1. (a) Reserves for annuity contracts or for annuity riders attached to life insurance contracts that have been approved by the department prior to December 31, 1994, and that contain a provision waiving surrender charges only on the condition that the annuitant becomes disabled or is confined in a hospital or nursing home for not less than 30 days, may be calculated with a reduction for such surrender charges by establishing a separate additional reserve for the waiver of surrender charge based on tables of disability, morbidity or mortality appropriate for determining liability for the benefits provided. Such disability, morbidity or mortality tables shall be certified as appropriate by a member of the American Academy of Actuaries and approved by the department under the Insurance Code, Article 3.28, §(3)(g). The insurer shall file with the department the basis of reserves for any annuity contract or annuity rider attached to a life insurance contract providing for a waiver of surrender charge along with such annuity contract or annuity rider to be considered under this section.

2. (b) Reserves for annuity contracts or for annuity riders attached to life insurance contracts that contain a provision waiving surrender charges only on the condition that the annuitant becomes disabled or is confined in a hospital or nursing home for not less than 30 days may be calculated with a reduction for such surrender charges by complying with paragraphs (1)-(4) of this subsection.

   1. (1) A separate additional reserve for the waiver of surrender charge is established and is based on tables of disability, morbidity or mortality appropriate for determining liability for the benefits provided. Such disability, morbidity or mortality tables shall be certified as appropriate by a member of the American Academy of Actuaries and approved by the department under the Insurance Code, Article 3.28, §(3)(g). The insurer shall file with the department the basis of reserves for any annuity contract or annuity rider attached to a life insurance contract providing for a waiver of surrender charge along with such annuity contract or annuity rider to be considered under this section.
   2. (2) The terms "disability," "nursing home," or "hospital," as applicable, are defined in the annuity contract or annuity rider. "Nursing home" may be defined to include a convalescent nursing home, a residential care or intermediate nursing facility. Each definition shall be at least as restrictive as the corresponding definitions in §3.129 of this title (relating to Acceleration of Benefits).
   3. (3) The title of the provision for the waiver of surrender charges in the annuity contract or annuity rider (when it is based solely on the annuitant's disability or confinement in a hospital or nursing home) must uniquely describe the coverage provided by the annuity contract or annuity rider.
   4. (4) The annuity contract or annuity rider shall clearly and concisely describe the requirements for disability, the conditions of care or confinement, and the proof required to substantiate eligibility for waiver of the surrender charge.
3. (c) Previously approved forms for annuity contracts or annuity riders attached to life insurance contracts must be amended to comply with subsection (b) of this section by June 30, 1995.
4. (d) Forms for annuity contracts or annuity riders attached to life insurance contracts that are submitted to the department for approval after March 30, 1995, must comply with subsection (b) of this section.

Source Note:The provisions of this §3.1203 adopted to be effective March 3, 1995, 20 TexReg 1146.