Indiana Code
Chapter 12.3. Interest Rates on Insurance Policy Loans
27-1-12.3-2. Required Provisions in Policies

Sec. 2. Policies issued after August 31, 1983, must contain a provision for policy loan interest rates permitting:
(1) a maximum interest rate of not more than eight percent (8%) per year; or
(2) an adjustable interest rate established from time to time as follows:
(A) The maximum rate of interest shall be the greater of the rate determined by the published monthly average for the calendar month ending two (2) months before the date on which the interest rate is determined or the rate used to compute the cash surrender values under the policy during the applicable loan period as required in IC 27-1-12-7(5), plus one percent (1%) per year.
(B) The maximum interest rate for each policy shall be determined at regular intervals at least once every twelve (12) months, but not more frequently than once every three (3) months. The interval must be specified in the policy.
(C) As of the time of the periodic maximum interest determination, the interest rate on the policy loan will be fixed, not below the minimum rate, as follows:
(i) If the maximum rate is greater than the last previous establishment or change of the interest rate, the interest rate may at the option of the insurer be increased to any rate not in excess of the maximum rate.
(ii) If the maximum rate is less than the last previous establishment or change of the interest rate, the interest rate will be decreased to the new maximum rate.
(iii) Notwithstanding subparts (i) and (ii) of this clause (C), no change in interest rate which is less than one-half percent (1/2%) will be made.
(D) The most recently determined interest rate on a loan made on any policy will apply to the unpaid amount of all policy loans previously made thereon.
As added by Acts 1981, P.L.240, SEC.1. Amended by P.L.260-1983, SEC.6.

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