(1) The minimum values specified in sections 10-7-505 to 10-7-508 and 10-7-509 (1) of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon the following minimum nonforfeiture amounts:

(a) (I) The minimum nonforfeiture amount at any time at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at a rate of interest authorized by subsection (3) of this section of the net considerations, as defined in subsection (2) of this section, paid prior to such time, decreased by the following:

(A) The sum of any prior withdrawals from or partial surrenders of the contract accumulated at a rate of interest authorized by subsection (3) of this section;

(B) An annual contract charge of fifty dollars, accumulated at rates of interest authorized by subsection (3) of this section;

(C) The amount of any indebtedness to the company on the contract, including interest due and accrued.

(II) (Deleted by amendment, L. 2004, p. 818, § 2, effective July 1, 2004.)

(b) and (c) (Deleted by amendment, L. 2004, p. 818, § 2, effective July 1, 2004.)

(2) The net considerations for a given contract year used to define the minimum nonforfeiture amount shall be equal to eighty-seven and one-half percent of the gross considerations credited to the contract during such contract year.

(3) (a) The interest rate used to determine minimum nonforfeiture amounts shall be the lesser of the following:

(I) Three percent per annum; or

(II) If specified in the contract that the interest rate will reset, the five-year constant maturity treasury rate reported by the federal reserve as of a specified date or averaged over a period reduced by one hundred twenty-five basis points so long as:

(A) The rate is rounded to the nearest one-twentieth of one percent;

(B) The reset is specified in the contract to be no longer than fifteen months before the contract issue or redetermination date under sub-subparagraph (E) of this subparagraph (II);

(C) The resulting interest is not less than one percent;

(D) The interest rate applies for an initial period and may be redetermined for additional periods;

(E) Any redetermination date, basis, and period is stated in the contract; and

(F) The basis is the date or average over a specified period that produces the value of the five-year constant maturity treasury rate used at each redetermination date.

(b) During the period or term that a contract provides substantive participation in an equity indexed benefit, the contract may increase the reduction authorized in subparagraph (II) of paragraph (a) of this subsection (3) by an additional rate not to exceed one hundred basis points to reflect the value of the equity indexed benefit. The present value of the additional reduction at the contract issue date and at each redetermination date shall not exceed the market value of the benefit. The commissioner may disallow or limit the additional reduction.

(c) The commissioner may adopt rules to implement paragraph (b) of this subsection (3) and to provide further adjustments to the minimum forfeiture amounts for contracts that provide substantive participation in an equity indexed benefit and for other contracts for which the commissioner determines adjustments are justified.