(a) (1) The trustees shall invest the trust fund only in the following:

(A) Demand deposits, savings accounts, certificates of deposit, and all other accounts which are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation [abolished];

(B) Bonds and obligations which are insured by, fully guaranteed as to principal and interest by, and due from the United States Government or any of its agencies, including the Federal National Mortgage Association and the Government National Mortgage Association, and any repurchase obligations which are secured by any of the foregoing;

(C) (i) (a) Corporate, state, municipal, or political subdivision bonds or obligations that at the time of purchase are rated A or better by Moody's or A or better by Standard & Poor's rate services.

(b) The Insurance Commissioner by rule may permit the continued investment in a bond purchased in compliance with subdivision (a)(1)(C)(i)(a) of this section that is subsequently downgraded for the time and in the amounts established by the commissioner; or

(ii)

(a) Bonds of any school district in this state.

(b) Provided, however, no more than thirty percent (30%) of the total trust assets may be invested in such school bonds; and

(D)

(1) Mutual funds or common trust funds whose portfolio is made up of investments that are described in subdivisions (a)(1)(A)-(C) of this section.

(2) Investments described in subdivisions (a)(1)(B)-(D) of this section shall be purchased and held by the trustee which has trust powers under a trust agreement filed with and approved by the commissioner.

(b) The trustee shall maintain the trust fund in a manner consistent with the following investment policies:

(1) The trust fund shall contain at all times liquid investments having a cost basis not less than thirty percent (30%) of the total contract proceeds disbursed from the trust fund as described in § 23-40-116(1)-(3) during the preceding calendar year;

(2)

(A) An investment shall not be sold, exchanged, or liquidated at less than its cost if it would result in the aggregate cost basis of the trust fund minus undistributed net investment income being less than the aggregate amount of contract proceeds held in the trust fund.

(B) However, this prohibition shall not apply if the seller contemporaneously deposits with the trustee a sum of money or other property in an amount equal to the loss realized upon the sale, exchange, or liquidation of the investment;

(3)

(A) For cash-funded trust contracts, the portion of the contract proceeds collected for cash accommodation items pursuant to the terms of a contract shall be deposited into a separate account which shall be clearly identified as "cash accommodation funds" and shall state the name of the contract buyer.

(B) All income earned on the cash accommodation funds shall become a part of the principal of the respective accounts; and

(4) For insurance-funded or annuity-funded contracts, if nonguaranteed cash accommodation items are included in the contract total, the entire amount may be included in the purchase premium of the insurance or annuity policy used to fund the contract if a proration calculation is used to identify the portion of the accrued interest income that is associated with the nonguaranteed portion of the contract.