California Insurance Code

§ 10541

INS § 10541 Effective Jan 1, 1999Div. 2 · Part 2 · Ch. 6 · Art. 3

Statute text

(a)Insurers authorized to deliver or issue for delivery life insurance policies in this state may deliver or issue for delivery one or more funding agreements, but the issuance or delivery of those funding agreements shall not be deemed to be doing the insurance business described in Section 700, a class of business as provided in Section 100 or 101, a “security” as defined in Section 821, or receipt of “gross premiums” as defined in Section 12221 or 12222 of the Revenue and Taxation Code. Notwithstanding the definition of “insurance” in Section 22 or the definition of “life insurance” in Section 101, the issuance or delivery of a funding agreement by an admitted life insurer in this state shall constitute a lawful activity of that insurer that is reasonably related to and incidental to its insurance activities as provided in this section. However, this section shall not authorize any insurer to transact, under the guise of funding agreements, any class of insurance not authorized by its certificate of authority.

(b)As used in this section, the term “funding agreement” means an agreement that authorizes an admitted life insurer to accept funds and that provides for an accumulation of those funds for the purpose of making one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies. However, the term “funding agreement” does not include any agreement in connection with the funding of one or more payments that are excludable from the gross income of the recipient under Section 104(a)(2) of the United States Internal Revenue Code, as it may be amended or renumbered from time to time.

(c)No amounts shall be guaranteed or credited under any funding agreement except upon reasonable assumptions as to investment income and expenses and on a basis equitable to all holders of funding agreements of a given class.

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Legislative history

Amended by Stats. 1998, Ch. 386, Sec. 2. Effective January 1, 1999.