A. This section does not apply to the following:

1. 1. Reinsurance.
2. 2. Group annuity contract purchases that are made in connection with one or more retirement or deferred compensation plans that are established or maintained by or for one or more employers, including partnerships or sole proprietorships, employee organizations or any combination of partnerships, proprietorships and employee organizations. This exception does not apply to group annuity contract purchases that are made in connection with plans that provide individual retirement accounts or individual retirement annuities under section 408 of the internal revenue code.
3. 3. A premium deposit fund.
4. 4. An investment annuity.
5. 5. An immediate annuity.
6. 6. A deferred annuity contract after annuity payments begin.
7. 7. A reversionary annuity.
8. 8. A contract that is delivered outside this state through any insurance producer or other representative of the company issuing the contract.

C. Except pursuant to subsections A and B of this section, if a contract is issued on or after January 1, 1998, a variable annuity contract shall not be delivered or issued for delivery in this state unless it contains in substance the following provisions or corresponding provisions that the director determines are at least as favorable to the contract holder:

1. 1. That, on cessation of the payment of considerations under a contract, the company will grant a paid-up annuity benefit on a plan that is described in the contract and that complies with subsection G of this section. The description shall include a statement of the mortality table, if any, and the guaranteed or assumed interest rates that are used in calculating annuity payments.
2. 2. If a contract provides for a lump sum settlement at maturity or at any other time, that, on the surrender of the contract at or before the commencement of any annuity payments, the company will pay in lieu of any paid-up annuity benefit a cash surrender benefit that is described in the contract and that complies with subsection H of this section. The contract may provide that the company reserves the right to defer the determination and payment of any cash surrender benefit for any period during which the New York stock exchange is closed for trading except for normal holidays or in which the securities and exchange commission determines that a state of emergency exists.

3. 3. 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 that are required by the laws of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by any of the following:

   1. (a) The existence of any additional amounts the company credited to the contract.
   2. (b) Any indebtedness to the company on the contract.
   3. (c) Any prior withdrawals from or partial surrenders of the contract.

D. The minimum values under this section of any paid-up annuity, cash surrender or death benefits that are available under a variable annuity contract shall be based on nonforfeiture amounts that meet the following requirements:

1. 1. The minimum nonforfeiture amount on any date before the annuity commencement date shall be an amount that is equal to the percentages of net considerations under subsection E of this section, and increased or decreased by the net investment return that is allocated to the percentages of net considerations. This amount shall be reduced to reflect the effect of:

   1. (a) Any partial withdrawals from or partial surrenders of the contract.
   2. (b) The amount of any indebtedness on the contract, including interest due and accrued.
   3. (c) An annual contract charge that is not less than zero and that is equal to the lesser of thirty dollars or two per cent of the end of year contract value, less the amount of any annual contract charge that is deducted from any gross considerations credited to the contract during the contract year.
   4. (d) A transaction charge of ten dollars for each transfer to another separate account or to another investment division within the same separate account.
2. 2. The net investment return to be credited to a contract shall be determined at least monthly.

3. 3. The annual thirty dollar contract charge and the ten dollar transaction charge under paragraph 1 of this subsection will be adjusted to reflect changes in the consumer price index pursuant to subsection F of this section.

   For the purposes of this subsection, "net investment return" means the rate of investment return that is in an amount that does not exceed the actual expense not offset by other deductions and that is credited to the variable annuity contract according to the terms of the contract after deductions for tax charges, if any, for asset charges either at a rate that does not exceed the rate stated in the contract, or if the contract is issued by a nonprofit corporation under which the contract holder participates fully in the investment, for mortality and expense experience of the account.

E. The percentages of net considerations that are used to define the minimum nonforfeiture amount under subsection D of this section shall meet one of the following requirements:

1. 1. For contracts that provide for periodic considerations, the net considerations for a given contract year that are used to define the minimum nonforfeiture amount shall be an amount not less than zero and shall be equal to the corresponding gross considerations that are credited to the contract during that contract year less an annual contract charge of thirty dollars, less a collection charge of one dollar twenty-five cents for each periodic consideration credited to the contract during that contract year, and less any charges for premium taxes. The percentages used to calculate the minimum nonforfeiture amount shall be as follows:

   1. (a) For the first contract year, sixty-five per cent of the net considerations.
   2. (b) For each renewal contract year, eighty-seven and one-half per cent of the net considerations, except that for any portion of the total net consideration for a renewal contract year that exceeds by not more than two times the sum of those portions of the net considerations in all prior contract years for which the percentage was sixty-five per cent, the percentage to be applied to this amount shall be sixty-five per cent.
2. 2. For contracts that provide for a single consideration, the net consideration that is used to define the minimum nonforfeiture amount shall be the gross consideration less a seventy-five dollar contract charge and less any charges for premium taxes. The percentage of the net consideration shall be ninety per cent. The annual thirty dollar contract charge, the collection charge of one dollar twenty-five cents per collection and the seventy-five dollar single consideration contract charge will be adjusted to reflect changes in the consumer price index pursuant to subsection F of this section.

F. A demonstration that a contract's nonforfeiture amounts comply with this section shall be based on the following assumptions, unless the company demonstrates the suitability of alternative assumptions:

1. 1. The testing of values shall occur at the end of each of the first twenty contract years.
2. 2. A net investment return of seven per cent per year.
3. 3. If the contract provides for transfers to another separate account or to another investment division within the same separate account, one transfer per contract year.
4. 4. In determining the state premium tax that applies to the contract, the state of residence is the state of delivery.
5. 5. With respect to contracts that provide for periodic considerations, monthly considerations of one hundred dollars for each of the first two hundred forty months.
6. 6. With respect to contracts that provide for a single consideration, a ten thousand dollar single consideration.

7. 7. The following contract charges:

   1. (a) For contracts that are filed in 1980 or earlier, the annual thirty dollar contract charge, the charge of ten dollars per transfer, the collection charge of one dollar twenty-five cents per consideration and the seventy-five dollar contract charge.
   2. (b) For contracts that are filed in 1981 or after, the contract charges listed in subdivision (a) of this paragraph multiplied by the ratio of the consumer price index for June of the calendar year preceding the date of filing to the consumer price index for June, 1979.
8. 8. If the contract provides for the allocation of considerations to both fixed and variable accounts, allocate one hundred per cent of the considerations to the variable account.

J. Notwithstanding the requirements of this section, a variable annuity contract may provide that the company may cancel the annuity and pay the contract holder its accumulated value and that on the payment of its accumulated value the company is released from any further obligation under the contract if either:

1. 1. At the time the annuity becomes payable the accumulated value is less than two thousand dollars, or would provide an income the initial amount of which is less than twenty dollars per month.

2. 2. Before the annuity becomes payable under a periodic payment variable annuity contract, considerations have not been received under the contract for the two full years preceding the cancellation and both:

   1. (a) The considerations were paid before the annuity became payable and were reduced to reflect any partial withdrawals from or partial surrenders of the contract.
   2. (b) The accumulated value amounted to less than two thousand dollars.