INSURANCE DEPARTMENT NOTICE NO. 1995-07
July 19, 1995
SUBJECT: Modification of Contract for Use When an Annuity Premium Tax Is Not Applicable
TO: Presidents of All Life Insurance Companies and Fraternal Benefit Societies Authorized to Write Business in the Commonwealth of Pennsylvania
FROM: Gregory Martino Deputy Insurance Commissioner
In accordance with Section 11 of Act 21 of 1995, a tax on annuity considerations will no longer be in effect for the tax year beginning January 1, 1996 and for each tax year thereafter. The purpose of this communication is to inform insurers of the effect of the tax repeal on annuity contracts approved prior to January 1, 1996 and issued on or after January 1, 1996.
Premium Tax Notice
If an annuity contract contains any reference to a premium tax and is not subject to the retaliatory effects of Section 212 (40 P.S. S50) of the Insurance Department Act, a notice describing the nonapplicability of the premium tax must be attached to the face of the contract when the contract is issued on or after January 1, 1996. The notice shall indicate that there is no premium tax applicable to the contract. This notice will replace any prior premium tax notice and need not be filed with the Department.
If an insurer chooses to delete references to a premium tax in an already approved annuity contract instead of attaching a premium tax notice, the deletions may be accomplished either by reprinting of the affected contract pages or by amendatory endorsement of the contract. If the changes being made by the reprinted contract pages or amendatory endorsements are limited only to the deletion of premium tax references the reprinted contract pages or amendatory endorsements will be processed on a file and use basis. If changes are made in addition to the deletion of the premium tax references, the contract pages or amendatory endorsements must be submitted to the Department for approval prior to use under Section 354 (40 P.S. §477b) of the Insurance Company Law of 1921 and, in the case of reprinted contract pages, under Title 31, Pennsylvania Code, Section 153.2, entitled permission to file accident and health, life and annuity insert pages- statement of policy.
Table of Cash Values
If an annuity contract provides for the deduction of the premium tax in calculating the cash values and is not subject to the retaliatory effects of Section 212 (40 P.S. §50) of the Insurance Department Act, the table(s) of cash values in the contract issued on and after January 1, 1996 must be revised to exclude the deduction of the premium tax. The calculation of the cash values shown in the table(s) must otherwise be consistent with the approved description of the values in the contract. The revised table(s) of values does not need to be filed with the Department for approval.
Questions regarding the repeal of the annuity premium tax or this notice may be referred to Paul Makurath, Policy Examiner Supervisor Bureau of Life Insurance Pennsylvania Insurance Department 1311 Strawberry Square Harrisburg, PA 17120 (717) 783-2118.