S.C. Code Ann. § 38-63-250 – Alternative adjustable interest rate

(a) In the alternative life insurers may issue policies that permit an adjustable maximum interest rate established from time to time by the life insurer as permitted by law. These adjustable maximum interest rates may not exceed the higher of the following:
1. (1) The Published Monthly Average for the calendar month ending two months before the date on which the rate is determined; or
2. (2) The rate used to compute the cash surrender values under the policy during the applicable period plus one percent per annum. "Published Monthly Average" means Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto or, if Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the department.
(b) If the maximum rate of interest is determined pursuant to this section, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for the policy.
(c) The maximum rate for each policy must be determined at regular intervals but only once each twelve months.
(d) At the intervals specified in the policy:
1. (1) The rate being charged may be increased whenever the increase as determined under subsection (a) would increase the rate by one-half percent or more per annum, but not more than twice in any calendar year.
2. (2) The rate being charged must be reduced whenever the reduction as determined under subsection (a) would decrease that rate by one-half percent or more per annum.
(e) The life insurer shall:
1. (1) Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan.
2. (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, but in no event later than sixty days after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in item (3) of this subsection (e).
3. (3) Send to policyholders with loans at least thirty days' advance notice of any increase in the rate and within due course notify the policyholder of any decrease in the interest rate.
4. (4) Include in the notices required above the substance of the pertinent provisions of Section 38-63-240 or subsections (a) and (b) of this section.
(f) The loan value of the policy must be determined in accordance with the provisions of this article but no policy may 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 Section 38-63-240 or subsections (a) and (b) of this section must be set forth in the policies to which they apply.
(h) For the purposes of this section:
1. (1) The rate of interest on policy loans hereunder shall include the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.
2. (2) 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. (3) Policyholder includes the owner of the policy or the person designated to pay premiums, if different, as shown on the records of the life insurer.
4. (4) Policy includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
  However, before May 1, 1986, no life insurer may issue policies that permit such rates unless at the same time it also makes available policies providing for a rate of interest under Section 38-63-240.