, for policies or 
 contracts issued on or after January 1, 1966, the tables of 
 period 2 disablement rates and the 1930 to 1950 termination 
 rates of the 1952 disability study of the Society of Actuaries, 
 with due regard to the type of benefit or any tables of 
 disablement rates and termination rates, including any adopted 
 after 1980 by the National Association of Insurance 
 Commissioners, that are approved by rule adopted by the 
 commissioner for use in determining the minimum standard of 
 valuation for the policies; for policies or contracts issued on 
 or after January 1, 1963, and prior to January 1, 1966, either 
 the tables or, at the option of the company, the class (3) 
 disability table (1926); and for policies issued prior to 
 January 1, 1963, the class (3) disability table (1926).  The 
 table shall, for active lives, be combined with a mortality 
 table permitted for calculating the reserves for life insurance 
 policies. 

    (f) For accidental death benefits in or supplementary to 
 policies, for policies issued on or after January 1, 1966, the 
 1959 Accidental Death Benefits Table or any accidental death 
 benefits table, including any adopted after 1980 by the National 
 Association of Insurance Commissioners, that is approved by rule 
 adopted by the commissioner for use in determining the minimum 
 standard of valuation for the policies; for policies issued on 
 or after January 1, 1963, and prior to January 1, 1966, either 
 table or, at the option of the company, the Intercompany Double 
 Indemnity Mortality Table; and for policies issued prior to 
 January 1, 1963, the Intercompany Double Indemnity Mortality 
 Table.  Either table shall be combined with a mortality table 
 permitted for calculating the reserves for life insurance 
 policies. 

    (g) For group life insurance, life insurance issued on the 
 substandard basis and other special benefits, any tables as may 
 be approved by the commissioner. 

    Subd. 3a.    Minimum standard of valuation for annuities 
 and pure endowment contracts.  Except as provided in 
 subdivision 3b, the minimum standard for the valuation of all 
 individual annuity and pure endowment contracts issued on or 
 after the operative date of this subdivision and for all 
 annuities and pure endowments purchased on or after this 
 operative date under group annuity and pure endowment contracts, 
 shall be the commissioner's reserve valuation methods defined in 
 subdivisions 4 and 4a, and the following tables and interest 
 rates: 

    (a) For individual annuity and pure endowment contracts 
 issued prior to August 1, 1978, excluding any disability and 
 accidental death benefits in the contracts, the 1971 individual 
 annuity mortality table, or any modification of this table 
 approved by the commissioner, and six percent interest for 
 single premium immediate annuity contracts, and four percent 
 interest for all other individual annuity and pure endowment 
 contracts. 

    (b) For individual single premium immediate annuity 
 contracts issued on or after August 1, 1978, excluding any 
 disability and accidental death benefits in the contracts, the 
 1971 individual annuity mortality table, any individual annuity 
 mortality table, including any adopted after 1980 by the 
 National Association of Insurance Commissioners, that is 
 approved by rule adopted by the commissioner for use in 
 determining the minimum standard of valuation for the contracts, 
 or any modification of these tables approved by the 
 commissioner, and 7-1/2 percent interest. 

    (c) For individual annuity and pure endowment contracts 
 issued on or after August 1, 1978, other than single premium 
 immediate annuity contracts, excluding any disability and 
 accidental death benefits in the contracts, the 1971 individual 
 annuity mortality table, any individual annuity mortality table, 
 including any adopted after 1980 by the National Association of 
 Insurance Commissioners, that is approved by rule adopted by the 
 commissioner for use in determining the minimum standard of 
 valuation for the contracts, or any modification of these tables 
 approved by the commissioner, and 5-1/2 percent interest for 
 single premium deferred annuity and pure endowment contracts and 
 4-1/2 percent interest for all other individual annuity and pure 
 endowment contracts. 

    (d) For all annuities and pure endowments purchased prior 
 to August 1, 1978, under group annuity and pure endowment 
 contracts, excluding any disability and accidental death 
 benefits purchased under the contracts, the 1971 group annuity 
 mortality table, or any modification of this table approved by 
 the commissioner, and six percent interest. 

    (e) For all annuities and pure endowments purchased on or 
 after August 1, 1978, under group annuity and pure endowment 
 contracts, excluding any disability and accidental death 
 benefits purchased under the contracts, the 1971 group annuity 
 mortality table, any group annuity mortality table, including 
 any adopted after 1980 by the National Association of Insurance 
 Commissioners, that is approved by rule adopted by the 
 commissioner for use in determining the minimum standard of 
 valuation for the annuities and pure endowments, or any 
 modification of these tables approved by the commissioner, and 
 7-1/2 percent interest. 

    After April 11, 1974, a company may file with the 
 commissioner a written notice of its election to comply with the 
 provisions of this subdivision after a specified date before 
 January 1, 1979, which shall be the operative date of this 
 subdivision for the company.  A company may elect a different 
 operative date for individual annuity and pure endowment 
 contracts from that elected for group annuity and pure endowment 
 contracts.  If a company makes no election, the operative date 
 of this subdivision for the company shall be January 1, 1979. 

    Subd. 3b.    Computation of minimum standard by calendar 
 year of issue.  (a) The interest rates used in determining the 
 minimum standard for the valuation of the following shall be the 
 calendar year statutory valuation interest rates as defined in 
 this subdivision:  

    (1) all life insurance policies issued in a particular 
 calendar year, on or after the operative date of section 61A.24, 
 subdivision 12; 

    (2) all individual annuity and pure endowment contracts 
 issued in a particular calendar year on or after January 1, 
 1982; 

    (3) all annuities and pure endowments purchased in a 
 particular calendar year on or after January 1, 1982, under 
 group annuity and pure endowment contracts; and 

    (4) the net increase, if any, in a particular calendar year 
 after January 1, 1982, in amounts held under guaranteed interest 
 contracts.  

    (b) The calendar year statutory valuation interest rates, 
 I, shall be determined as follows and the results rounded to the 
 nearer one-quarter of one percent:  

    (1) for life insurance, I = .03 + W (R1 - .03) + (W/2) (R2 -
 .09); 

    (2) for single premium immediate annuities and for annuity 
 benefits involving life contingencies arising from other 
 annuities with cash settlement options and from guaranteed 
 interest contracts with cash settlement options, I = .03 + W (R 
 - .03) where R1 is the lesser of R and .09, R2 is the greater of 
 R and .09, R is the reference interest rate defined in this 
 subdivision, and W is the weighting factor defined in this 
 subdivision; 

    (3) for other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, 
 valued on an issue year basis, except as stated in clause (2), 
 the formula for life insurance stated in clause (1) shall apply 
 to annuities and guaranteed interest contracts with guarantee 
 durations in excess of ten years and the formula for single 
 premium immediate annuities stated in clause (2) shall apply to 
 annuities and guaranteed interest contracts with guarantee 
 duration of ten years or less; 

    (4) for other annuities with no cash settlement options and 
 for guaranteed interest contracts with no cash settlement 
 options, the formula for single premium immediate annuities 
 stated in clause (2) shall apply; 

    (5) for other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, 
 valued on a change in fund basis, the formula for single premium 
 immediate annuities stated in clause (2) shall apply.  

    However, if the calendar year statutory valuation interest 
 rate for life insurance policies issued in a calendar year 
 determined without reference to this sentence differs from the 
 corresponding actual rate for similar policies issued in the 
 immediately preceding calendar year by less than one-half of one 
 percent, the calendar year statutory valuation interest rate for 
 the life insurance policies shall be equal to the corresponding 
 actual rate for the immediately preceding calendar year.  

    For purposes of applying the immediately preceding 
 sentence, the calendar year statutory valuation interest rate 
 for life insurance policies issued in a calendar year shall be 
 determined for 1980 using the reference interest rate defined 
 for 1979 and shall be determined for each subsequent calendar 
 year regardless of when section 61A.24, subdivision 12 becomes 
 operative.  

    (c) The weighting factors referred to in the formulas 
 stated above are as follows:  

    (1) The weighting factors for life insurance are:  

       Guarantee Duration (Years)         Weighting Factors
  
       ten or less                               .50 
       more than ten, but not more than 20       .45 
       more than 20                              .35 

    For life insurance, the guarantee duration is the maximum 
 number of years the life insurance can remain in force on a 
 basis guaranteed in the policy or under options to convert to 
 plans of life insurance with premium rates or nonforfeiture 
 values or both which are guaranteed in the original policy; 

    (2) The weighting factor for single premium immediate 
 annuities and for annuity benefits involving life contingencies 
 arising from other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options is 
 .80; and 

    (3) The weighting factors for other annuities and for 
 guaranteed interest contracts, except as stated in clause (2), 
 shall be as specified in tables (i), (ii), and (iii), according 
 to the rules and definitions in (iv), (v), and (vi):  

    (i) For annuities and guaranteed interest contracts valued 
 on an issue year basis:  

       Guarantee Duration      Weighting Factor for Plan Type
           (Years)                               A     B     C 
  
       five or less:                            .80  .60  .50 
       more than five, but not more than ten:   .75  .60  .50 
       more than ten, but not more than 20:     .65  .50  .45 
       more than 20:                            .45  .35  .35 
      (ii)                                         Plan Type 
                                                 A    B     C 
        For annuities and guaranteed interest 
        contracts valued on a change in fund 
        basis, the factors shown in (i) 
        increased by:                           .15  .25  .05 
      (iii)                                        Plan Type
                                                 A    B     C 
        For annuities and guaranteed interest 
        contracts valued on an issue year 
        basis, other than those with no cash 
        settlement options, which do not guar- 
        antee interest on considerations 
        received more than one year after 
        issue or purchase and for annuities 
        and guaranteed interest contracts 
        valued on a change in fund basis 
        which do not guarantee interest 
        rates on considerations received  
        more than 12 months beyond the 
        valuation date, the factors shown in 
        (i) or derived in (ii) increased by:    .05  .05  .05

    (iv) For other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, the 
 guarantee duration is the number of years for which the contract 
 guarantees interest rates in excess of the calendar year 
 statutory valuation interest rate for life insurance policies 
 with guarantee duration in excess of 20 years.  For other 
 annuities with no cash settlement options and for guaranteed 
 interest contracts with no cash settlement options, the 
 guarantee duration is the number of years from the date of issue 
 or date of purchase to the date annuity benefits are scheduled 
 to commence.  

    (v) Plan type as used in the above tables is defined as 
 follows:  

    Plan Type A:  At any time policyholders may withdraw funds 
 only (1) with an adjustment to reflect changes in interest rates 
 or asset values since receipt of the funds by the insurance 
 company, (2) without the adjustment but in installments over 
 five years or more, or (3) as an immediate life annuity.  

    Plan Type B:  Before expiration of the interest rate 
 guarantee, policyholders may withdraw funds only (1) with an 
 adjustment to reflect changes in interest rates or asset values 
 since receipt of the funds by the insurance company, or (2) 
 without the adjustment but in installments over five years or 
 more.  At the end of interest rate guarantee, funds may be 
 withdrawn without the adjustment in a single sum or installments 
 over less than five years.  

    Plan Type C:  Policyholders may withdraw funds before 
 expiration of interest rate guarantee in a single sum or 
 installments over less than five years either (1) without 
 adjustment to reflect changes in interest rates or asset values 
 since receipt of the funds by the insurance company, or (2) 
 subject only to a fixed surrender charge stipulated in the 
 contract as a percentage of the fund.  

    (vi) A company may elect to value guaranteed interest 
 contracts with cash settlement options and annuities with cash 
 settlement options on either an issue year basis or on a change 
 in fund basis.  Guaranteed interest contracts with no cash 
 settlement options and other annuities with no cash settlement 
 options must be valued on an issue year basis.  As used in this 
 subdivision, an issue year basis of valuation refers to a 
 valuation basis under which the interest rate used to determine 
 the minimum valuation standard for the entire duration of the 
 annuity or guaranteed interest contract is the calendar year 
 valuation interest rate for the year of issue or year of 
 purchase of the annuity or guaranteed interest contract, and the 
 change in fund basis of valuation refers to a valuation basis 
 under which the interest rate used to determine the minimum 
 valuation standard applicable to each change in the fund held 
 under the annuity or guaranteed interest contract is the 
 calendar year valuation interest rate for the year of the change 
 in the fund.  

    (d) The reference interest rate referred to in paragraph 
 (b) shall be defined as follows:  

    (1) for all life insurance, the lesser of the average over 
 a period of 36 months and the average over a period of 12 
 months, ending on June 30 of the calendar year next preceding 
 the year of issue, of Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates, as published by Moody's 
 Investors Service, Inc.; 

    (2) for single premium immediate annuities and for annuity 
 benefits involving life contingencies arising from other 
 annuities with cash settlement options and guaranteed interest 
 contracts with cash settlement options, the average over a 
 period of 12 months, ending on June 30 of the calendar year of 
 issue or year of purchase, of Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates, as published by Moody's 
 Investors Service, Inc.; 

    (3) for other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, 
 valued on a year of issue basis, except as stated in clause (2), 
 with guarantee duration in excess of ten years, the lesser of 
 the average over a period of 36 months and the average over a 
 period of 12 months, ending on June 30 of the calendar year of 
 issue or purchase, of Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates, as published by Moody's 
 Investors Service, Inc.; 

    (4) for other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, 
 valued on a year of issue basis, except as stated in clause (2), 
 with guarantee duration of ten years or less, the average over a 
 period of 12 months, ending on June 30 of the calendar year of 
 issue or purchase, of Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates, as published by Moody's 
 Investors Service, Inc.; 

    (5) for other annuities with no cash settlement options and 
 for guaranteed interest contracts with no cash settlement 
 options, the average over a period of 12 months, ending on June 
 30 of the calendar year of issue or purchase, of Moody's 
 Corporate Bond Yield Average-Monthly Average Corporates, as 
 published by Moody's Investors Service, Inc.; and 

    (6) for other annuities with cash settlement options and 
 guaranteed interest contracts with cash settlement options, 
 valued on a change in fund basis, except as stated in clause 
 (2), the average over a period of 12 months, ending on June 30 
 of the calendar year of the change in the fund, of Moody's 
 Corporate Bond Yield Average-Monthly Average Corporates, as 
 published by Moody's Investors Service, Inc.  

    (e) In the event that Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates is no longer published by 
 Moody's Investors Service, Inc., or in the event that the 
 commissioner determines that Moody's Corporate Bond Yield 
 Average-Monthly Average Corporates as published by Moody's 
 Investors Service, Inc. is no longer appropriate for the 
 determination of the reference interest rate, then an 
 alternative method for determination of the reference interest 
 rate, which has been approved by rule adopted by the 
 commissioner, may be substituted.  

    Subd. 4.    Reserve valuation of life insurance and 
 endowment benefits; modified premiums.  (a) Except as 
 otherwise provided in paragraph (b) and subdivisions 4a and 7, 
 reserves according to the commissioners reserve valuation 
 method, for the life insurance and endowment benefits of 
 policies providing for a uniform amount of insurance and 
 requiring the payment of uniform premiums shall be the excess, 
 if any, of the present value at the date of valuation of future 
 guaranteed benefits provided for by the policies over the then 
 present value of any future modified net premiums therefor.  The 
 modified net premiums for a policy shall be the uniform 
 percentage of the respective contract premiums for the benefits 
 that the present value, at the date of issue of the policy, of 
 all the modified net premiums shall be equal to the sum of the 
 then present value of the benefits provided for by the policy 
 and the excess of clause (1) over clause (2) as follows: 

    (1) a net level annual premium equal to the present value, 
 at the date of issue, of the benefits provided for after the 
 first policy year, divided by the present value at the date of 
 issue of an annuity of one per annum payable on the first and 
 each subsequent anniversary of the policy on which a premium 
 falls due; but the net level annual premium shall not exceed the 
 net level annual premium on the 19 year premium whole life plan 
 for insurance of the same amount at an age one year higher than 
 the age at issue of the policy; 

    (2) a net one year term premium for the benefits provided 
 for in the first policy year. 

    (b) For a life insurance policy issued on or after January 
 1, 1985, for which the contract premium in the first policy year 
 exceeds that of the second year and for which no comparable 
 additional benefit is provided in the first year for the excess 
 and which provides an endowment benefit or a cash surrender 
 value or a combination thereof in an amount greater than the 
 excess premium, the reserve according to the commissioners 
 reserve valuation method as of a policy anniversary occurring on 
 or before the assumed ending date defined herein as the first 
 policy anniversary on which the sum of any endowment benefit and 
 any cash surrender value then available is greater than the 
 excess premium shall, except as otherwise provided in 
 subdivision 7, be the greater of the reserve as of the policy 
 anniversary calculated as described in paragraph (a) and the 
 reserve as of the policy anniversary calculated as described in 
 that paragraph, but with the value defined in clause (1) of that 
 paragraph being reduced by 15 percent of the amount of the 
 excess first year premium; all present values of benefits and 
 premiums being determined without reference to premiums or 
 benefits provided for by the policy after the assumed ending 
 date; the policy being assumed to mature on that date as an 
 endowment; and the cash surrender value provided on that date 
 being considered as an endowment benefit.  In making the above 
 comparison the mortality and interest bases stated in 
 subdivisions 3 and 3b shall be used.  

    (c) Reserves according to the commissioners reserve 
 valuation method for (1) life insurance policies providing for a 
 varying amount of insurance or requiring the payment of varying 
 premiums, (2) group annuity and pure endowment contracts 
 purchased under a retirement plan or plan of deferred 
 compensation, established or maintained by an employer, 
 including but not limited to a partnership or sole 
 proprietorship, or by an employee organization, or by both, 
 other than a plan providing individual retirement accounts or 
 individual retirement annuities under Section 408 of the 
 Internal Revenue Code, as amended, (3) disability and accidental 
 death benefits in all policies and contracts, and (4) all other 
 benefits, except life insurance and endowment benefits in life 
 insurance policies and benefits provided by all other annuity 
 and pure endowment contracts, shall be calculated by a method 
 consistent with the principles of paragraphs (a) and (b), except 
 that any extra premiums charged because of impairments or 
 special hazards shall be disregarded in the determination of 
 modified net premiums. 

    Subd. 4a.    Annuity and pure endowment contracts.  
 This subdivision shall apply to all annuity and pure endowment 
 contracts other than group annuity and pure endowment contracts 
 purchased under a retirement plan or plan of deferred 
 compensation, established or maintained by an employer, 
 including but not limited to a partnership or sole 
 proprietorship, or by an employee organization, or by both, 
 other than a plan providing individual retirement accounts or 
 individual retirement annuities under Section 408 of the 
 Internal Revenue Code, as amended. 

    Reserves according to the commissioner's annuity reserve 
 method for benefits under annuity or pure endowment contracts, 
 excluding any disability and accidental death benefits in the 
 contracts, shall be the greatest of the respective excesses of 
 the present values, at the date of valuation, of the future 
 guaranteed benefits, including guaranteed nonforfeiture 
 benefits, provided for by the contracts at the end of each 
 respective contract year, over the present value, at the date of 
 valuation, of any future valuation considerations derived from 
 future gross considerations, required by the terms of the 
 contract, that become payable prior to the end of the respective 
 contract year.  The future guaranteed benefits shall be 
 determined by using the mortality table, if any, and the 
 interest rate, or rates, specified in the contracts for 
 determining guaranteed benefits.  The valuation considerations 
 are the portions of the respective gross considerations applied 
 under the terms of the contracts to determine nonforfeiture 
 values. 

    Subd. 5.    Minimum aggregate reserves.  A company's 
 aggregate reserves for all life insurance policies, excluding 
 disability and accidental death benefits, issued on or after the 
 operative date of Laws 1947, chapter 182, shall not be less than 
 the aggregate reserves calculated in accordance with the methods 
 set forth in subdivisions 4, 4a, 7, and 8, and the mortality 
 table or tables and rate or rates of interest used in 
 calculating nonforfeiture benefits for the policies. 

    In no event shall the aggregate reserves for all policies, 
 contracts, and benefits be less than the aggregate reserves 
 determined by the qualified actuary to be necessary to render 
 the opinion required under subdivision 2a. 

    Subd. 6.    Calculation of reserves.  (1) Reserves for 
 all policies and contracts issued prior to the operative date of 
 Laws 1947, chapter 182, may be calculated, at the option of the 
 company, according to any standards which produce greater 
 aggregate reserves for all such policies and contracts than the 
 minimum reserves required by the laws in effect immediately 
 prior to such date. 

    (2) Reserves for any category of policies, contracts or 
 benefits as established by the commissioner, issued on or after 
 the operative date of Laws 1947, chapter 182, may be calculated, 
 at the option of the company, according to any standards which 
 produce greater aggregate reserves for such category than those 
 calculated according to the minimum standard herein provided, 
 but the rate or rates of interest used for policies and 
 contracts, other than annuity and pure endowment contracts, 
 shall not be higher than the corresponding rate or rates of 
 interest used in calculating any nonforfeiture benefits provided 
 for therein. 

    (3) Any such company which at any time shall have adopted 
 any standard of valuation producing greater aggregate reserves 
 than those calculated according to the minimum standard herein 
 provided may, with the approval of the commissioner, adopt any 
 lower standard of valuation, but not lower than the minimum 
 herein provided.  For purposes of this section, the holding of 
 additional reserves previously determined by a qualified actuary 
 to be necessary to give the opinion required under subdivision 
 2a shall not be considered the adoption of a higher standard of 
 valuation. 

    Subd. 7.    Reserve calculation; valuation net premium 
 exceeding the gross premium charged.  If in a contract year 
 the gross premium charged by a life insurance company on a 
 policy or contract is less than the valuation net premium for 
 the policy or contract calculated by the method used in 
 calculating the reserve thereon, but using the minimum valuation 
 standards of mortality and rate of interest, the minimum reserve 
 required for the policy or contract shall be the greater of 
 either the reserve calculated according to the mortality table, 
 rate of interest, and method actually used for the policy or 
 contract, or the reserve calculated by the method actually used 
 for the policy or contract but using the minimum valuation 
 standards of mortality and rate of interest and replacing the 
 valuation net premium by the actual gross premium in each 
 contract year for which the valuation net premium exceeds the 
 actual gross premium.  The minimum valuation standards of 
 mortality and rate of interest referred to in this subdivision 
 are those standards stated in subdivisions 3 and 3b.  However, 
 for a life insurance policy issued on or after January 1, 1985 
 for which the gross premium in the first policy year exceeds 
 that of the second year and for which no comparable additional 
 benefit is provided in the first year for the excess and which 
 provides an endowment benefit or a cash surrender value or a 
 combination thereof in an amount greater than the excess 
 premium, the foregoing provisions of this subdivision shall be 
 applied as if the method actually used in calculating the 
 reserve for the policy was the method described in subdivision 
 4, ignoring subdivision 4, paragraph (b).  The minimum reserve 
 at each policy anniversary of the policy shall be the greater of 
 the minimum reserve calculated in accordance with subdivision 4, 
 including subdivision 4, paragraph (b), and the minimum reserve 
 calculated in accordance with this subdivision.  

    Subd. 8.    Reserve calculation; plans not covered by 
 other subdivisions.  In the case of a plan of life insurance 
 or annuity for which the minimum reserves cannot be determined 
 by the methods described in subdivisions 4, 4a, and 7, the 
 reserves which are held under any plan must:  

    (a) be appropriate in relation to the benefits and the 
 pattern of premiums for that plan, and 

    (b) be computed by a method which is consistent with the 
 principles of this section as determined by rules adopted by the 
 commissioner.  

    Subd. 9.    Minimum standards for health, disability, 
 accident, and sickness plans.  The commissioner may adopt a 
 rule containing the minimum standards applicable to the 
 valuation of health, disability, accident, and sickness plans. 

    HIST: 1967 c 395 art 2 s 25; 1974 c 433 s 3,4; 1978 c 662 s 
 7-13; 1982 c 589 s 15-21; 1986 c 444; 1991 c 325 art 7 s 1-5 

     61A.255 Smoker and nonsmoker mortality tables. 

    For the purposes of sections 61A.24 and 61A.25, insurers 
 may utilize the 1958 Commissioners Standard Ordinary and the 
 1958 Commissioners Extended Term smoker and nonsmoker mortality 
 tables and the 1980 Commissioners Standard Ordinary and the 1980 
 Commissioners Extended Term smoker and nonsmoker mortality 
 tables in addition to the tables specified in sections 61A.24 
 and 61A.25.  The tables may be utilized as provided in the model 
 rule permitting smoker and nonsmoker mortality tables for use in 
 determining minimum reserve liabilities and nonforfeiture 
 benefits adopted by the National Association of Insurance 
 Commissioners.  This section applies to policies issued on or 
 after January 1, 1984, and before January 1, 1989.  

    HIST: 1984 c 538 s 1; 1984 c 592 s 46 

DIVIDEND PROVISIONS

     61A.26 Dividends.  

    Subdivision 1.    Annual apportionment and accounting of 
 surplus.  Every life insurance company doing business in this 
 state conducted on the mutual plan or in which policyholders are 
 entitled to share in the profits or surplus shall make an annual 
 apportionment and accounting of divisible surplus to each 
 policyholder, beginning not later than the end of the third 
 policy year, on all participating policies hereafter issued; and 
 each such policyholder shall be entitled to and be credited with 
 or paid, in the manner hereinafter provided, such a portion of 
 the entire divisible surplus as has been contributed thereto by 
 that person's policy.  

    Subd. 2.    Policyholder to choose.  Every policyholder 
 shall, on all participating policies hereafter issued, be 
 permitted, after that person's policy has been in force five 
 years, annually, to select the manner and method of the 
 application of the surplus to be annually apportioned to that 
 person's policy from among those set forth in the policy.  All 
 apportioned surplus not actually paid over to the insured, or 
 applied in the reduction of current or future premiums or in the 
 purchase of paid-up insurance or pure endowment additions, shall 
 be credited to the insured and carried as an actual liability 
 and be paid at the maturity of the policy.  

    Subd. 3.    Waiver prohibited.  No agreement between 
 the company and the policyholder or applicant for insurance 
 shall be held to waive any of the provisions of subdivisions 1 
 and 2.  

    Subd. 4.    Policies issued prior to January 1, 1908.  
 Every life insurance company doing business in this state 
 conducted on the mutual plan, or in which policyholders are 
 entitled to share in the profits or surplus, shall, on all 
 policies of life insurance issued prior to January 1, 1908, 
 under the conditions of which the distribution of surplus is 
 deferred to a fixed or specified time, and contingent upon the 
 policy being in force and the insured living at that time, 
 annually ascertain the amount of surplus to which all such 
 policies as a separate class are entitled, and shall annually 
 apportion to such policies as a class the amount of surplus so 
 ascertained, and carry the amount of such apportioned surplus, 
 plus the actual interest earnings and accretions of such fund, 
 as a distinct and separate liability to such class of policies 
 on and for which the same was accumulated, and no company or any 
 of its officers shall be permitted to use any part of such 
 apportioned surplus fund for any purpose other than the express 
 purpose for which the same was accumulated.  This subdivision 
 shall not apply to industrial policies.  

    Subd. 5.    Required policy provision.  The required 
 policy provision is contained in section 61A.03(6).  

    HIST: 1967 c 395 art 2 s 26; 1986 c 444 

CONTINGENCY RESERVE

     61A.27 Contingency reserve; limitations.  

    Any life insurance company doing business in this state may 
 accumulate and maintain, in addition to the capital and surplus 
 contributed by its stockholders, and in addition to an amount 
 equal to the net values of its policies, computed according to 
 the laws of the jurisdiction under which it is organized, a 
 contingency reserve not exceeding the following respective 
 percentages of these net values:  When the net values are less 
 than $100,000, 20 percent thereof, or the sum of $10,000, 
 whichever is the greater; when the net values are greater than 
 $100,000, the percentage thereof measuring the contingency 
 reserve shall decrease one-half of one percent for each $100,000 
 of the net values up to $1,000,000; when the net values are 
 greater than $1,000,000, but do not exceed $25,000,000, the 
 contingency reserve shall not exceed 15 percent thereof; when 
 the net values are greater than $25,000,000, but do not exceed 
 $150,000,000, the contingency reserve shall not exceed 12-1/2 
 percent thereof; when the net values are greater than 
 $150,000,000, the contingency reserve shall not exceed ten 
 percent thereof; provided, that as the net values of these 
 policies increase and the maximum percentage measuring the 
 contingency reserve decreases, the corporation may maintain the 
 contingency reserve already accumulated hereunder, although for 
 the time being it may exceed the maximum percentage herein 
 prescribed, but may not add to the contingency reserve when the 
 addition will bring it beyond the maximum percentage.  For cause 
 shown, the commissioner may, at any time and from time to time, 
 permit any corporation to accumulate and maintain a contingency 
 reserve in excess of the limit above mentioned for a prescribed 
 period, not exceeding one year under any one permission, by 
 filing in the commissioner's office a decision stating the 
 reasons therefor and causing the same to be published in the 
 next annual report.  This section shall not apply to any company 
 doing exclusively a nonparticipating business.  

    HIST: 1967 c 395 art 2 s 27; 1986 c 444 

BENEFIT ACCOUNTS

     61A.275 Separate accounts; pension plans. 

    Subdivision 1.    Establishment.  Any domestic life 
 insurance company, by adoption of a resolution by its governing 
 body, may establish one or more separate accounts and may 
 allocate thereto, in accordance with the terms of a written 
 agreement, any amounts which are paid to or held by the company 
 in connection with a pension, retirement, or profit-sharing plan 
 described under section 401, 414(d), or 457 of the Internal 
 Revenue Code of 1954, as amended through December 31, 1981.  In 
 connection with the separate accounts, the company may issue, 
 subject to the terms of the written agreement, group policies or 
 contracts with benefits payable in fixed or variable amounts.  

    The assets held in a separate account pursuant to this 
 section shall be owned by the company.  The company shall not 
 be, nor hold itself out to be, a trustee with respect to the 
 assets.  

    Subd. 2.    Allocations, credits, or charges.  The 
 income, if any, and gains or losses realized or unrealized on 
 each separate account may be credited to or charged against the 
 amount allocated to that separate account in accordance with the 
 written agreement, without regard to the other income, gains, or 
 losses of the company.  

    Subd. 3.    Transfer of assets.  No sale, exchange, or 
 other transfer of assets may be made by a company between any of 
 its separate accounts or between any other investment account 
 and one or more of its separate accounts unless:  

    (1) in case of a transfer into a separate account, the 
 transfer is made solely to establish the account or to support 
 the contractual obligations of the company with respect to the 
 separate account to which the transfer is made; or 

    (2) in case of a transfer from a separate account, the 
 transfer would not cause the remaining assets of the account to 
 become less than the reserves and other contract liabilities 
 with respect to that separate account.  A transfer, whether into 
 or from a separate account, shall be made by a transfer of cash, 
 or by a transfer of securities having a readily determinable 
 market value, if the transfer of securities is approved by the 
 commissioner.  The commissioner may approve other transfers 
 among separate accounts if, in the commissioner's opinion, the 
 transfers would not be inequitable.  

    Except as the commissioner may otherwise approve, where a 
 company transfers assets into a separate account for the purpose 
 of establishing the account, the transfer shall be in the form 
 of cash and shall be made only from its surplus.  Not more than 
 five percent of its surplus may be so invested in its separate 
 accounts.  

    Subd. 4.    Application of investment law.  
 Notwithstanding any inconsistent provision in the company's 
 charter or other law, the amounts allocated to separate accounts 
 and accumulations thereon may be invested and reinvested in any 
 class of loans and investments.  The loans and investments shall 
 not be included in applying any of the limitations provided in 
 section 61A.28.  However, unless otherwise approved by the 
 commissioner, a portion of the assets of each separate account 
 equal to the company's reserve liability with regard to the 
 guaranteed benefits and funds, if any, shall be invested in 
 accordance with the requirements otherwise applicable to the 
 company's general assets.  

    Subd. 5.    Valuation of assets.  Unless otherwise 
 approved by the commissioner, assets allocated to a separate 
 account shall be valued at their market value on the date of 
 valuation, or if there is no readily available market, then as 
 provided under the terms of the contract or the requirements or 
 other written agreement applicable to the separate account.  
 However, unless otherwise approved by the commissioner, a 
 portion of the assets of each separate account equal to the 
 company's reserve liability with regard to the guaranteed 
 benefits and funds, if any, shall be valued in accordance with 
 the requirements otherwise applicable to the company's general 
 assets.  

    Subd. 6.    Other laws.  No separate account established 
 pursuant to this section shall be subject to the provisions of 
 sections 61A.13 to 61A.21, nor shall any of the provisions of 
 this section be construed to have any application to separate 
 accounts established pursuant to sections 61A.13 to 61A.21.  

    HIST: 1982 c 555 s 3; 1986 c 444 

     61A.276 Funding agreements. 

    Subdivision 1.    Authorization.  An insurer authorized 
 to deliver or issue for delivery annuity contracts in this state 
 may deliver or issue for delivery one or more funding 
 agreements.  The issuance or delivery of these funding 
 agreements shall not be deemed to be doing a kind of business 
 specifically authorized by section 60A.06.  Notwithstanding the 
 definition of contracts of life and endowment insurance or of 
 annuities under section 60A.06, subdivision 1, clause (4) or the 
 definition of life insurance company under section 61A.01, the 
 issuance or delivery of a funding agreement by an insurer in 
 this state constitutes doing an insurance business in the state. 

    Subd. 2.    Issuance.  The funding agreements may be 
 issued to:  (1) individuals; or (2) persons authorized by a 
 state or foreign country to engage in an insurance business or 
 subsidiaries or affiliates of these persons; or (3) entities 
 other than individuals and other than persons authorized to 
 engage in an insurance business, and subsidiaries and affiliates 
 of these persons, for the following purposes:  (i) to fund 
 benefits under any employee benefit plan as defined in the 
 Employee Retirement Income Security Act of 1974, as now or 
 hereafter amended, maintained in the United States or in a 
 foreign country; (ii) to fund the activities of any organization 
 exempt from taxation under section 501(c) of the Internal 
 Revenue Code of 1986, as amended through December 31, 1992, or 
 of any similar organization in any foreign country; (iii) to 
 fund any program of any state, foreign country or political 
 subdivision thereof, or any agency or instrumentality thereof; 
 (iv) to fund any agreement providing for periodic payments in 
 satisfaction of a claim; or (v) to fund a program of an 
 institution that has assets in excess of $25,000,000.  No 
 funding agreement shall be issued in an amount less than 
 $1,000,000.  

    Subd. 3.    General operation.  No amounts shall be 
 guaranteed or credited under a funding agreement except upon 
 reasonable assumptions as to investment income and expenses and 
 on a basis equitable to all holders of funding agreements of a 
 given class.  The funding agreements shall not provide for 
 payments to or by the insurer based on mortality or morbidity 
 contingencies. 

    Subd. 4.    Allocation to separate accounts.  Amounts 
 paid to the insurer, and proceeds applied under optional modes 
 of settlement, under the funding agreements may be allocated by 
 the insurer to one or more separate accounts pursuant to section 
 61A.275, 61A.14, or 60L.01 to 60L.15.  Notwithstanding the 
 provisions of section 61A.275, subdivision 1, a separate account 
 for funding agreement proceeds may include funds from any source 
 authorized to purchase a funding agreement pursuant to this 
 section. 

    Subd. 5.    Rules.  The commissioner may adopt rules 
 relating to (1) the standards to be followed in the approval of 
 forms of the funding agreements, (2) the reserves to be 
 maintained by insurers issuing the funding agreements, (3) the 
 accounting and reporting of funds credited under the funding 
 agreements, (4) the disclosure of information to be given to 
 holders and prospective holders of the funding agreements, and 
 (5) the qualification and compensation of persons selling the 
 funding agreements on behalf of insurers.  Notwithstanding any 
 other provision of law, the commissioner has sole authority to 
 regulate the issuance and sale of the funding agreements, 
 including the persons selling the funding agreements on behalf 
 of insurers. 

    HIST: 1985 c 43 s 1; 1993 c 375 art 8 s 14; 1998 c 319 s 17; 
 1999 c 177 s 34; 2001 c 131 s 11 

INVESTMENTS

     61A.28 Domestic companies, investments. 

    Subdivision 1.    Investment guidelines and procedures.  
 Each domestic life insurance company must comply with section 
 60A.112. 

    No investment or loan, except policy loans, shall be made 
 by a domestic life insurance company unless authorized or 
 approved by the board of directors or by a committee of 
 directors, officers, or employees of the company designated by 
 the board and charged with the duty of supervising the 
 investment or loan.  Accurate records of all authorizations and 
 approvals must be maintained. 

    The capital, surplus and other funds of every domestic life 
 insurance company, whether incorporated by special act or under 
 the general law (in addition to investments in real estate as 
 otherwise permitted by law) may be invested only in one or more 
 of the following kinds of securities or property.  An investment 
 may not be made under this section if the required interest 
 obligation is in default. 

    Investments must be valued in accordance with the valuation 
 procedures established by the National Association of Insurance 
 Commissioners, unless the commissioner requires or finds another 
 method of valuation reasonable under the circumstances.  Other 
 invested assets must be valued according to the procedures 
 promulgated by the National Association of Insurance 
 Commissioners, if not addressed in another section, unless the 
 commissioner requires or finds another method of valuation 
 reasonable under the circumstances. 

    Subd. 2.    Government obligations.  Bonds or other 
 obligations of, or bonds or other obligations insured or 
 guaranteed by:  (a) the United States or any state thereof; (b) 
 the Dominion of Canada or any province thereof; (c) any county, 
 city, town, statutory city formerly a village, organized school 
 district, municipality, or other civil or political subdivision 
 of this state, or of any state of the United States or of any 
 province of the Dominion of Canada; (d) any agency or 
 instrumentality of the foregoing, including but not limited to, 
 debentures issued by the federal housing administrator, 
 obligations of the Federal Home Loan Mortgage Corporation, the 
 Federal National Mortgage Association, the Government National 
 Mortgage Association; and (e) obligations payable in United 
 States dollars issued or fully guaranteed by the International 
 Bank for Reconstruction and Development, the Inter-American 
 Development Bank, the Asian Development Bank, the African 
 Development Bank, the Export-Import Bank, or any other United 
 States government sponsored organization of which the United 
 States is a member.  The life insurance company may not invest 
 in the obligations of these banks or organizations if the 
 investment causes the company's aggregate investments in the 
 obligations of any one of these banks or organizations to exceed 
 five percent of its admitted assets or if the investment causes 
 the company's aggregate investments in the obligations of all 
 banks or organizations described in clause (e) to exceed 15 
 percent of its admitted assets.  

    Subd. 3.    Loans or obligations secured by mortgage.  
 Loans or obligations (hereinafter loans) secured by a first 
 mortgage, or deed of trust (hereinafter mortgage), on improved 
 real estate in the United States, if the amount of the loan 
 secured thereby is not in excess of 66-2/3 percent of the market 
 value of the real estate at the time of the loan, or, when the 
 loan is to be fully amortized by installment payments of 
 principal, which may begin up to five years from the date of the 
 loan if the real estate is to be used for commercial purposes, 
 and interest at least annually over a period of not to exceed 40 
 years, the amount of the loan does not exceed (a) 80 percent of 
 the market value of the real estate at the time of the loan; (b) 
 90 percent of the market value of the real estate at the time of 
 the loan if the loan is secured by a purchase money mortgage 
 made in connection with the disposition of real estate acquired 
 pursuant to section 61A.31, subdivision 1, or, if (1) the real 
 estate is used for commercial purposes, and (2) the loan is 
 additionally secured by an assignment of lease or leases, and 
 (3) the lessee or lessees under the lease or leases, or a 
 guarantor or guarantors of the lessee's obligations, is a 
 corporation whose obligations would qualify as an investment 
 under subdivision 6, paragraph (e), and (4) the rents payable 
 during the primary term of the lease or leases are sufficient to 
 amortize at least 60 percent of the loan.  In calculating the 
 ratio of the amount of the loan to the value of the property, no 
 part of the amount of any loan is to be included which the 
 United States or any agency or instrumentality thereof or other 
 mortgage insurer as may be approved by the commissioner has 
 insured or guaranteed or made a commitment to insure or 
 guarantee; provided, in no event may the loan exceed the market 
 value of the property.  No improvement may be included in 
 estimating the market value of the real estate unless it is 
 insured against fire by policies payable to the security holder 
 or a trustee for its benefit.  This requirement may be met by a 
 program of self-insurance established and maintained by a 
 corporation whose debt obligations would qualify for purchase 
 under subdivision 6, paragraph (g), clause (4).  Also loans 
 secured by mortgage, upon leasehold estates in improved real 
 property where at the date of investment the lease has an 
 unexpired term of at least five years longer than the term of 
 the loan secured thereby, and where the leasehold estate is 
 unencumbered except by the lien reserved in the lease for the 
 payment of rentals and the observance of the other covenants, 
 terms and conditions of the lease and where the mortgagee, upon 
 default, is entitled to be subrogated to, or to exercise, all 
 the rights and to perform all the covenants of the lessee, 
 provided that no loan on the leasehold estate may exceed (a) 
 66-2/3 percent of the market value thereof at the time of the 
 loan, or (b) 80 percent of the market value thereof at the time 
 of the loan if the loan is to be fully amortized by installment 
 payments of principal which begin within five years from the 
 date of the loan if the leasehold estate is to be used for 
 commercial purposes, interest is payable at least annually over 
 the period of the loan which may not exceed 40 years and the 
 market value of the leasehold estate is shown by the sworn 
 certificate of a competent appraiser, or (c) 90 percent of the 
 market value of the leasehold estate at the time of the loan if 
 the loan is secured by a purchase money mortgage made in 
 connection with the disposition of real estate acquired pursuant 
 to section 61A.31, subdivision 1.  In calculating the ratio of 
 the amount of the loan to the value of the leasehold estate, no 
 part of the amount of any loan is to be included which the 
 United States or any agency or instrumentality thereof or other 
 mortgage insurer approved by the commissioner has insured or 
 guaranteed or made a commitment to insure or guarantee; 
 provided, in no event may the loan exceed the market value of 
 the leasehold estate.  Also loans secured by mortgage, which the 
 United States or any agency or instrumentality thereof or other 
 mortgage insurer approved by the commissioner has insured or 
 guaranteed or made a commitment to insure or guarantee.  Also 
 loans secured by mortgage, on improved real estate in the 
 Dominion of Canada if the amount of the loan is not in excess of 
 66-2/3 percent of the market value of the real estate at the 
 time of the loan, or, when the loan is to be fully amortized by 
 installment payments of principal, which may begin up to five 
 years from the date of the loan if the real estate is used for 
 commercial purposes, and interest at least annually over a 
 period of not to exceed 40 years, the amount of the loan does 
 not exceed (a) 80 percent of the market value of the real estate 
 at the time of the loan, or (b) 90 percent of the market value 
 of the real estate at the time of the loan if the loan is 
 secured by a purchase money mortgage made in connection with the 
 disposition of real estate acquired pursuant to section 61A.31, 
 subdivision 1.  In calculating the ratio of the amount of the 
 loan to the value of the property, no part of the amount of any 
 loan is to be included which the Dominion of Canada or any 
 agency or instrumentality thereof has insured or guaranteed or 
 made a commitment to insure or guarantee; provided in no event 
 may the loan exceed the market value of the property.  Also 
 loans secured by mortgage, on real estate in the United States 
 which may be unimproved provided there exists a definite plan 
 for commencement of development for commercial purposes within 
 not more than five years where the amount of the loan does not 
 exceed 80 percent of the market value of the unimproved real 
 estate at the time of the loan and the loan is to be fully 
 amortized by installment payments of principal, which may begin 
 up to five years from the date of the loan, and interest at 
 least annually over a period of not to exceed 40 years.  Also 
 loans secured by second mortgage on improved or unimproved real 
 estate used, or to be used, for commercial purposes; provided, 
 that if unimproved real estate there exists a definite plan for 
 commencement of development within not more than five years, in 
 the United States or the Dominion of Canada under the following 
 conditions:  (a) the amount of the loan secured by the second 
 mortgage is equal to the sum of the amount disbursed by the 
 company and the then outstanding indebtedness under the first 
 mortgage loan; and (b) the company has control over the payments 
 under the first mortgage indebtedness; and (c) the total amount 
 of the loan does not exceed 66-2/3 percent of the market value 
 of the real estate at the date of the loan or, when the note or 
 bond is to be fully amortized by installment payments of 
 principal, beginning not more than five years from the date of 
 the loan, and interest at least annually over a period of not to 
 exceed 40 years, the amount of the loan does not exceed 80 
 percent of the market value of the real estate at the date of 
 the loan. 

    A company may not invest in a mortgage loan authorized 
 under this subdivision, if the investment causes the company's 
 aggregate investments in mortgages secured by a single property 
 to exceed one percent of its admitted assets.  

    For purposes of this subdivision, improved real estate 
 includes real estate improved with permanent buildings, used for 
 agriculture or pasture, or income producing real estate, 
 including but not limited to, parking lots and leases, royalty 
 or other mineral interests in properties producing oil, gas, or 
 other minerals and interests in properties for the harvesting of 
 forest products.  

    A loan or obligation otherwise permitted under this 
 subdivision must be permitted notwithstanding the fact that it 
 provides for a payment of the principal balance prior to the end 
 of the period of amortization of the loan.  

    The vendor's equity in a contract for deed qualifies as a 
 loan secured by mortgage for the purposes of this subdivision. 

    Subd. 4. Repealed, 1991 c 325 art 9 s 13 

    Subd. 5. Repealed, 1991 c 325 art 9 s 13 

    Subd. 6.    Stocks, obligations, and other investments.  
 (a) Common stocks, common stock equivalents, or securities 
 convertible into common stock or common stock equivalents of a 
 business entity organized under the laws of the United States or 
 any state thereof, or the Dominion of Canada or any province 
 thereof.  

    (b) Preferred stock of, or common or preferred stock 
 guaranteed as to dividends by a business entity organized under 
 the laws of the United States or any state thereof, or the 
 Dominion of Canada or any province thereof, under the following 
 conditions:  (1) No investment may be made under this paragraph 
 in a stock upon which any dividend, current or cumulative, is in 
 arrears; (2) the company may not invest in stocks under this 
 paragraph and in common stocks under paragraph (a) if the 
 investment causes the company's aggregate investments in the 
 common or preferred stocks to exceed 25 percent of the company's 
 total admitted assets, provided that no more than 20 percent of 
 the company's admitted assets may be invested in common stocks 
 under paragraph (a); and (3) the company may not invest in any 
 preferred stock or common stock guaranteed as to dividends, 
 which is rated in the four lowest categories established by the 
 Securities Valuation Office of the National Association of 
 Insurance Commissioners, if the investment causes the company's 
 aggregate investment in the lower rated preferred or common 
 stock guaranteed as to dividends to exceed five percent of its 
 total admitted assets.  

    (c) Warrants, options, and rights to purchase stock if the 
 stock, at the time of the acquisition of the warrant, option, or 
 right to purchase, would qualify as an investment under 
 paragraph (a) or (b), whichever is applicable.  A company shall 
 not invest in a warrant, option, or right to purchase stock if, 
 upon purchase and immediate exercise thereof, the acquisition of 
 the stock violates any of the concentration limitations 
 contained in paragraphs (a) and (b).  

    (d) In addition to amounts that may be invested under 
 subdivision 8 and without regard to the percentage limitation 
 applicable to stocks, warrants, options, and rights to purchase, 
 the securities of any face amount certificate company, unit 
 investment trust, or management type investment company, 
 registered or in the process of registration under the 
 Investment Company Act of 1940 as from time to time amended.  In 
 addition, the company may transfer assets into one or more of 
 its separate accounts for the purpose of establishing, or 
 supporting its contractual obligations under, the accounts in 
 accordance with the provisions of sections 61A.13 to 61A.21.  A 
 company may not invest in a security authorized under this 
 paragraph if the investment causes the company's aggregate 
 investments in the securities to exceed ten percent of its total 
 admitted assets, except that for a health service plan 
 corporation operating under chapter 62C, and for a health 
 maintenance organization operating under chapter 62D, the 
 company's aggregate investments may not exceed 20 percent of its 
 total admitted assets.  No more than five percent of the allowed 
 investment by health service plan corporations or health 
 maintenance organizations may be invested in funds that invest 
 in assets not backed by the federal government.  When investing 
 in money market mutual funds, nonprofit health service plans 
 regulated under chapter 62C, and health maintenance 
 organizations regulated under chapter 62D, shall establish a 
 trustee custodial account for the transfer of cash into the 
 money market mutual fund. 

    (e) Investment grade obligations that are:  

    (1) bonds, obligations, notes, debentures, repurchase 
 agreements, or other evidences of indebtedness of a business 
 entity, organized under the laws of the United States or any 
 state thereof, or the Dominion of Canada or any province 
 thereof; and 

    (2) rated in one of the four highest rating categories by 
 at least one nationally recognized statistical rating 
 organization, or are rated in one of the two highest categories 
 established by the Securities Valuation Office of the National 
 Association of Insurance Commissioners. 

    (f) Noninvestment grade obligations:  A company may acquire 
 noninvestment grade obligations as defined in subclause (i) 
 (hereinafter noninvestment grade obligations) which meet the 
 earnings test set forth in subclause (ii).  A company may not 
 acquire a noninvestment grade obligation if the acquisition will 
 cause the company to exceed the limitations set forth in 
 subclause (iii). 

    (i) A noninvestment grade obligation is an obligation of a 
 business entity, organized under the laws of the United States 
 or any state thereof, or the Dominion of Canada or any province 
 thereof, that is not rated in one of the four highest rating 
 categories by at least one nationally recognized statistical 
 rating organization, or is not rated in one of the two highest 
 categories established by the Securities Valuation Office of the 
 National Association of Insurance Commissioners. 

    (ii) Noninvestment grade obligations authorized by this 
 subdivision may be acquired by a company if the business entity 
 issuing or assuming the obligation, or the business entity 
 securing or guaranteeing the obligation, has had net earnings 
 after the elimination of extraordinary nonrecurring items of 
 income and expense and before income taxes and fixed charges 
 over the five immediately preceding completed fiscal years, or 
 its period of existence of less than five years, has averaged 
 not less than 1-1/4 times its average annual fixed charges 
 applicable to the period; provided, however, that if a business 
 entity issuing or assuming the obligation, or the business 
 entity securing or guaranteeing the obligation, has undergone an 
 acquisition, recapitalization, or reorganization within the 
 immediately preceding 12 months, or will use the proceeds of the 
 obligation for an acquisition, recapitalization, or 
 reorganization, then such business entity shall also have, on a 
 pro forma basis, for the next succeeding 12 months, net earnings 
 averaging 1-1/4 times its average annual fixed charges 
 applicable to such period after elimination of extraordinary 
 nonrecurring items of income and expense and before taxes and 
 fixed charges; no investment may be made under this section upon 
 which any interest obligation is in default. 

    (iii) Limitation on aggregate interest in noninvestment 
 grade obligations.  A company may not invest in a noninvestment 
 grade obligation if the investment will cause the company's 
 aggregate investments in noninvestment grade obligations to 
 exceed the applicable percentage of admitted assets set forth in 
 the following table:  

                                         Percentage of
             Effective Date              Admitted Assets
             January 1, 1992                  20
             January 1, 1993                  17.5
             January 1, 1994                  15

    Nothing in this paragraph limits the ability of a company 
 to invest in noninvestment grade obligations as provided under 
 subdivision 12. 

    (g) Obligations for the payment of money under the 
 following conditions:  (1) The obligation must be secured, 
 either solely or in conjunction with other security, by an 
 assignment of a lease or leases on property, real or personal; 
 (2) the lease or leases must be nonterminable by the lessee or 
 lessees upon foreclosure of any lien upon the leased property; 
 (3) the rents payable under the lease or leases must be 
 sufficient to amortize at least 90 percent of the obligation 
 during the primary term of the lease; and (4) the lessee or 
 lessees under the lease or leases, or a governmental entity or 
 business entity, organized under the laws of the United States 
 or any state thereof, or the Dominion of Canada, or any province 
 thereof, that has assumed or guaranteed any lessee's performance 
 thereunder, must be a governmental entity or business entity 
 whose obligations would qualify as an investment under 
 subdivision 2 or paragraph (e) or (f).  A company may acquire 
 leases assumed or guaranteed by a noninvestment grade lessee 
 unless the value of the lease, when added to the other 
 noninvestment grade obligations owned by the company, exceeds 15 
 percent of the company's admitted assets.  

    (h) A company may sell call options against stocks or other 
 securities owned by the company and may purchase call options in 
 a closing transaction against a call option previously written 
 by the company.  In addition to the authority granted by 
 paragraph (c), to the extent and on the terms and conditions the 
 commissioner determines to be consistent with the purposes of 
 this chapter, a company may purchase or sell other 
 exchange-traded call options, and may sell or purchase 
 exchange-traded put options.  

    (i) A company may not invest in a security or other 
 obligation authorized under this subdivision if the investment, 
 valued at cost at the date of purchase, causes the company's 
 aggregate investment in any one business entity to exceed two 
 percent of the company's admitted assets.  

    (j) For nonprofit health service plan corporations 
 regulated under chapter 62C, and for health maintenance 
 organizations regulated under chapter 62D, a company may invest 
 in commercial paper rated in one of the two highest rating 
 categories by at least one nationally recognized statistical 
 rating organization, or rated in one of the two highest 
 categories established by the Securities Valuation Office of the 
 National Association of Insurance Commissioners, if the 
 investment, valued at cost at the date of purchase, does not 
 cause the company's aggregate investment in any one business 
 entity to exceed six percent of the company's admitted assets. 

    Subd. 7.    Transportation equipment obligations.  
 Equipment trust obligations or certificates which are adequately 
 secured or other adequately secured instruments evidencing an 
 interest in transportation equipment purchased, leased, or under 
 contract for purchase or lease by a corporation incorporated in 
 the United States or in Canada or by a receiver or trustee of 
 such corporation and a right to receive determined portions of 
 rental, purchase or other fixed obligatory payments for the use 
 or purchase of such transportation equipment.  

    Subd. 8.    Asset backed arrangements.  Investments in 
 asset backed arrangements that meet the definitions and credit 
 criteria provided in this subdivision.  For purposes of this 
 subdivision, "asset backed arrangement" means a loan 
 participation or loan to or equity investment in a business 
 entity that has as its primary business activity the acquisition 
 and holding of financial assets for the benefit of its debt and 
 equity holders.  

    In order to qualify for investment under this subdivision:  

    (a) the investment in the asset backed arrangement must be 
 secured by or represent an undivided interest in a single 
 financial asset or a pool of financial assets; and 

    (b) either (1) at least 90 percent of the dollar value of 
 the financial assets held under the asset backed arrangement 
 qualifies for direct investment under this section; (2) the 
 investment in the asset backed arrangement is rated in one of 
 the four highest rating categories by at least one nationally 
 recognized statistical rating organization; or (3) the 
 investment in the asset backed arrangement is rated in one of 
 the two highest categories established by the Securities 
 Valuation Office of the National Association of Insurance 
 Commissioners.  

    Examples of asset backed arrangements authorized by this 
 subdivision include, but are not limited to:  general and 
 limited partnership interests; participations under unit 
 investment trusts such as collateralized mortgage obligations 
 and collateralized bond obligations; shares in, or obligations 
 of, corporations formed for holding investment assets, and 
 contractual participation interests in a loan or group of loans. 

    A company may not invest in an asset backed arrangement if 
 the investment causes the company's aggregate investment in the 
 financial assets held under the asset backed arrangement to 
 exceed any of the concentration limits contained in this section.

    Subd. 9.    Obligations of trustees and receivers.  
 Certificates, notes, or other obligations issued by trustees or 
 receivers of any institution created or existing under the laws 
 of the United States or of any state, district, or territory 
 thereof, which, or the assets of which, are being administered 
 under the direction of any court having jurisdiction if such 
 obligation is adequately secured as to principal and interest; 
 the amount invested in the securities mentioned in this 
 subdivision shall not, at any time, exceed 25 percent of the 
 unassigned surplus and capital of the company.  

    Subd. 9a.    Hedging.  A domestic life insurance company 
 may enter into financial transactions solely for the purpose of 
 reducing the risk associated with assets and liabilities that 
 the company has acquired or incurred or has legally contracted 
 to acquire or incur, and not for speculative or other purposes.  
 For purposes of this subdivision, "financial transactions"  
 include, but are not limited to, futures, options to buy or sell 
 fixed income securities, repurchase and reverse repurchase 
 agreements, and interest rate swaps, caps, and floors.  This 
 authority is in addition to any other authority of the insurer.  

    Subd. 10.    Real estate sales contracts.  Real estate 
 sales contracts to which the company is not an original party, 
 involving unencumbered real property situated in the United 
 States, having a value of at least 50 percent more than the 
 amount of the unpaid balance of the contract, same to be 
 assigned or otherwise transferred to the company or to a trustee 
 or nominee of its choosing.  No improvement shall be included in 
 estimating the value unless the same shall be insured against 
 fire by policies payable to and held by the company or a trustee 
 or nominee for its benefit.  The foregoing provisions of this 
 subdivision shall not apply to real estate sales contracts to 
 which the company is an original party and shall not prohibit 
 the company from holding such contracts as an investment.  

    Subd. 11.    Policy loans.  Loans on the security of 
 insurance policies issued by itself to an amount not exceeding 
 the loan value thereof; and loans on the pledge of any of the 
 securities eligible for investment under the provisions of 
 subdivisions 2 to 10, with the exception of noninvestment grade 
 obligations as defined in subdivision 6, paragraph (f), but not 
 exceeding 95 percent of the value of securities enumerated in 
 subdivisions 2, 3, and 4 and 80 percent of the value of stocks 
 and other securities; in case of securities enumerated in 
 subdivisions 3, 5, and 10 "value" means principal amount unpaid 
 thereon and in case of other securities market value thereof; in 
 case of securities enumerated in subdivisions 3 and 10 the 
 pledge agreement shall require principal payments by the pledgor 
 at least equal to and concurrent with principal payments on the 
 pledged security; in loans authorized by this subdivision, 
 except as otherwise provided by law in regard to policy loans, 
 the company shall reserve the right at any time to declare the 
 indebtedness due and payable when in excess of such proportions 
 of value or, in case of pledge of securities other than those 
 enumerated in subdivisions 3 and 10, upon depreciation of 
 security.  In the case of securities enumerated in subdivision 
 8, the provision of this subdivision must be applied in 
 accordance with the type of security subject to the asset backed 
 arrangement. 

    Subd. 12.    Additional investments.  Investments of any 
 kind, without regard to the categories, conditions, standards, 
 or other limitations set forth in the foregoing subdivisions and 
 section 61A.31, subdivision 3, except that the prohibitions in 
 clause (d) of subdivision 3 remains applicable, may be made by a 
 domestic life insurance company in an amount not to exceed the 
 lesser of the following: 

    (1) five percent of the company's total admitted assets as 
 of the end of the preceding calendar year; or 

    (2) fifty percent of the amount by which its capital and 
 surplus as of the end of the preceding calendar year exceeds 
 $675,000.  Except as provided in section 61A.281, a company's 
 total investment under this section in the common stock of any 
 corporation, other than the stock of the types of corporations 
 specified in section 61A.284, may not exceed ten percent of the 
 common stock of the corporation.  No investment may be made 
 under the authority of this clause or clause (1) by a company 
 that has not completed five years of actual operation since the 
 date of its first certificate of authority.  

    If, subsequent to being made under the provisions of this 
 subdivision, an investment is determined to have become 
 qualified or eligible under any of the other provisions of this 
 chapter, the company may consider the investment as being held 
 under the other provision and the investment need no longer be 
 considered as having been made under the provisions of this 
 subdivision.  

    In addition to the investments authorized by this 
 subdivision, with the written order of the commissioner, a 
 domestic life insurance company may make qualified investments 
 in any other type of investment or exceed any limitations of 
 quality, quantity, or percentage of admitted assets contained in 
 this section, section 61A.29 or 61A.31, or other provision 
 governing the investments of a domestic life insurance company.  
 This approval is at the discretion of the commissioner, provided 
 that the additional investments allowed by the commissioner's 
 written order may not exceed five percent of the company's 
 admitted assets.  

    Subd. 13.    Additional limitations.  Under the 
 standards and procedures in sections 60G.20 to 60G.22 for 
 individual insurers, the commissioner may impose additional 
 limitations on all insurers on the types and percentages of 
 investments as the commissioner determines necessary to protect 
 and ensure the safety of the general public. 

    Subd. 14.    Replication transactions.  An insurer 
 engaging in replication transactions shall include all 
 replicated investment positions in calculating compliance with 
 the limitations on investments applicable to the insurer.  
 Replication transactions are permitted only under the authority 
 of subdivision 12.  For these purposes, "replication 
 transaction" means a derivative transaction that is intended to 
 replicate the performance of one or more assets that an insurer 
 is authorized to acquire under applicable law.  A derivative 
 transaction that either is authorized by subdivision 6, 8, or 9a 
 or section 61A.29, subdivision 2, paragraph (d), or is entered 
 into as a hedging transaction shall not be considered a 
 replication transaction.  "Replicated investment position" means 
 the statement value of the position reported under the heading 
 "Replicated (Synthetic) Asset" on Schedule DB, Part F, of the 
 annual statement of the insurer, or any successor provision. 

    HIST: 1967 c 395 art 2 s 28; 1969 c 494 s 12-16; 1971 c 816 s 
 1,2; 1973 c 123 art 5 s 7; 1974 c 64 s 6; 1975 c 141 s 1; 1981 c 
 211 s 32-34; 1983 c 340 s 12-14; 1984 c 382 s 4; 1985 c 147 s 1; 
 1987 c 337 s 43; 1991 c 325 art 9 s 1-9; 1992 c 540 art 2 s 13; 
 1994 c 425 s 9,10; 1998 c 328 s 1-3; 2001 c 131 s 12,13 

     61A.281 Investments; subsidiaries. 

    Subdivision 1.    Special purpose corporations.  A 
 domestic life insurance company may organize and hold, or 
 acquire and hold, more than 50 percent of the capital stock of 
 any corporation organized under the laws of the United States or 
 any state thereof, or the Dominion of Canada or any province 
 thereof, or if approved by the commissioner, elsewhere, which is 
 one or more of the following:  (1) a corporation providing 
 investment advisory, management or sales services to an 
 investment company or to an insurance company; or (2) a data 
 processing or computer service corporation; or (3) a real 
 property holding, developing, managing or leasing corporation; 
 or (4) a mortgage loan corporation engaged in the business of 
 making, originating, purchasing, or otherwise acquiring or 
 investing in, and servicing or selling or otherwise disposing of 
 loans secured by mortgages on real property; or (5) a 
 corporation whose business is owning and managing or leasing 
 personal property; or (6) a corporation other than a bank or an 
 insurance company, whose business has been approved by the 
 commissioner as complementary or supplementary to the business 
 of a domestic life insurance company.  Provided, however, that 
 such percentage of stock may, with the approval of the 
 commissioner, be 50 percent or less.  The limits contained in 
 the other investment sections of the insurance code shall not 
 apply to such holdings, provided that the aggregate cost of the 
 investments made under this subdivision shall not exceed five 
 percent of the domestic life insurance company's admitted assets.

    Subd. 2.    General purpose corporations.  A domestic 
 life insurance company may organize and hold, or acquire and 
 hold, more than 50 percent of the capital stock of any 
 corporation organized under the laws of the United States or any 
 state thereof, or the Dominion of Canada or any province 
 thereof, or if approved by the commissioner, elsewhere, whether 
 or not of the type of corporation enumerated in subdivision 1 or 
 approved by the commissioner under subdivision 1.  The limits 
 contained in the other investment sections of Minnesota Statutes 
 relating to insurance shall not apply to such holdings, provided 
 that the aggregate cost of the investments made under authority 
 of this subdivision shall not exceed ten percent of the capital 
 and surplus of the domestic life insurance company.  

    Subd. 3.    Rules.  The commissioner may issue such 
 reasonable rules as may be appropriate to carry out the purposes 
 of this section.  

    Subd. 4.    Other corporations acquired or organized, 
 activities.  A domestic life insurance company may organize 
 or acquire a corporation domiciled in the United States and hold 
 the capital stock thereof, provided that it shall continuously 
 own more than 50 percent of such capital stock.  The corporation 
 so organized or acquired shall limit its activities to the 
 investing of its assets in the same corporations, subject to the 
 same ownership requirements, in which the insurance company may 
 directly invest under subdivisions 1 and 2; provided that the 
 sum of the total cost of the investments made by both it and the 
 insurance company in corporations authorized under said 
 subdivision 1 or said subdivision 2 shall not exceed the dollar 
 amount which would have been applicable had the insurance 
 company directly made such investments.  The limits contained in 
 the other investment sections of the insurance code shall not 
 apply to any investment made by the insurance company under this 
 subdivision, provided that the aggregate cost of the investments 
 made by the insurance company hereunder and under said 
 subdivisions 1 and 2 shall not exceed the sum of five percent of 
 the insurance company's admitted assets and ten percent of the 
 insurance company's capital and surplus.  

    Subd. 5.    Corporations organized to hold investments.  
 A domestic life insurance company may organize one or more 
 corporations domiciled in the United States and hold the capital 
 stock of them, provided that it shall continuously own all of 
 the capital stock and that the corporations so organized shall 
 limit their activities to acquiring and holding investments, 
 other than under subdivisions 1 to 4, that a domestic life 
 insurance company may acquire and hold.  The investments of 
 these corporations are subject to the same restrictions and 
 requirements as apply to domestic life insurance companies, 
 including the applicable percentage limitations for investments 
 in individual properties and entities and limitations on the 
 aggregate amount to be invested in any investment category.  For 
 the purposes of calculating the amount of an investment held by 
 the life insurance company, investments in the same property, 
 entity, or investment category that are owned by the company and 
 all corporations qualifying under this subdivision must be 
 aggregated. 

    HIST: 1969 c 494 s 17; 1971 c 816 s 3-5; 1985 c 248 s 70; 1991 
 c 325 art 9 s 10 

     61A.282 Investments in name of company or nominee and 
  prohibitions. 

    Subdivision 1.    Requirements.  A company's investments 
 shall be held in its corporate name or its nominee name, except 
 that: 

    (a) Investments may be held in the name of a clearing 
 corporation or of a custodian bank or in the name of the nominee 
 of either under the following conditions:  

    (1) The clearing corporation, custodian bank, or nominee 
 must be legally authorized to hold the particular investment for 
 the account of others; 

    (2) Where the investment is evidenced by a certificate and 
 held in the name of a custodian bank or the nominee of a 
 custodian bank, a written agreement shall provide that 
 certificates so deposited shall at all times be kept separate 
 and apart from other deposits with the depository, so that at 
 all times they may be identified as belonging solely to the 
 company making the deposit; or 

    (3) Where a clearing corporation is to act as depository, 
 the investment may be merged or held in bulk in the clearing 
 corporation's name, or in the name of its nominee, together with 
 any other investments deposited with the clearing corporation by 
 any other person, if a written agreement provides that adequate 
 evidence of the deposit will be obtained and retained by the 
 company or a custodian bank.  

    As used in this subdivision, the term "custodian bank" 
 means a bank or trust company licensed by the United States or 
 any state thereof. 

    (b) A company may participate, through a bank or trust 
 company which is a member of the Federal Reserve System, in the 
 Federal Reserve's book-entry system, if the records of the 
 member bank or trust company at all times show that the 
 investments are held for the company and/or for specific 
 accounts of the company.  

    (c) If an investment consists of an individual interest in 
 a pool of obligations, or of a fractional interest in a single 
 obligation, the certificate of participation or interest, or the 
 confirmation of participation or interest in the investment, 
 shall be held in the manner set forth in paragraph (a) or held 
 in the name of the company.  

    (d) Where an investment is not evidenced by a certificate, 
 except as provided in paragraph (b), adequate evidence of the 
 company's investment shall be obtained from the issuer or its 
 transfer or recording agent and retained by the company, a 
 custodian bank, or clearing corporation.  Adequate evidence, for 
 purposes of this section, shall mean a written receipt or other 
 verification issued by the depository or issuer or a custodian 
 bank which shows that the investment is held for the company.  
 Transfers of ownership of investments held as described in 
 paragraphs (a)(3), (b), and (c) may be evidenced by bookkeeping 
 entry on the books of the issuer of the investment or its 
 transfer or recording agent or the clearing corporation without 
 physical delivery of certificates, if any, evidencing the 
 company's investment. 

    Subd. 2.    Lending of securities.  A company may loan 
 securities held by it under this chapter to a broker-dealer 
 registered under the Securities and Exchange Act of 1934 or to a 
 bank which is a member of the Federal Reserve System, under the 
 following conditions: 

    (a) The market value of loaned securities outstanding at 
 any one time, excluding securities held in a separate account 
 established pursuant to section 61A.14, subdivision 1, or 
 61A.275, shall not exceed 40 percent of the company's admitted 
 assets as of the December 31 immediately preceding. 

    (b) The company is limited to no more than two percent of 
 its admitted assets as of the December 31 immediately preceding 
 being subject to lending of securities with any one borrower. 

    (c) Each loan must be evidenced by a written agreement 
 which provides: 

    (1) that the loan will be fully collateralized by cash or 
 obligations issued or guaranteed by the United States or an 
 agency or an instrumentality thereof, and that the collateral 
 will be adjusted each business day during the term of the loan 
 to maintain the required collateral in the event of market value 
 changes in the loaned securities or collateral; 

    (2) that the loan may be terminated by the company at any 
 time, and that the borrower must return the loaned securities or 
 their equivalent within five business days after termination; 

    (3) that the company has the right to retain the collateral 
 or to use the collateral to purchase securities equivalent to 
 the loaned securities if the borrower defaults under the terms 
 of the agreement; and 

    (4) that the borrower remains liable for any losses and 
 expenses, not covered by the collateral, which are incurred by 
 the company due to default. 

    Subd. 3.    Conflicts of interest.  No officer, 
 director, or member of any committee passing on investments 
 shall borrow any of the funds, or become, directly or 
 indirectly, liable as a surety or endorser for or on account of 
 loans thereof to others, or receive for personal use any fee, 
 brokerage, commission, gift or other consideration for, or on 
 account of, any loan made by or on behalf of the company. 

    HIST: 1969 c 494 s 18; 1981 c 211 s 35; 1982 c 555 s 4; 1986 c 
 313 s 3; 1986 c 444; 1994 c 485 s 25 

     61A.283 Admitted assets. 

    For the purpose of applying any investment limitation based 
 on the amount of a domestic life insurance company's admitted 
 assets, the term "admitted assets" has the meaning given in 
 section 60A.02, subdivision 27, with an adjustment in the 
 admitted asset figure to exclude amounts which on the December 
 31 immediately preceding the date the company acquires an 
 investment are allocated to separate accounts. 

    HIST: 1969 c 494 s 19; 1991 c 325 art 10 s 9 

     61A.284 Investments; capital stock of other insurance 
  companies. 

    Subdivision 1.    Purchase of insurance company.  A 
 domestic life insurance company may acquire and hold all or part 
 of the capital stock of another insurance company whether or not 
 in the same line of insurance for cash or through the issuance 
 of its own stock in payment of all or part of the purchase 
 price.  The limits contained in the other investment provisions 
 shall not apply to these holdings providing the acquiring 
 company secures the prior approval of the purchase agreement by 
 the commissioner. 

    Subd. 2.    Organization of subsidiary insurance company. 
  A domestic life insurance company may organize and hold all 
 or part of the capital stock of another insurance company 
 whether or not in the same line of insurance.  The limits 
 contained in the other investment provisions shall not apply to 
 these holdings providing the organizing company secures the 
 prior approval of the commissioner.  

    Subd. 3.    Investments in health maintenance 
 organizations.  An investment in a health maintenance 
 organization may be deemed by a domestic life insurance company 
 to be an investment under this section. 

    HIST: 1981 c 211 s 36; 1990 c 538 s 11 

     61A.29 Foreign investments. 

    Subdivision 1.    Authorization.  In addition to the 
 Canadian investments permitted by this chapter, a domestic life 
 insurance company may make foreign investments authorized by 
 subdivision 2, subject to the limitations contained in 
 subdivision 3.  Investments authorized by this section are 
 restricted to countries where the obligations of the sovereign 
 government are rated in one of the two highest rating categories 
 by at least one nationally recognized statistical rating 
 organization in the United States.  All investments must be made 
 as provided under foreign investment guidelines established and 
 maintained by the company under section 60A.112.  

    Subd. 2.    Authorized investments.  A company may 
 invest in (i) foreign assets denominated in United States 
 dollars; (ii) foreign assets denominated in foreign currency; 
 and (iii) United States assets denominated in foreign currency.  
 The investments may be made in any combination of the following: 

    (a) Obligations of sovereign governments and political 
 subdivisions thereof and obligations issued or fully guaranteed 
 by a supranational bank or organization, other than those 
 described in section 61A.28, subdivision 2, paragraph (e), 
 provided that the obligations are rated in one of the two 
 highest rating categories by at least one nationally recognized 
 statistical rating organization in the United States.  For 
 purposes of this section, "supranational bank" means a bank 
 owned by a number of sovereign nations and engaging in 
 international borrowing and lending.  

    (b) Obligations of a foreign business entity, provided that 
 the obligation (i) is rated in one of the four highest rating 
 categories by at least one nationally recognized statistical 
 rating organization in the United States or by a similarly 
 recognized statistical rating organization, as approved by the 
 commissioner, in the country where the investment is made; or 
 (ii) is rated in one of the two highest categories established 
 by the Securities Valuation Office of the National Association 
 of Insurance Commissioners.  

    (c) Stock or stock equivalents issued by a foreign entity 
 if the stock or stock equivalents are regularly traded and 
 subject to oversight by the government of the country in which 
 the regular trading occurs. 

    (d) Financial transactions for the sole purpose of managing 
 the foreign currency risk of investments made under this 
 subdivision, provided that the financial transactions are 
 entered into under a detailed plan maintained by the company.  
 For purposes of this paragraph, "financial transactions"  
 include, but are not limited to, the purchase or sale of 
 currency swaps, forward agreements, and currency futures. 

    Subd. 3.    Investment limitations.  Investments 
 authorized by subdivision 2 are subject to the following 
 limitations: 

    (a) A company shall not make an investment under this 
 section if the investment causes the company's aggregate 
 investments authorized under this section to exceed ten percent 
 of its total admitted assets.  

    (b) Investments made under subdivision 2 must be aggregated 
 with United States investments in determining compliance with 
 percentage concentration limitations, if any, contained in this 
 chapter.  

    (c) A company shall not invest in the obligations of one 
 issuer under subdivision 2 in an amount greater than authorized 
 for investments of the same class under this chapter.  A company 
 shall not invest more than two percent of its total admitted 
 assets in the direct or guaranteed obligations of a sovereign 
 government or political subdivision thereof, or of a 
 supranational bank. 

    HIST: 1967 c 395 art 2 s 29; 1969 c 494 s 20; 1981 c 211 s 37; 
 1983 c 340 s 15; 1991 c 325 art 9 s 11; 2001 c 131 s 14 

     61A.30 Joint investments. 

    No domestic life insurance company shall subscribe to or 
 participate in any underwriting of the purchase or sale of 
 securities or other property, enter into any transactions for 
 the purchase or sale on account of the company jointly with any 
 other person, firm, or corporation, nor enter into any agreement 
 to withhold from sale any of its property, unless the 
 disposition of the property shall be, at all times, within the 
 control of its board of directors.  Nothing contained herein 
 shall be construed to invalidate or prohibit an agreement by two 
 or more investors to join and share in the purchase of 
 investments for bona fide investment purposes.  In the 
 investments secured by mortgage or deed of trust, provisions 
 shall be made for a method of resolving any matters relating 
 thereto as to which the investors are not in agreement. 

    HIST: 1967 c 395 art 2 s 30; 1981 c 211 s 38 

     61A.31 Real estate holdings. 

    Subdivision 1.    Purposes.  Except as provided in 
 subdivisions 2, 3, and 4, every domestic life insurance company 
 may acquire, hold and convey real property only for the 
 following purposes and in the following manner: 

    (1) such as shall have been mortgaged to it in good faith 
 by way of security for loans previously contracted, or for 
 moneys due; 

    (2) such as shall have been conveyed to it in satisfaction 
 of debts previously contracted in the course of its dealings; 

    (3) such as shall have been purchased at sales on 
 judgments, decrees or mortgages obtained or made for such debts; 

    (4) such as shall have been subject to a contract for deed 
 under which the company held the vendor's interest to secure the 
 payment by the vendee.  

    Subd. 2.    Building projects.  In order to promote and 
 supplement public and private efforts to provide an adequate 
 supply of decent, safe, and sanitary dwelling accommodations for 
 persons of low and moderate income; to relieve unemployment; to 
 alleviate the shortage of rental residences; and to assist in 
 relieving the emergency in the housing situation in this country 
 through investment of funds, any life insurance company may 
 purchase or lease from any owner or owners (including states and 
 political subdivisions thereof), real property in any state in 
 which such company is licensed to transact the business of life 
 insurance; and on any real property so acquired or on real 
 property so located and acquired otherwise in the conduct of its 
 business, such company may erect apartment, or other dwelling 
 houses, not including hotels, but including accommodations for 
 retail stores, shops, offices, and other community services 
 reasonably incident to such projects; or, to provide such 
 housing or accommodations, may construct, reconstruct, improve, 
 or remove any buildings or other improvements thereon.  Such 
 company may thereafter own, improve, maintain, manage, collect 
 or receive income from, sell, lease, or convey any such real 
 property and the improvements thereon.  A company may not invest 
 in the building projects if the investment causes the company's 
 aggregate investments under this subdivision to exceed ten 
 percent of its total admitted assets.  

    Subd. 3.    Acquisition of property.  Any domestic life 
 insurance company may: 

    (a) acquire real property or any interest in real property, 
 including oil and gas and other mineral interests, in the United 
 States or any state thereof, or in the Dominion of Canada or any 
 province thereof, as an investment for the production of income, 
 and hold, improve or otherwise develop, and lease, sell, and 
 convey the same either directly or as a joint venturer or 
 through a limited, limited liability, or general partnership in 
 which the company is a partner or through a limited liability 
 company in which the company is a member.  A company may not 
 invest in any real property asset other than property held for 
 the convenience and accommodation of its business if the 
 investment causes:  (1) the company's aggregate investments in 
 the real property assets to exceed ten percent of its admitted 
 assets; or (2) the company's investment in any single parcel of 
 real property to exceed one-half of one percent of its admitted 
 assets; 

    (b) acquire personal property in the United States or any 
 state thereof, or in the Dominion of Canada or any province 
 thereof, under lease or leases or commitment for lease or leases 
 if:  (1) either the fair value of the property exceeds the 
 company's investment in it or the lessee, or at least one of the 
 lessees, or a guarantor, or at least one of the guarantors, of 
 the lease is a corporation with a net worth of $1,000,000 or 
 more; and (2) the lease provides for rent sufficient to amortize 
 the investment with interest over the primary term of the lease 
 or the useful life of the property, whichever is less.  A 
 company may not invest in the personal property if the 
 investment causes the company's aggregate investments in the 
 personal property to exceed three percent of its admitted 
 assets; 

    (c) acquire and hold real estate (1) if the purpose of the 
 acquisition is to enhance the sale value of real estate 
 previously acquired and held by the company under this section 
 and (2) if the company expects the real estate so acquired to 
 qualify and be held by the company under paragraph (a) within 
 five years after acquisition; and 

    (d) not acquire real property under paragraphs (a) to (c) 
 if the property is to be used primarily for agricultural, 
 horticultural, ranch, mining, or church purposes. 

    All real property acquired or held under this subdivision 
 must be carried at a value equal to the lesser of (1) cost plus 
 the cost of capitalized improvements, less normal depreciation, 
 or (2) market value. 

    Subd. 4.    Convenience and accommodation of business.  
 A company may acquire and hold real estate for the convenience 
 and accommodation of its business.  Without the prior approval 
 of the Department of Commerce, a company may not invest in real 
 estate authorized under this subdivision if the investment 
 causes the company's aggregate investments under this 
 subdivision to exceed five percent of its total admitted assets, 
 except that a health service plan corporation operating under 
 chapter 62C may not invest in real estate authorized under this 
 subdivision if the investment causes the company's aggregate 
 investments under this subdivision to exceed 25 percent of its 
 total admitted assets. 

    HIST: 1967 c 395 art 2 s 31; 1969 c 494 s 21-24; 1981 c 211 s 
 39,40; 1983 c 289 s 114 subd 1; 1983 c 340 s 16; 1984 c 655 art 
 1 s 92; 1991 c 325 art 9 s 12; 1995 c 214 s 15 

     61A.315 Investments and holdings; limitations. 

    The sum of the value of assets permitted to be acquired 
 pursuant to sections 61A.31, subdivision 3 and 61A.28, 
 subdivision 6, paragraphs (a) and (b) shall not exceed 30 
 percent of admitted assets as of the end of the preceding 
 calendar year.  

    HIST: 1981 c 211 s 41 

DOMESTIC MUTUAL LIFE COMPANIES;

ADDITIONAL PROVISIONS

     61A.32 Domestic mutual and stock and mutual companies; 
  voting rights of members. 

    Every person insured by a domestic mutual life insurance 
 company, and every participating policyholder of a domestic 
 stock and mutual life insurance company as defined in sections 
 61A.33 to 61A.36, shall be a member, entitled to one vote and 
 one vote additional for each $1,000 of insurance in excess of 
 the first $1,000; provided, that no member shall be entitled to 
 more than 100 votes; and, provided, further, that in the case of 
 group insurance on employees such group shall be deemed to be a 
 single member and the employer shall be deemed to be such member 
 for the purpose of voting, having not to exceed 100 votes, 
 provided, that in cases where the employees pay all or any part 
 of the premium, either directly or by payroll deductions, the 
 employees shall be allowed to choose their representative, who 
 shall exercise a voting power in proportion to the percentage of 
 premium paid by such employees.  Every member shall be notified 
 of its annual meetings by a written notice mailed to the 
 member's address, or by an imprint on the back of the policy, 
 premium notice, receipt or certificate of renewal, as follows: 

    "The insured is hereby notified that by virtue of this 
 policy the insured is a member of the .......... Insurance 
 Company, and that the annual meetings of said company are held 
 at its home office on the ..... day of ..... in each year, at 
 .......... o'clock."  

    The blanks shall be duly filled in print.  Any such member 
 may vote by proxy by filing written proxy appointment with the 
 secretary of the company at its home office at least five days 
 before the first meeting at which it is to be used.  Such proxy 
 appointment may be for a specified period of time not to exceed 
 one year.  A proxy may be revoked by a member at any time by 
 written notice to the secretary of the company or by executing a 
 new proxy appointment and filing it as required herein:  
 provided, however, that any member may always appear personally 
 and exercise rights as a member at any meeting of the company.  

    A domestic mutual life insurance company may by its 
 articles of incorporation or bylaws provide for a representative 
 system of voting in any meeting of members.  The articles or 
 bylaws may provide for the selection of representatives from 
 districts as therein specified, such representatives to 
 represent approximately equal numbers of members with power to 
 exercise all the voting powers, rights and privileges of the 
 members they represent with the same force and effect as might 
 be exercised by the members themselves.  In such a 
 representative system the votes cast by the representative shall 
 be one vote for each member, notwithstanding the amount of 
 insurance carried, and proxy voting shall not be permitted; 
 provided, however, that any member may always appear personally 
 and exercise rights as a member of the company at any meeting of 
 the membership.  

    HIST: 1967 c 395 art 2 s 32; 1986 c 444; 1996 c 446 art 2 s 9 

     61A.321 Guaranty funds. 

    (a) A domestic mutual life insurance company may be formed 
 with, or an existing domestic mutual life insurance company may 
 establish, a guaranty fund divided into certificates of $10 
 each, or multiples thereof, and this guaranty fund shall be 
 invested in the same manner as is provided for the investment of 
 capital stock of insurance companies. 

    (b) The certificate holders of the guaranty fund are 
 entitled to an annual dividend of not more than ten percent on 
 their respective certificates, if the net profits or unused 
 premiums left after all losses, expenses, or liabilities then 
 incurred, with reserves for reinsurance, are provided for, are 
 sufficient to pay the annual dividend.  If the dividends in any 
 one year are less than ten percent, the difference may be made 
 up in any subsequent year or years from the net profits.  
 Approval of the commissioner must be obtained before accrual for 
 or payment of the dividend, or any repayment of principal.  

    (c) The guaranty fund must be applied to the payment of 
 losses and expenses when necessary, and, if the guaranty fund is 
 impaired, the directors may make good the whole or any part of 
 the impairment from future profits of the company, but no 
 dividend shall be paid on guaranty fund certificates while the 
 guaranty fund is impaired.  The holder of the guaranty fund 
 certificate is not liable for any more than the amount of the 
 certificate which has not been paid in, and this amount must be 
 plainly and legibly stated on the face of the certificate. 

    (d) Notwithstanding any other provision of law, each 
 certificate holder of record is entitled to one vote in person 
 or by proxy in any meeting of the members of the company for 
 each $10 investment in guaranty fund certificates. 

    (e) The guaranty fund may be reduced or retired by vote of 
 the policyholders of the company and the assent of the 
 commissioner, if the net assets of the company above its 
 reinsurance reserve and all other claims and obligations and the 
 amount of its guaranty fund certificates and interest on the 
 certificates for two years last preceding and including the date 
 of its last annual statement are not less than 50 percent of the 
 premiums in force.  Due notice of this proposed action on the 
 part of the company shall be mailed to each policyholder of the 
 company not less than 30 days before the meeting when the action 
 may be taken. 

    (f) In domestic mutual life insurance companies with a 
 guaranty fund, the certificate holders shall be entitled to 
 choose and elect from among their own number or from among the 
 policyholders at least one-half or more of the total number of 
 directors. 

    (g) If any domestic mutual life insurance company with a 
 guaranty fund ceases to do business, it shall not divide among 
 its certificate holders any part of its assets or guaranty fund 
 until all its debts and obligations have been paid or canceled. 

    (h) Foreign mutual life insurance companies having a 
 guaranty fund shall not be required to make their certificate of 
 guaranty fund conform to the provisions of this section, but 
 when the certificates do not conform with this section, the 
 amount of the guaranty fund shall be charged as a liability. 

    HIST: 2001 c 131 s 15 

STOCK AND MUTUAL COMPANIES;

ADDITIONAL PROVISIONS

     61A.33 Stock and mutual life insurance companies.  

    Insurance corporations for the transaction of the kinds of 
 business authorized and permitted by section 60A.06, subdivision 
 1, clause (4), and subject to these provisions and limitations, 
 may be formed having a capital stock, but which shall be 
 controlled by the votes of both stockholders and participating 
 policyholders.  All such companies shall be known as stock and 
 mutual companies.  Corporations so formed shall have the right 
 to make any contracts which insurance companies formed to 
 transact the same kinds of business upon the stock plan or upon 
 the mutual plan are authorized by law to make.  

    HIST: 1967 c 395 art 2 s 33 

     61A.34 Application.  

    All provisions of law relating to stock companies and all 
 such provisions relating to mutual companies shall, so far as 
 applicable, relate to and govern such stock and mutual companies 
 and the rights of stockholders and members thereof.  

    HIST: 1967 c 395 art 2 s 34 

     61A.35 Voting rights. 

    Unless otherwise provided in the certificate of 
 incorporation or an amendment thereto adopted as provided by 
 section 60A.07, subdivision 1d, or 61A.36, each stockholder of a 
 stock and mutual life insurance company shall, at all meetings, 
 be entitled to one vote for each share of stock held and, except 
 as otherwise provided by law, each holder of a policy entitled 
 to participate in profits or savings shall be a member and, as 
 such, shall be entitled to the number of votes to which that 
 person would be entitled in a mutual company.  

    HIST: 1967 c 395 art 2 s 35; 1986 c 444; 2005 c 69 art 3 s 11 

*   NOTE:  The amendment to this section by Laws 2005, chapter 
*69, article 3, section 11, is effective August 1, 2006.  Laws 
*2005, chapter 69, article 4, section 2.

     61A.36 Conversion of existing companies; amendment of 
  certificates of incorporation. 

    Any existing stock or mutual insurance company authorized 
 to do the kinds of business referred to in section 61A.33 may 
 amend its certificate of incorporation so as to become a stock 
 and mutual company; provided, that no such amendment shall 
 deprive any stockholder or member or policyholder of the right, 
 at any and all meetings of stockholders and members or 
 policyholders held thereafter, to cast as many votes for 
 directors as are provided by the certificate of incorporation in 
 force at the time of the adoption of such amendment, or by the 
 law in force at such time.  No such amendment shall be construed 
 to change the identity of the corporation and it shall 
 thereafter continue to be governed by the laws applicable 
 thereto at the time of such amendment and as amended hereafter 
 and not inconsistent with sections 61A.33 to 61A.36, as well as 
 those relating to the added characteristic of capital stock or 
 mutuality which it shall have acquired by such amendment.  

    The certificate of incorporation of a stock and mutual life 
 insurance company may be amended in any respect therein provided 
 by section 60A.07, subdivision 1d, in the manner therein 
 provided.  The certificate of incorporation of a stock and 
 mutual life insurance company may also be amended in respect to 
 any matter which an original certificate of incorporation of a 
 stock and mutual life insurance company might lawfully have 
 contained, or so as to vest in its board of directors authority 
 to make and alter bylaws subject to the power of the 
 stockholders and members to change or repeal such bylaws, by the 
 affirmative vote, at a regular meeting of stockholders and 
 members or at a special meeting of stockholders and members 
 called for that expressly stated purpose by the board of 
 directors which shall first have proposed the amendment and 
 declared it to be advisable, of (1) a majority of the total 
 number of votes to which all stockholders are entitled, and (2) 
 at least one-fifth of the total number of votes to which all 
 participating policyholder members are entitled, provided the 
 proposed amendment does not receive the negative vote of more 
 than five percent of the total number of votes to which all 
 participating policyholder members are entitled.  The 
 certificate of incorporation of a stock and mutual life 
 insurance company may also be amended so as to increase or 
 decrease its capital stock, or so as to change the number and 
 par value of the shares of its capital stock, or so as to limit 
 or deny to stockholders the preemptive right to subscribe to any 
 or all shares of stock which may be authorized to be thereafter 
 issued, by a majority vote of all its shares but without the 
 vote of its members, at a regular meeting or at a special 
 meeting of stockholders called for that expressly stated purpose 
 by the board of directors which shall first have proposed the 
 amendment and declared it to be advisable and not adverse to or 
 in conflict with the rights and interests of the members, 
 provided that if the proposed amendment is to increase or 
 decrease the capital stock or to change the number of the shares 
 of the capital stock, the resolution specifying the proposed 
 amendment and the certificate of amendment shall expressly 
 provide (1) that the stockholders holding all its shares shall, 
 at all meetings, be entitled to the same number of total votes 
 after the amendment is adopted as they were entitled to before 
 the amendment, and (2) that each stockholder shall, at all 
 meetings, be entitled to a fraction of one vote for each share 
 of stock held, the numerator of which fraction shall be the 
 number of shares outstanding before the first such amendment is 
 adopted and the denominator of which fraction shall be the 
 number of shares outstanding.  The resolution specifying the 
 amendment shall be embraced in a certificate duly executed by 
 its president and secretary, or other presiding and recording 
 officers, under its corporate seal, and approved, filed, 
 recorded, and published in the manner prescribed for the 
 execution, approval, filing, recording, and publishing of an 
 original certificate of incorporation.  

    HIST: 1967 c 395 art 2 s 36; 1986 c 444; 2005 c 69 art 3 s 12 

*   NOTE:  The amendment to this section by Laws 2005, chapter 
*69, article 3, section 12, is effective August 1, 2006.  Laws 
*2005, chapter 69, article 4, section 2.

     61A.37 Domestic insurance corporations may become mutual 
  corporations.  

    Any domestic insurance corporation heretofore or hereafter 
 incorporated for the transaction of the kinds of business 
 authorized and permitted by section 60A.06, subdivision 1, 
 clause (4), and having capital stock may become a mutual 
 corporation and to that end may formulate and carry out a plan 
 for the acquisition by it of its outstanding capital stock, and 
 for the mutualization of such corporation, as follows: 

    (a) Such plan shall have been adopted by vote of a majority 
 of the directors of such company.  

    (b) Such plan shall have been submitted to the commissioner 
 of commerce and shall have been approved as conforming to the 
 requirements of this section and section 61A.38 and as not 
 prejudicial to the policyholders of such company or to the 
 insuring public.  

    (c) Such plan shall have been approved by a vote of 
 stockholders representing a majority of the outstanding capital 
 stock at a meeting of stockholders called for that purpose.  
 Stockholders may vote in person or by proxy filed with the 
 company at least five days before the meeting at which it is to 
 be used.  Notice of such meeting shall be given by mailing such 
 notice from the home office of such company at least 30 days 
 prior to such meeting in a sealed envelope, postage prepaid, 
 directed to each stockholder at the address shown on the stock 
 records of the company.  

    (d) Such plan shall have been approved by a majority of the 
 votes cast by policyholders (whether or not members) who vote at 
 a meeting called for that purpose.  Eligibility of 
 policyholders, whether or not members of the company, and the 
 number of votes to which each is entitled, shall be determined 
 by the laws of Minnesota relating to the rights of members of 
 domestic mutual life insurance companies to vote at company 
 meetings.  Policyholders may vote in person or by proxy filed 
 with the company at least five days before the meeting at which 
 it is to be used.  Notice of such meeting shall be given by 
 mailing such notice from the home office of such company at 
 least 30 days prior to such meeting in a sealed envelope, 
 postage prepaid, directed to each policyholder at the address 
 shown on the policy records of the company.  Such meeting shall 
 be conducted in such manner as may be provided for in such plan, 
 with the approval of the commissioner.  The commissioner shall 
 supervise and direct the methods and procedure of said meeting 
 and appoint an adequate number of inspectors to conduct the 
 voting at said meeting, who shall have power to determine all 
 questions concerning the verification of the ballots, the 
 ascertaining of the validity thereof, the qualifications of the 
 voters and the canvass of the vote.  Such inspectors, or any one 
 thereof designated by the commissioner, shall certify to the 
 commissioner and to such company the result of such vote, and 
 with respect thereto shall act under such rules as shall be 
 prescribed by the commissioner.  All necessary expenses incurred 
 by the commissioner, or incurred with the commissioner's 
 approval by the inspectors appointed, shall be paid by such 
 company upon the certificate of the commissioner.  

    (e) Approval of the plan by stockholders and policyholders 
 as above provided may be given at a joint meeting thereof.  

    (f) Such plan may specify the purchase price to be paid by 
 such company for shares of its capital stock, and in such case 
 the price so specified shall be adhered to.  If such plan does 
 not specify the price to be paid for such shares, such company 
 shall first obtain the approval of the commissioner for every 
 payment made for the acquisition of any shares of its capital 
 stock.  

    (g) Such plan may authorize the board of directors of the 
 company to provide for participation in the surplus of the 
 company by holders of policies which do not by their terms 
 provide for such participation or which provide for a limited 
 participation only, and may include appropriate proceedings to 
 confer upon policyholders the right to vote at meetings of the 
 company.  Policyholders upon whom the right to vote is so 
 conferred shall have the same voting rights and shall be 
 entitled to the same notice of annual meeting as members of 
 domestic mutual life insurance companies.  

    (h) Before approving any such plan or any such payment, the 
 commissioner shall be satisfied, by making investigation or such 
 evidence as the commissioner may require, that such company, 
 after deducting the aggregate sum appropriated by such plan for 
 the acquisition of any part or all of its capital stock, and in 
 the case of any payment not fixed by such plan and subject to 
 approval as aforesaid, after deducting also the amount of such 
 payment, will be possessed of admitted assets in an amount equal 
 to the sum of (1) and (2) as follows: 

    (1) Its entire liabilities, including the net value of its 
 outstanding contracts computed as provided by law, and (2) the 
 contingency reserve deemed by the commissioner necessary to 
 protect its policyholders and the insuring public, in view of 
 the past experience of such company, the character of its 
 assets, its present management and its probable future earnings. 

    The commissioner's action in refusing to give any approval 
 required by this section shall be subject to review by any court 
 of competent jurisdiction.  

    Such plan may be amended by vote of stockholders 
 representing a majority of the outstanding capital stock and by 
 a majority of the votes cast by policyholders who vote at the 
 meeting, but in such case the plan shall not become effective 
 until approved, as amended, by vote of a majority of the 
 directors of such company and by the commissioner.  

    HIST: 1967 c 395 art 2 s 37; 1983 c 289 s 114 subd 1; 1984 c 
 655 art 1 s 92; 1986 c 444 

     61A.38 May acquire capital stock.  

    In pursuance of any plan such company shall have power, and 
 shall be privileged, to acquire any shares of its capital stock 
 by gift, bequest, or purchase.  Until all of the shares of its 
 outstanding capital stock are acquired, any shares so acquired 
 shall be taken and held in trust for all the policyholders of 
 such company, as hereinafter provided, and shall be assigned and 
 transferred on the books of the company to three trustees, who 
 shall be named in such plan and shall be approved by the 
 commissioner.  All shares held by such trustees shall be deemed 
 admitted assets of such company at their par value.  Such 
 trustees, who may be directors of the company, shall vote all 
 shares so acquired and held by them at all corporate meetings in 
 accordance with the majority vote of policyholders voting on any 
 question before the meeting.  When all of the outstanding 
 capital stock of any such corporation shall have been acquired, 
 the entire capital stock of such corporation shall be retired 
 and canceled and thereupon such corporation shall be and become 
 a mutual life insurance company without capital stock.  The plan 
 of conversion formulated pursuant to section 61A.37 shall 
 provide for the method of filling vacancies among such trustees. 
 Before undertaking any of the duties of appointment each trustee 
 shall file with the company a verified acceptance of appointment 
 and a declaration that the person will faithfully discharge the 
 duties of trustee.  All dividends and other sums received by 
 such trustees on the shares of stock so acquired by them shall, 
 after paying the necessary expenses of executing the trust, be 
 immediately repaid to such company for the benefit of all who 
 are or may become policyholders of such company and entitled to 
 participate in the profits or savings thereof.  

    HIST: 1967 c 395 art 2 s 38; 1986 c 444 

COOPERATIVE COMPANIES;

SPECIAL PROVISIONS

     61A.39 Cooperative life and casualty companies. 

    Subdivision 1.    Cooperative plan.  Every corporation, 
 society, or association which issues a certificate or policy or 
 makes an agreement with its members by which, upon the decease 
 of a member, any money is to be paid to, or benefit conferred 
 upon, the legal representatives or designated beneficiaries of 
 such member, or reaching a certain age, to pay any money or 
 benefit to the member, such money or benefit to be derived from 
 voluntary donations, admission fees, dues, or assessments to be 
 collected from its members or any class thereof, and which 
 reserves the right to make any additional assessments, or 
 without the consent of the certificate or policyholder to 
 increase the premium named therein, shall be deemed to be 
 engaged in the business of life insurance upon the cooperative 
 or assessment plan.  Every corporation which likewise agrees, in 
 case of accident, sickness, or other physical disability, or 
 reaching a certain age, to pay money or confer benefits likewise 
 derived and issuing certificates or policies with similar 
 conditions with reference to the payment of dues or assessments, 
 shall be deemed to be engaged in the business of casualty 
 insurance upon the cooperative or assessment plan, and shall, 
 except as herein otherwise specified, be subject to the 
 provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50.  

    Subd. 2.    Continued corporate existence.  
 Notwithstanding the repeal of sections 63.01, 63.011, and 63.02 
 to 63.35 pursuant to Laws 1983, chapter 104, section 1, any 
 corporation, society or association formed or having existed 
 under Laws 1933, chapter 241, whether or not it amended its 
 articles of incorporation in accordance with Laws 1945, chapter 
 178, as amended by Laws 1951, chapter 257, and which has 
 transformed itself into a cooperative life insurance company to 
 engage in business under the cooperative plan, shall be and 
 continue to exist as a corporation by virtue of the provisions 
 hereof and may exercise and shall continue to have and to hold 
 all the rights, privileges and powers which it had, prior to the 
 repeal of such sections, including those derived under Laws 
 1945, chapter 178, section 1, as amended by Laws 1951, chapter 
 257, section 2.  

    HIST: 1967 c 395 art 2 s 39; 1984 c 602 s 1; 1986 c 444 

     61A.40 Qualifications for license; number of members. 

    No corporation not now authorized to transact business in 
 this state shall be licensed to transact the business of life or 
 casualty insurance, or both, upon the cooperative or assessment 
 plan, until at least 300 persons eligible to membership have 
 made individual applications, in writing, containing warranties 
 of age, health, and other required conditions of membership, and 
 the corporation has on deposit with the commissioner, as 
 security for all its policyholders, stocks or bonds of this 
 state or of the United States, or bonds of any of the 
 municipalities of this state, or personal obligations secured by 
 first mortgage on real estate within this state, worth, 
 exclusive of buildings, the amount of the lien, and bearing 
 interest of not less than three percent per annum, to an amount 
 the actual market value of which, exclusive of interest, shall 
 never be less than $100,000; provided, that any corporation 
 which has heretofore procured and filed with the commissioner a 
 part of the total number of applications required by law shall 
 only be required to deposit securities of the market value of 
 $5,000; and provided, that a corporation that confines its 
 membership exclusively to the members of volunteer fire 
 departments shall be required to have not less than 100 
 individual applications, in writing, from persons eligible to 
 membership and the sum of at least $1,000, which amount shall be 
 liable only for death or indemnity claims made under its policy 
 or membership certificate contracts. 

    HIST: 1967 c 395 art 2 s 40; 1978 c 465 s 10 

     61A.41 Reserve fund; reciprocal provisions.  

    Every domestic cooperative life or casualty corporation, 
 society or association, except a fraternal benefit society, 
 which issues a certificate or policy, or makes an agreement with 
 its members, by which, upon the decease of a member, more than 
 $200 is to be paid to, or benefit conferred upon, the legal 
 representatives or designated beneficiary of such member, shall 
 set aside ten percent of its gross premium receipts or 
 assessments each year, as a reserve, until the same, together 
 with any reserve already accumulated, shall amount to the sum of 
 $25,000.  

    Every domestic cooperative or assessment company 
 transacting the business of life and health and accident 
 insurance, which does not issue health and accident policies 
 providing indemnity for disability from accident or disease in 
 excess of $750 on account of any one accident or illness, nor 
 issues policies providing indemnity for disability from accident 
 or illness in excess of $750 on account of any one accident or 
 illness and death indemnity of more than $200, shall set aside 
 as a reserve ten percent of its gross premium receipts or 
 assessments each year until the same, together with any reserve 
 already accumulated, shall amount to $2,000, and shall 
 thereafter set aside as a reserve five percent of its gross 
 premium receipts or assessments each year until the same, 
 together with any reserve already accumulated, shall amount to 
 $25,000.  

    Every domestic cooperative or assessment life insurance 
 corporation, society or association, which issues a certificate 
 or policy, or makes an agreement with its members, by which, 
 upon the decease of a member, a funeral benefit is to be paid or 
 funeral service is to be furnished, not exceeding $200 in amount 
 or value, shall set aside ten percent of its gross premium 
 receipts or assessments each year as a reserve, until the same, 
 together with any reserve already accumulated, shall amount to 
 the sum of $5,000, which reserve fund, accumulated as herein 
 provided, shall be deposited with the commissioner in accordance 
 with section 60A.10, subdivision 4, for the benefit of all its 
 policyholders.  

    This deposit may consist of securities of the class in 
 which insurance companies are authorized to invest under the 
 laws of this state, and the company depositing the same shall be 
 entitled to the income derived from the securities.  No foreign 
 insurance company upon the cooperative or assessment plan shall 
 be permitted to transact business in this state unless it makes 
 the deposit hereinbefore required of domestic companies, except 
 that where, by the laws of the state under which the foreign 
 company is organized, it is permitted to, and actually does, 
 maintain for the benefit of all its policyholders a deposit with 
 some proper officer of that state of an amount equal to the 
 deposit required by sections 61A.39 to 61A.42 and 61A.44 to 
 61A.50; the deposit with the other state shall be a sufficient 
 compliance with the provisions of this section.  No deposit of 
 securities, other than that herein provided for, shall be 
 required of any such cooperative or assessment company.  Any 
 company transacting the business of life insurance upon the 
 cooperative or assessment plan, and creating and maintaining a 
 greater reserve than herein provided for, may elect, by written 
 stipulation, filed with the commissioner, to keep on deposit 
 with the commissioner in accordance with section 60A.10, 
 subdivision 4, its entire reserve and special benefit funds, 
 other than mortuary funds; and thereafter the entire reserve and 
 special benefit funds shall be deposited with the commissioner 
 in accordance with section 60A.10, subdivision 4, in securities 
 of like character and upon the same terms as provided herein for 
 the deposit of the reserve required by this section.  

    HIST: 1967 c 395 art 2 s 41; 1974 c 425 s 5; 1992 c 564 art 1 
 s 54 

     61A.42 Payments; liens; assessments; policies to be 
  labeled.  

    No cooperative or assessment life insurance company shall 
 hereafter issue any policy in this state which does not provide 
 for the payment of a fixed minimum sum, which may be increased 
 each year the insurance remains in force, in the amounts to be 
 provided in the policy. Any agreement or bylaw providing for the 
 placing of a lien upon such policy, except for nonpayment of 
 premium or assessment, and any agreement or bylaw providing for 
 the payment of a less sum than the minimum sum specified in the 
 contract, because of the failure of the corporation to receive 
 or collect the amount in the contract by assessment upon the 
 surviving members, shall be void.  Nothing in this section 
 contained shall be so construed as to render any member liable 
 for more than one assessment for each death occurring during the 
 period of membership, unless otherwise specified in the policy.  
 All policies issued by the company shall contain a title 
 including the word "assessment" on the face and on the back of 
 the policy correctly describing the same.  

    This section shall not apply to any existing domestic 
 company until it has been in existence for four years.  

    HIST: 1967 c 395 art 2 s 42; 1986 c 444 

     61A.43 Accumulations; amendment to articles or bylaws.  

    Any insurance company transacting the business of life or 
 casualty insurance upon the cooperative or assessment plan under 
 any law of this state may, upon so providing in its articles or 
 bylaws, elect to ascertain and apportion to its outstanding 
 policies or certificates the respective accumulations upon each 
 such policy or certificate, and to carry to the credit of each 
 such policy or certificate the future net premiums or 
 assessments and the accretions thereto, less its equitable 
 contribution to the death claims and other benefits, and that 
 the premiums or assessments upon any such policy or certificate 
 may, upon such credit becoming exhausted, be increased as may be 
 necessary to meet its share of death claims and other benefits, 
 and that the holder of any such policy or certificate may be 
 granted extended or paid-up insurance or the right to convert 
 into any other form of policy or insurance then being issued by 
 such company and to have the credit on such former policy or 
 certificate applied to such new policy or insurance.  When 
 making the ascertainment and apportionment, account shall be 
 taken of the premiums or assessments theretofore paid and of the 
 death claims and other benefits which should be borne by the 
 policy or certificate, of the interest earnings and other 
 accretions to the accumulated funds, and of other matters which 
 should equitably be taken into consideration for the purposes of 
 the apportionment.  Subject to such adjustment as shall be 
 equitable, the experience of the company, or any table of 
 mortality recognized for the purpose of insurance and any law of 
 this state, may be used as a basis for the ascertainment and 
 apportionment herein authorized; provided, that any company 
 availing itself of the provisions of this section shall, in its 
 articles or bylaws, specify the table of mortality and rate of 
 interest which are to be the basis for the charges thereafter to 
 be made to the policies or certificates aforesaid; and, 
 provided, further, that when any table of mortality is specified 
 in any policy that table shall be followed.  

    HIST: 1967 c 395 art 2 s 43 

     61A.44 Limitation on expenses; life insurance.  

    Every corporation, as described in section 61A.39, now or 
 hereafter organized or admitted to transact the business of life 
 insurance in this state, shall set aside and appropriate 
 exclusively to its mortuary or benefit funds, including reserve 
 or special benefit funds, not less than 65 percent of all 
 premium receipts and all interest earnings thereon upon such 
 life insurance policies that shall have been in force one year 
 or more, and the entire amount of receipts upon postmortem 
 assessment certificates, except the expense dues and charges 
 therein provided.  No such funds heretofore or hereafter so 
 appropriated to such mortuary or benefit fund, including reserve 
 or special benefit funds, shall ever be used for the expense of 
 conducting such business; provided, that every such corporation 
 which issues a certificate or policy or makes an agreement with 
 its members, by which, upon the decease of a member, a funeral 
 benefit is to be paid, or funeral service is to be furnished, 
 not exceeding $200 in amount or value, and which pays no 
 accident, disability, or other benefits, shall set aside and 
 appropriate exclusively to its mortuary or benefit funds, 
 including reserve or special benefit funds, not less than 60 
 percent of all premium receipts upon such insurance policies 
 that shall have been in force one year or more, and the entire 
 amount of receipts upon postmortem assessment certificates, 
 except the expense dues and charges therein provided.  No such 
 funds heretofore or hereafter so appropriated to such mortuary 
 or benefit funds, including reserve or special benefit funds, 
 shall ever be used for the expense of conducting such business.  

    The net accretions to the funds enumerated in this section 
 derived from interest, rents, or other sources shall also be set 
 aside and appropriated exclusively to the fund producing the net 
 accretions.  

    HIST: 1967 c 395 art 2 s 44 

     61A.45 Limitation on expenses; companies with reserve 
  deposits.  

    No company, as described in section 61A.39, transacting the 
 business of casualty or health insurance in this state shall 
 incur, lay out, or expend, in any one calendar year, as and for 
 the expenses of conducting such business, more than its 
 application or membership fees and 40 percent of its total 
 premiums or assessments.  When any such company shall have on 
 deposit with the commissioner a reserve of $25,000, as provided 
 by law, then and thereafter the company may expend, in addition 
 to the 40 percent, the interest earnings on the reserve fund and 
 the interest on any additional surplus funds it may accumulate.  

    Any officer of any corporation violating, or consenting to 
 the violation of, this section or section 61A.44 shall be guilty 
 of a gross misdemeanor.  

    HIST: 1967 c 395 art 2 s 45 

     61A.46 Net rates; reserve fund; limitation of expenses.  

    No corporation organized to transact the business of life 
 insurance upon the cooperative or assessment plan, and no such 
 corporation not already admitted to transact business in this 
 state, shall be licensed to transact such life insurance 
 business in this state unless it shall, by its charter, bylaws 
 and policy or certificate contracts, provide for and actually 
 charge and collect from its members, for and on account of the 
 insurance furnished to them, net rates which are at least equal 
 to the rates known as the national fraternal congress rates, 
 with four percent interest.  When any such corporation has 
 adopted the use of a net rate not less than the national 
 fraternal congress table of mortality and interest at the rate 
 of four percent, on the full preliminary term plan, and shall 
 set aside the net premium to its mortuary or benefit funds, 
 including reserve or special benefits, for the use and benefit 
 of its members, such corporation shall, on all premiums or 
 assessments collected from and after January 1, 1927, be exempt 
 from the provisions of sections 61A.41 and 61A.44; but it shall 
 keep on deposit, for the use and benefit of all its 
 policyholders, an amount equal to the value of its individual 
 policies, as shown by its annual statement each year, with the 
 commissioner, until the same shall amount to the sum of 
 $25,000.  The accretions to the various funds derived from 
 interest, rents, or other sources, less expense incidental to 
 investment supervision, shall also be set aside and appropriated 
 to the fund producing the accretions.  Gain from lapses, savings 
 in mortality, surrenders, and changes shall revert to the 
 expense fund.  Policies issued by such corporation may contain a 
 provision that in the event of default in premium payments, 
 after premiums shall have been paid for three years, shall 
 secure to the owner of the policy a stipulated form of 
 insurance, the net value of which shall be at least equal to the 
 reserve at the date of default on the policy and on any dividend 
 additions thereto, specifying the mortality table and the rate 
 of interest adopted for computing such reserve, less a sum not 
 more than 2-1/2 percent of the amount insured by the policy, and 
 of any existing dividend additions thereto, and less any 
 existing indebtedness to the company on the policy; and that the 
 policy may be surrendered to the company, at its home office, 
 within one month from date of default for a specified cash value 
 at least equal to the sum which would otherwise be available for 
 the purchase of insurance, and shall stipulate that the company 
 may defer payment for not more than six months after the 
 application therefor is made.  This provision shall not be 
 required in term insurance of 20 years or less.  Such 
 corporation shall value its policies at the end of each calendar 
 year and show in its annual statement as a reserve liability the 
 amount of such valuation.  If infantile insurance is written, it 
 may be valued on the table known as Craig's extension below age 
 ten.  If any corporation, society or association operating the 
 business of life or casualty insurance on the assessment plan 
 under any law of this state shall reincorporate under section 
 61A.39 and in connection with such reincorporation shall provide 
 in its articles or bylaws that this section shall not apply to 
 any class or group of assessment policies in force at the time 
 that such reincorporation becomes effective, then this section 
 shall not apply to such policies; provided that such 
 corporation, society or association shall, in all other 
 operations and as to all other policies, be subject to the 
 provisions of sections 61A.39 to 61A.42 and sections 61A.44 to 
 61A.50.  

    HIST: 1967 c 395 art 2 s 46 

     61A.47 Reinsurance or consolidation.  

    Any corporation, association, or society organized or 
 authorized to transact business under the provisions of sections 
 61A.39 to 61A.42 and 61A.44 to 61A.50 may, by contract of 
 reinsurance, assume the risks of any other similar corporation, 
 association, or society engaged in the business of life or 
 casualty insurance, or both, only on the following conditions: 

    (1) that both the corporations, associations, or societies 
 which propose to enter into the reinsurance contract, shall be, 
 upon the date of reinsurance, duly authorized under the 
 provisions of sections 61A.39 to 61A.42 and 61A.44 to 61A.50 to 
 transact business in this state; 

    (2) that the contract of reinsurance shall have previously 
 been submitted to the commissioner and the attorney general and 
 received the approval of the commissioner duly endorsed thereon; 

    (3) that the corporation, association, or society, which 
 proposes to reinsure and retire, shall have been thoroughly 
 examined by the commissioner within six months of the date of 
 the proposed consolidation or reinsurance; provided, that, in 
 the judgment of the commissioner, the consolidation or 
 reinsurance can in no way impair the solvency of the 
 corporation, association, or society which proposes to reinsure 
 and assume the business and affairs of the corporation, 
 association, or society contemplating reinsurance and 
 retirement; 

    (4) that the contract of reinsurance shall have been 
 approved by a majority vote of all the members of the 
 corporation, association, or society, which proposes to reinsure 
 and retire, present in person or by proxy, at any regular 
 meeting thereof, or at any special meeting thereof called to 
 consider the same; and, that a written or printed notice of the 
 purpose of the corporation, association, or society to reinsure 
 shall have been mailed to each of its members at least 30 days 
 prior to the date fixed for the meeting.  

    When the members of any such corporation, association, or 
 society shall have so voted to reinsure and retire, its officers 
 and the officers of the corporation, association, or society 
 which proposes to assume the risks and other obligations are 
 hereby authorized to enter into and consummate the contract of 
 reinsurance as submitted and approved and to do and perform all 
 other acts necessary to the final and complete consolidation or 
 reinsurance.  The retiring corporation, association, or society 
 shall turn over all its property, securities, moneys, and other 
 assets to the corporation, association, or society reinsuring 
 and assuming its obligations, to become the sole and absolute 
 property thereof.  The actual and reasonable expenses and costs 
 incident to proceedings under the provisions of this section may 
 be paid by the companies so consolidating or reinsuring, and an 
 itemized and verified statement of these expenses, together with 
 proper vouchers for each of the same, shall be filed with the 
 commissioner.  No officer of any such company, nor any employee 
 of the state, shall receive any compensation, gratuity, 
 employment, or other promise or thing of value, directly or 
 indirectly, for in any matter aiding, promoting, or assisting in 
 the consolidation or reinsurance.  Any officer or director of 
 any company which is a party to the agreement of reinsurance 
 herein provided for, who shall receive any compensation or 
 gratuity for aiding or promoting or consenting to the contract, 
 shall be guilty of theft; and any other person guilty of 
 willfully violating, or consenting to the willful violation of, 
 the provisions of sections 61A.39 to 61A.42 and 61A.44 to 
 61A.50, shall be guilty of a gross misdemeanor.  

    HIST: 1967 c 395 art 2 s 47 

     61A.48 Change to legal reserve or level premium 
  companies.  

    Any corporation, association, or society, as described in 
 section 61A.39, may, with the written consent of the 
 commissioner, upon a majority vote of its governing body, amend 
 its articles of incorporation and bylaws in such manner as to 
 transform itself into a legal reserve or level premium insurance 
 company and, upon so doing and upon procuring from the 
 commissioner a certificate of authority, as provided by law, to 
 transact business in this state as a legal reserve or level 
 premium company, shall incur the obligations and enjoy the 
 benefits thereof, the same as though originally thus 
 incorporated, and this corporation, under its charter, as 
 amended, shall be a continuation of the original corporation, 
 and the officers thereof shall serve through their respective 
 terms, as provided in the original charter, but their successors 
 shall be elected and serve as in the amended articles provided; 
 but the amendment or reincorporation shall not affect existing 
 suits, rights, or contracts.  Any corporation, association, or 
 society so reincorporated to transact the business of life 
 insurance, shall, unless a higher method of valuation be 
 provided for in its policy, or certificates of membership 
 previously written, value its assessment policies or 
 certificates of membership previously written as yearly 
 renewable term policies, according to the standard of valuation 
 of life insurance policies prescribed by the laws of this state. 

    HIST: 1967 c 395 art 2 s 48 

  61A.49 Repealed, 1987 c 268 art 2 s 38 

     61A.50 Application.  

    Section 60A.16, and all other laws and parts of laws, in so 
 far as they may be inconsistent with sections 61A.39 to 61A.42 
 and 61A.44 to 61A.50, shall not apply to corporations 
 transacting the business of life or casualty insurance solely 
 upon the cooperative or assessment plan, as defined in sections 
 61A.39 to 61A.42 and 61A.44 to 61A.50.  

    HIST: 1967 c 395 art 2 s 50 

     61A.51 Insolvency.  

    In case any cooperative or assessment life, endowment, or 
 casualty insurance association or society is adjudged insolvent, 
 the balance of its reserve fund, if any, after payment of claims 
 and other indebtedness, shall be paid to the commissioner who 
 shall pay it into the state treasury.  

    HIST: 1967 c 395 art 2 s 51; 1986 c 444 

     61A.52 Reserve required.  

    No casualty company or association organized under the 
 cooperative or assessment laws of this state not having a 
 reserve of at least $25,000 on deposit with the commissioner 
 shall issue policies or contracts providing for the payment of 
 endowments of any kind.  

    HIST: 1967 c 395 art 2 s 52 

REPLACEMENT INSURANCE

     61A.53 Definitions. 

    Subdivision 1.    Applicability.  For purposes of 
 sections 61A.53 to 61A.60, the terms defined in this section 
 have the meanings given. 

    Subd. 2.    Replacement.  "Replacement" means any 
 transaction in which new life insurance or a new annuity is to 
 be purchased, and it is known or should be known to the 
 proposing agent or broker or to the proposing insurer if there 
 is no agent, that by reason of the transaction, existing life 
 insurance or annuity has been or is to be: 

    (1) lapsed, forfeited, surrendered, or otherwise 
 terminated; 

    (2) converted to reduced paid-up insurance, continued as 
 extended term insurance, or otherwise reduced in value by the 
 use of nonforfeiture benefits or other policy values; 

    (3) amended so as to effect either a reduction in benefits 
 or in the term for which coverage would otherwise remain in 
 force or for which benefits would be paid; 

    (4) reissued with any reduction in cash value; or 

    (5) pledged as collateral or subjected to borrowing, 
 whether in a single loan or under a schedule of borrowing over a 
 period of time for amounts in the aggregate exceeding 25 percent 
 of the loan value set forth in the policy. 

    Subd. 3.    Conservation.  "Conservation" means any 
 attempt by the existing insurer or its agent or broker to 
 dissuade a policy owner or contract holder from the replacement 
 of existing life insurance or annuity.  Conservation does not 
 include routine administrative procedures such as late payment 
 reminders, late payment offers, or reinstatement offers. 

    Subd. 4.    Direct-response sale.  "Direct-response sale"
 means any sale of life insurance or annuity where the insurer 
 does not use an agent in the sale or delivery of the policy or 
 contract. 

    Subd. 5.    Existing insurer.  "Existing insurer" means 
 the insurance company whose policy or contract is or will be 
 changed or terminated in such a manner as described within the 
 definition of "replacement." 

    Subd. 6.    Existing life insurance or annuity.  
 "Existing life insurance or annuity" means any life insurance or 
 annuity in force, including life insurance under a binding or 
 conditional receipt or a life insurance policy or annuity 
 contract that is within an unconditional refund period. 

    Subd. 7.    Replacing insurer.  "Replacing insurer" 
 means the insurance company that issues or proposes to issue a 
 new policy or contract which is a replacement of existing life 
 insurance or annuity. 

    HIST: 1996 c 446 art 1 s 13 

     61A.54 Exemptions. 

    Unless otherwise specifically included, sections 61A.53 to 
 61A.60 do not apply to transactions involving: 

    (1) credit life insurance; 

    (2) group life insurance or group annuities; 

    (3) an application to the existing insurer that issued the 
 existing life insurance or annuity, where a contractual change 
 or a conversion privilege is being exercised; 

    (4) proposed life insurance that is to replace life 
 insurance under a binding or conditional receipt issued by the 
 same company; or 

    (5) transactions where the replacing insurer and the 
 existing insurer are the same, or are subsidiaries or affiliates 
 under common ownership or control; provided, however, that 
 agents or brokers proposing replacement shall comply with 
 section 61A.55, subdivision 1. 

    HIST: 1996 c 446 art 1 s 14 

     61A.55 Duties of agents and brokers. 

    Subdivision 1.    Submission to insurer.  Each agent or 
 broker who initiates the application shall submit to the insurer 
 to which an application for life insurance or annuity is 
 presented, with or as part of each application: 

    (1) a statement signed by the applicant as to whether 
 replacement of existing life insurance or annuity is involved in 
 the transaction; and 

    (2) a signed statement as to whether the agent or broker 
 knows replacement is or may be involved in the transaction. 

    Subd. 2.    Replacement information.  Where a 
 replacement is involved, the agent or broker shall: 

    (1) present to the applicant, not later than at the time of 
 taking the application, a "notice regarding replacement" in the 
 form as described in section 61A.60, subdivision 1, or other 
 substantially similar form approved by the commissioner.  The 
 notice shall be fully completed and signed by both the applicant 
 and the agent or broker and left with the applicant.  The 
 completed notice must list all existing life insurance and 
 annuity to be replaced, properly identified by name of insurer, 
 the insured, and contract number.  If a contract number has not 
 been assigned by the existing insurer, alternative 
 identification, such as an application or receipt number, shall 
 be listed; 

    (2) leave with the applicant the original or a copy of any 
 written or printed communications used for presentation to the 
 applicant; and 

    (3) submit to the replacing insurer with the application a 
 copy of the fully completed and signed replacement notice 
 provided under this subdivision. 

    Subd. 3.    Materials used to dissuade replacement.  
 Each agent or broker who uses written or printed communications 
 in a conservation shall leave with the applicant the original or 
 a copy of the communications. 

    HIST: 1996 c 446 art 1 s 15 

     61A.56 Duties of all insurers. 

    Each insurer shall: 

    (1) inform its field representatives or other personnel 
 responsible for compliance with sections 61A.53 to 61A.60 of the 
 requirements of those sections; and 

    (2) require with or as a part of each completed application 
 for life insurance or annuity a statement signed by the 
 applicant as to whether the proposed insurance or annuity will 
 replace existing life insurance or annuity. 

    HIST: 1996 c 446 art 1 s 16 

     61A.57 Duties of insurers that use agents or brokers. 

    Each insurer that uses an agent or broker in a life 
 insurance or annuity sale shall: 

    (a) Require with or as part of each completed application 
 for life insurance or annuity, a statement signed by the agent 
 or broker as to whether the agent or broker knows replacement is 
 or may be involved in the transaction. 

    (b) Where a replacement is involved: 

    (1) require from the agent or broker with the application 
 for life insurance or annuity, a copy of the fully completed and 
 signed replacement notice provided the applicant under section 
 61A.55.  The existing life insurance or annuity must be 
 identified by name of insurer, insured, and contract number.  If 
 a number has not been assigned by the existing insurer, 
 alternative identification, such as an application or receipt 
 number, must be listed; and 

    (2) send to each existing insurer a written communication 
 advising of the replacement or proposed replacement and the 
 identification information obtained under this section.  This 
 written communication must be made within five working days of 
 the date that the application is received in the replacing 
 insurer's home or regional office, or the date the proposed 
 policy or contract is issued, whichever is sooner. 

    (c) The replacing insurer shall maintain evidence of the 
 "notice regarding replacement" and a replacement register, 
 cross-indexed, by replacing agent and existing insurer to be 
 replaced.  Evidence that all requirements were met shall be 
 maintained for at least six years. 

    (d) The replacing insurer shall provide in its policy or 
 contract, or in a separate written notice that is delivered with 
 the policy or contract, that the applicant has a right to an 
 unconditional refund of all premiums paid, which right may be 
 exercised within a period of 20 days beginning from the date of 
 delivery of the policy. 

    HIST: 1996 c 446 art 1 s 17 

     61A.58 Duties of insurers with respect to direct 
  response sales. 

    (a) If in the solicitation of a direct response sale, the 
 insurer did not propose the replacement, and a replacement is 
 involved, the insurer shall send to the applicant with the 
 policy or contract a replacement notice as described in section 
 61A.60, subdivision 2, or other substantially similar form 
 approved by the commissioner.  

    (b) If the insurer proposed the replacement, it shall: 

    (1) provide to applicants or prospective applicants with or 
 as a part of the application a replacement notice as described 
 in section 61A.60, subdivision 2, or other substantially similar 
 form approved by the commissioner; 

    (2) request from the applicant with or as part of the 
 application, a list of all existing life insurance policies or 
 annuity contracts to be replaced and properly identified by name 
 of insurer and insured; and 

    (3) comply with the requirements of section 61A.57, 
 paragraph (b), clause (2), if the applicant furnishes the names 
 of the existing insurers, and the requirements of section 
 61A.57, paragraphs (c) and (d), except that it need not index 
 the replacement register by replacing agent. 

    HIST: 1996 c 446 art 1 s 18 

     61A.59 Enforcement; effect of compliance. 

    (a) An agent, broker, or insurer shall not recommend the 
 replacement or conservation of an existing policy or contract by 
 use of a substantially inaccurate presentation or comparison of 
 an existing policy's or contract's premiums and benefits or 
 dividends and values, if any.  An insurer, agent, 
 representative, officer, or employee of the insurer failing to 
 comply with the requirements of sections 61A.53 to 61A.60 is 
 subject to such penalties as may be appropriate under this 
 chapter.  

    (b) Patterns of action by policyholders or contract holders 
 who purchase replacing policies or contracts from the same agent 
 or broker, after indicating on applications that replacement is 
 not involved, are prima facie evidence of the agent's or 
 broker's knowledge that replacement was intended in connection 
 with the sale of those policies, and the patterns of action are 
 prima facie evidence of the agent's or broker's intent to 
 violate sections 61A.53 to 61A.60. 

    (c) Sections 61A.53 to 61A.60 do not prohibit the use of 
 additional material other than that which is required that does 
 not violate those sections or any other statute or rule. 

    (d) Compliance by an insurer, agent, or broker with 
 sections 61A.53 to 61A.60 does not limit any cause of action or 
 other remedies that the insured may otherwise have against an 
 insurer, agent, or broker.  In a proceeding in which the 
 insured's knowledge or understanding is an issue, compliance 
 with those sections may be admitted as evidence on that issue, 
 but shall not be conclusive. 

    HIST: 1996 c 446 art 1 s 19 

     61A.60 Required replacement notice and form. 

    Subdivision 1.    Notice form; agent sales.  The notice 
 required where sections 61A.53 to 61A.60 refer to this 
 subdivision is as follows: 

                         IMPORTANT NOTICE 

 
 DEFINITION   REPLACEMENT is any transaction where, in connection
              with the purchase of New Insurance or a New 
              Annuity, you LAPSE, SURRENDER, CONVERT to 
              Paid-up Insurance, Place on Extended Term, 
              or BORROW all or part of the policy loan 
              values on an existing insurance policy or an 
              annuity.  (See reverse side for DEFINITIONS.) 
 IF YOU       In connection with the purchase of this insurance 
 INTEND TO    or annuity, if you have REPLACED or intend to 
 REPLACE      REPLACE your present life insurance coverage 
 COVERAGE     or annuity(ies), you should be certain that you   
              understand all the relevant factors involved.
              You should BE AWARE that you may be required to
              provide EVIDENCE OF INSURABILITY and 
              (1)  If your HEALTH condition has CHANGED since 
              the application was taken on your present 
              policies, you may be required to pay ADDITIONAL 
              PREMIUMS under the NEW POLICY, or be DENIED 
              coverage. 
              (2)  Your present occupation or activities may not
              be covered or could require additional premiums. 
              (3)  The INCONTESTABLE and SUICIDE CLAUSE will 
              begin anew in a new policy.  This could RESULT 
              in a CLAIM under the new policy BEING DENIED 
              that would otherwise have been paid.
              (4)  Current law MAY NOT REQUIRE your present 
              insurer(s) to REFUND any premiums.
              (5)  It is to your advantage to OBTAIN INFORMATION
              regarding your existing policies or annuity 
              contracts from the insurer or agent from whom
              you purchased the policy or annuity contract.  
              (If you are purchasing an annuity, clauses (1), 
              (2), and (3) above would not apply to the new 
              annuity contract.)
              THE INSURANCE OR ANNUITY I INTEND TO PURCHASE FROM 
              _______________________________________INSURANCE CO.
              MAY REPLACE OR ALTER EXISTING LIFE INSURANCE 
              POLICY(IES) OR ANNUITY CONTRACT(S). 
              The following policy(ies) or annuity contract(s) 
              may be replaced as a result of this transaction:
           Insurer                               Insured 
  as it appears on the policy        as it appears on the policy 
  or contract                       or contract 
 ______________________________     ______________________________
 ______________________________     ______________________________
 ______________________________     ______________________________
 ______________________________     ______________________________
   Policy or contract number              Insured birthdate
 ______________________________     ______________________________
 ______________________________     ______________________________
 ______________________________     ______________________________
 ______________________________     ______________________________
         The proposed policy or contract is:

         ______________________________________  $_______________
         type of policy- or contract-generic name   face amount
         ________________________________________________________
         signature of applicant                   date
         ________________________________________________________
         address of applicant        city              state
         I certify that this form was given to and completed by 
         ________________________________________________________
                     (applicant-please print or type)
         prior to taking an application and that I am leaving a 
         signed copy for the applicant.
              ___________________________________________________
              agent's signature                    date
              ___________________________________________________
                               address
              ___________________________________________________
                      city                       state

           Note important statement on reverse side

    Subd. 2.    Notice form; direct response sales.  The 
 notice required where sections 61A.53 to 61A.60 refer to this 
 subdivision is as follows: 

                         IMPORTANT NOTICE
                           REQUIRED BY
                     MINNESOTA INSURANCE LAW

 DEFINITION  REPLACEMENT is any transaction where, in connection 
             with the purchase of New Insurance or a New Annuity, 
             you LAPSE, SURRENDER, CONVERT to Paid-up Insurance, 
             Place on Extended Term, or BORROW all or part of 
             the policy loan values on an existing insurance 
             policy or an annuity.  (See reverse side for 
             DEFINITIONS.) 
 IF YOU      In connection with the purchase of this insurance 
 INTEND TO   or annuity, if you have REPLACED or intend to 
 REPLACE     REPLACE your present life insurance coverage or 
 COVERAGE    annuity(ies), you should be certain that you 
             understand all the relevant factors involved. 
             You should BE AWARE that you may be required 
             to provide Evidence of insurabilityand 
             (1) If your HEALTH condition has CHANGED since 
                 the application was taken on your present 
                 policies, you may be required to pay 
                 ADDITIONAL PREMIUMS under the NEW POLICY, 
                 or be DENIED coverage. 
             (2) Your present occupation or activities may 
                 not be covered or could require additional 
                 premiums.
             (3) The INCONTESTABLE and SUICIDE CLAUSE will 
                 begin anew in a new policy.  This could 
                 RESULT in a CLAIM under the new policy 
                 BEING DENIED that would otherwise have 
                 been paid. 
             (4) Current law DOES NOT REQUIRE your present 
                 insurer(s) to REFUND any premiums. 
             (5) It may be to your advantage to OBTAIN 
                 INFORMATION regarding your existing 
                 policies or annuity contracts from the insurer
                 or agent from whom you purchased the policy 
                 or annuity contract.
             (If an annuity is being purchased, Items (1), 
             (2) and (3) above would not apply to the new 
             contract.)
 CAUTION     If after studying the information made 
             available to you, you decide to replace your 
             existing life insurance or annuity with our policy 
             or annuity contract, you are urged not to 
             take action to terminate or alter your existing
             coverage or annuity(ies) until after you have
             been issued the new policy or annuity contract,
             examined it and found it to be acceptable to you.  If
             you should terminate or otherwise materially alter
             your existing coverage or annuity(ies) and 
             fail to qualify for the life insurance for which
             you have applied, you may find yourself unable to
             purchase other life insurance or be able to
             purchase it only at substantially higher rates. 
 INSURER'S MAILING DATE: ...............................

    Subd. 3.    Definitions.  The following definitions must 
 appear on the back of the notice forms provided in subdivisions 
 1 and 2: 

                           DEFINITIONS 

    PREMIUMS:  Premiums are the payments you make in exchange 
 for an insurance policy or annuity contract.  They are unlike 
 deposits in a savings or investment program, because if you drop 
 the policy or contract, you might get back less than you paid in.

    CASH SURRENDER VALUE:  This is the amount of money you can 
 get in cash if you surrender your life insurance policy or 
 annuity.  If there is a policy loan, the cash surrender value is 
 the difference between the cash value printed in the policy and 
 the loan value.  Not all policies have cash surrender values. 

    LAPSE:  A life insurance policy may lapse when you do not 
 pay the premiums within the grace period.  If you had a cash 
 surrender value, the insurer might change your policy to as much 
 extended term insurance or paid-up insurance as the cash 
 surrender value will buy.  Sometimes the policy lets the insurer 
 borrow from the cash surrender value to pay the premiums. 

    SURRENDER:  You surrender a life insurance policy when you 
 either let it lapse or tell the company you want to drop it.  
 Whenever a policy has a cash surrender value, you can get it in 
 cash if you return the policy to the company with a written 
 request.  Most insurers will also let you exchange the cash 
 value of the policy for paid-up or extended term insurance. 

    CONVERT TO PAID-UP INSURANCE:  This means you use your cash 
 surrender value to change your insurance to a paid-up policy 
 with the same insurer.  The death benefit generally will be 
 lower than under the old policy, but you will not have to pay 
 any more premiums. 

    PLACE ON EXTENDED TERM:  This means you use your cash 
 surrender value to change your insurance to term insurance with 
 the same insurer.  In this case, the net death benefit will be 
 the same as before.  However, you will only be covered for a 
 specified period of time stated in the policy. 

    BORROW POLICY LOAN VALUES:  If your life insurance policy 
 has a cash surrender value, you can almost always borrow all or 
 part of it from the insurer.  Interest will be charged according 
 to the terms of the policy, and if the loan with unpaid interest 
 ever exceeds the cash surrender value, your policy will be 
 surrendered.  If you die, the amount of the loan and any unpaid 
 interest due will be subtracted from the death benefits. 

    EVIDENCE OF INSURABILITY:  This means proof that you are an 
 acceptable risk.  You have to meet the insurer's standards 
 regarding age, health, occupation, etc., to be eligible for 
 coverage. 

    INCONTESTABLE CLAUSE:  This says that after two years, 
 depending on the policy or insurer, the life insurer will not 
 resist a claim because you made a false or incomplete statement 
 when you applied for the policy.  For the early years, though, 
 if there are wrong answers on the application and the insurer 
 finds out about them, the insurer can deny a claim as if the 
 policy had never existed. 

    SUICIDE CLAUSE:  This says that if you commit suicide after 
 being insured for less than two years, depending on the policy 
 and insurer, your beneficiaries will receive only a refund of 
 the premiums that were paid. 

    Subd. 4.    Printing of notices.  The notices in 
 subdivisions 1 and 2 must be reproduced in their entirety on one 
 side of an 8-1/2 by 11 inch sheet of plain paper.  The 
 definitions contained in subdivision 3 must be printed on the 
 reverse side.  The insurer may print its legal name in the space 
 provided.  

    HIST: 1996 c 446 art 1 s 20; 1999 c 177 s 35