COMAR 31.09.08 · Chapter 08 Group Annuity Contracts

Administrative History Effective date: February 23, 1987 (14:4 Md. R. 417) Regulation .07C amended and D adopted effective January 29, 1996 (23:2 Md. R. 95) —————— Chapter recodified from COMAR 09.30.71 to COMAR 31.09.08 effective September 7, 1998 (25:18 Md. R. 1439) Authority Insurance Article, §§ 1-101 (d), 2-109 , 12-203 , 12-205 , 12-209 , 16-114 , and 16-501 , Annotated Code of Maryland

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.01 Purpose. The purpose of this chapter is to regulate the issuance of group annuity contracts with the objective of providing that they not be issued on an impracticable basis or in a manner which may be hazardous to policyholders and the public.

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.02 Scope. This chapter is applicable to all group annuity contracts whether issued on a fixed or a variable basis or on any basis providing a combination of both fixed and variable benefits.

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.03 Exceptions. A. These regulations do not apply to: (1) An annuity contract issued on an individual basis providing annuity benefits to individual or joint owners and providing further annuity benefits to one or more other individuals on the death of the original annuitant or joint annuitants; (2) An annuity contract issued on an individual basis to provide annuity benefits to one or more persons on the death of a named individual; (3) Annuity benefits provided as settlement options under individual life insurance policies; or (4) Annuity benefits provided as settlement options under group policies of whole life insurance. B. These regulations are not applicable to annuity agreements with donors issued under a special permit in accordance with Insurance Article, §16-114, Annotated Code of Maryland .

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.04 Definition. "Group annuity" means a contract: A. Purporting to provide annuity benefits to more than one individual; B. Issued to: (1) An employer or two or more employers in the same industry; (2) An association of employers which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; (3) A labor union; (4) An association of labor unions; (5) An association composed of one or more labor unions and one or more employers; (6) An association of persons having a common calling, occupation, or profession, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; (7) One or more departments of the federal government or of a state government or their subdivisions; (8) An association of persons employed in one or more departments of the federal government or of a state government or their subdivisions which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; (9) A college or university; (10) An association of persons employed in a college or university, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; (11) An association of alumni of a college or university, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; or (12) The trustees of a: (a) Fund established by an entity referred to in §B(1)—(11) of this regulation; or (b) Trust which permits individuals for whom contributions are made to individual retirement annuities or similar programs for which favorable federal income tax treatment exists under §403b or 408b of the Internal Revenue Code of 1954; and C. Issued for the purpose of providing annuity benefits to: (1) If the plan is noncontributory: (a) Employees of the employer or employers, (b) Members of the labor union or association, or (c) A class or classes of the employees or members; (2) If the plan is contributory, the employees or members who agree to contribute to the cost of the annuity; or (3) Individuals under a trust described in §B(12)(b) of this regulation .

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.05 Employees. In addition to those persons traditionally considered to be employees, employees may include: A. If the employer is an individual proprietor or partnership, the proprietor or the partner; B. If the employer is a corporation, the directors of the corporation; C. If the business of the employer and any affiliated corporations, proprietorships, or partnerships is under common control, the employees of one or more affiliated corporations, proprietorships, or partnerships; D. Independent contractors under contract to the employer and employees of the independent contractor; E. Retired and terminated employees; and F. Employees of a trustee under a trust referred to in Regulation .04B(12) of this chapter if their principal duties are connected with the trusteeship.

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.06 Members. Members may, but need not, include: A. Employees of a union or association; B. Members of a union or association who have retired; C. Employees of the members of an eligible association; or D. Employees of a trustee under a trust referred to in Regulation .04B(12) of this chapter if their principal duties are connected with the trusteeship.

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.07 Eligible Groups. A. An insurer may not deliver in this State a contract purporting to provide annuity benefits to more than one individual unless the contract conforms to the definition of a group annuity contract contained in Regulation .04 of this chapter . B. If a contract providing annuity benefits to more than one individual is delivered in this State before the effective date of these regulations, an insurer may not include additional annuitants under the contract if the contract does not conform to the definition of a group annuity contract contained in Regulation .04 of this chapter . C. Except as provided under §D of this regulation , an insurer may not include any resident of Maryland under any contract delivered in another jurisdiction which purports to provide annuity benefits to more than one individual if the contract does not conform to the definition of a group annuity contract contained in Regulation .04 of this chapter . D. An insurer may include a resident of Maryland under a contract delivered in another jurisdiction which purports to provide annuity benefits to more than one individual if both of the following requirements are satisfied: (1) A finding by the Commissioner that the type of group to be covered is the subject of an approval from the Commissioner for the solicitation of policies issued in another jurisdiction under Insurance Article, §15-310, Annotated Code of Maryland , in the case of group health insurance, or Insurance Article, §17-101(c), Annotated Code of Maryland , in the case of group life insurance; and (2) The group annuity contract contains a nonforfeiture provision or provisions which in the opinion of the Commissioner is equitable to the annuitants.

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