SB2872 amends the Illinois Insurance Code’s Standard Nonforfeiture Law for Individual Deferred Annuities. The bill primarily updates how minimum nonforfeiture benefits are calculated for deferred annuity contracts, including paid-up annuity benefits, cash surrender values, and death benefits. It also adds specific treatment for contingent deferred annuities, stating that the existing subsections governing nonforfeiture requirements do not apply to them, while authorizing the Director of Insurance to adopt rules establishing equitable nonforfeiture benefits for those products.
The measure sets detailed standards for annuity contract values, including formulas based on net considerations, interest rates, mortality tables, contract charges, and limits on reductions tied to equity-indexed benefits. It also preserves disclosure requirements for contracts that do not provide certain benefits, and allows the Director to regulate implementation through rulemaking. The bill applies to annuity contracts issued on or after the operative date and takes effect immediately upon becoming law.
Impact
SB2872 would amend Section 229.4a of the Illinois Insurance Code (215 ILCS 5/229.4a), affecting insurers that issue deferred annuities in Illinois and policyholders who purchase them. The bill clarifies and updates statutory minimum nonforfeiture protections, including formulas for calculating minimum paid-up annuity values, cash surrender benefits, and death benefits, and it gives the Director of Insurance additional authority to regulate contingent deferred annuities by rule. In practical terms, it changes the legal standards governing contract design, disclosures, and minimum guaranteed values for affected annuity products.
Sentiment
The available record shows no committee transcript and no recorded votes, so there is no documented floor or committee debate to indicate strong support or opposition. Based on the text, the bill appears technical and regulatory in nature, suggesting a generally policy-focused rather than partisan or controversial measure. The inclusion of explicit authority for the Director of Insurance to adopt rules indicates an intent to provide administrative flexibility rather than impose a highly contested substantive change.
Contention
The main potential point of contention is the treatment of contingent deferred annuities. The bill exempts them from the existing nonforfeiture subsections while allowing the Director of Insurance to create separate nonforfeiture benefits by rule, which could raise concerns among insurers, consumer advocates, or regulators about the adequacy and consistency of protections. Another possible issue is the detailed recalibration of minimum values and interest-rate assumptions, which may affect product pricing, insurer reserves, and consumer guarantees. No specific opposing or supporting groups are identified in the available materials.