40-420c. Same; methods to determine interest rates; definitions. (a) Policies issued on or after the effective date of this act shall provide for policy loan interest rates as follows:
(i) A provision permitting a maximum interest rate of not more than 8% per annum; or
(ii) a provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
(b) The rate of interest charged on a policy loan made under paragraph (ii) of subsection (a) shall not exceed the higher of the following:
(i) The published monthly average for the calendar month ending two months before the date on which the rate is determined; or
(ii) the rate used to compute the cash surrender values under the policy during the applicable period plus 1% per annum.
(c) If the maximum rate of interest is determined pursuant to paragraph (ii) of subsection (a), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
(d) The maximum rate for each policy 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:
(i) The rate being charged may be increased whenever such increase as determined under subsection (b) would increase that rate by 1/2% or more per annum;
(ii) the rate being charged must be reduced whenever such reduction as determined under subsection (b) would decrease that rate 1/2% or more per annum.
(e) The life insurer shall:
(i) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
(ii) 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 paragraph (iii) of this subsection;
(iii) send to policyholders with loans reasonable advance notice of any increase in the rate; and
(iv) include in the notices required above the substance of the pertinent provisions of subsections (a) and (c).
(f) The loan value of the policy shall be determined in accordance with the provisions of K.S.A. 40-429 and 40-2611 and K.S.A. 40-420, and amendments thereto, but no policy shall terminate in a policy year as the sole result of 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.
(g) The substance of the pertinent provisions of subsections (a) and (c) shall be set forth in the policies to which they apply.
(h) For purposes of this section:
(i) The rate of interest on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.
(ii) 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.
(iii) 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.
(iv) The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
(i) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
History: L. 1982, ch. 203, ยง 3; July 1.
Structure Kansas Statutes
Article 4 - General Provisions Relating To Life Insurance Companies
40-402 Paid-up capital stock, surplus; deposit of securities.
40-403b Same; foreign companies.
40-410 Cancellation of policy for nonpayment of premiums; notice, when; policyowner defined.
40-411 Notice of intention to cancel policy for nonpayment of premium; time for payment.
40-412 When action to be maintained on insurance contract.
40-413 Death of beneficiary in policy; duties of insurance company.
40-414 Exemption of interests in policies; exceptions.
40-414a Trust provisions in contracts; restrictions on alienation; exemptions.
40-415 Insurance to go to estate of insured when beneficiary dies before insured.
40-417 Fraud and perjury; penalty.
40-418 Materiality of misrepresentation in obtaining policy.
40-419 Tender of premiums with defense of misrepresentation.
40-419a Refund upon cancellation of individual term policy; calculation.
40-420 Contents of insurance policy; exceptions.
40-420a Policy loan interest rates; purpose.
40-420c Same; methods to determine interest rates; definitions.
40-420d Same; applicability to policies.
40-421 Provisions insurance policy not to contain.
40-422 Industrial life insurance; definitions.
40-423 Same; contents of industrial life insurance policy; exceptions; surrender.
40-424 Same; designation of beneficiary; change of; payments.
40-425 Same; cash surrender value and value of stipulated form to be equal.
40-426 Same; commissioner may authorize policies more favorable.
40-428 Standard nonforfeiture law.
40-429 Loan provisions in policies.
40-431 Definition of due date for the payment of premiums and of when premium in default.
40-433 Group life insurance; types of policies and requirements.
40-433a Same; provision granting employee right of assignment of benefits.
40-434 Same; policy provisions required.
40-435 Same; conversion privileges; notice.
40-439 Assignment of rights and privileges under life and accident and health insurance policies.
40-440 Same; act acknowledges existing right of assignment.
40-441 Designation of trustee under will as beneficiary of life insurance policy.
40-442 Issuance of life insurance policy; filing of form prior to issuance.
40-443 Same; approval of commissioner.
40-444 Same; disapproval of policy form; notice, requirements; hearing.
40-447 Payment of life insurance proceeds; interest required to be paid, when.
40-449 Policies covering debtors, replacement by creditor; limitation on contestation.
40-452 Life insurance; employer's insurable interest in employees; when.
40-453 Life insurance; insurable interest.
40-461 Structured settlement protection act; definitions.
40-462 Same; disclosure statement, contents.
40-463 Same; approval of transfer; required findings.
40-466 Same; limitations on provisions of transfer agreement.
40-467 Same; citation of act; applicability to workers compensation.
40-4,101 Standard nonforfeiture law for individual deferred annuities; citation of act.
40-4,103 Same; nonforfeiture requirements.
40-4,104 Same; minimum values; rules and regulations.
40-4,105 Same; computation of present value.
40-4,106 Same; calculation of cash surrender value.
40-4,107 Same; calculation of paid-up annuity benefits.
40-4,109 Same; disclosure of death benefits.
40-4,110 Same; inclusion of lapse of time considerations.
40-4,111 Same; proration of values; additional benefits.
40-4,112 Same; rules and regulations.
40-4,113 Same; effective date.