Current through February 24, 2025
(a) For a policy
with guaranteed non-level gross premiums or guaranteed non-level benefits,
other than a universal life policy, and with an unusual pattern of guaranteed
cash surrender values,
(1) the reserves held
before the first unusual guaranteed cash surrender value may not be less than
the reserves calculated by treating the first unusual guaranteed cash surrender
value as a pure endowment and treating the policy as a term policy plus an
endowment equal to the unusual cash surrender value, where the term of the
policy is the number of years from the date of issue to the date the unusual
cash surrender value is scheduled; or
(2) the reserves held after an unusual
guaranteed cash surrender value may not be less than the reserves calculated by
treating the policy as a term policy plus a pure endowment equal to the next
unusual guaranteed cash surrender value and treating any unusual guaranteed
cash surrender value at the end of the previous segment as a net single premium
in which
(A) the term of the policy is the
number of years from the date of the last unusual guaranteed cash surrender
value before the valuation date to the earlier of
(i) the date of the next unusual guaranteed
cash surrender value, if any, that is scheduled after the valuation date;
or
(ii) the mandatory expiration
date of the policy; or
(B) the net premium for a given year during
the term of the policy is equal to the respective gross premium multiplied by
the net-to-gross ratio; for purposes of this subparagraph, the net-to-gross
ratio is calculated by adding together the present value at the beginning of
the term of the policy of death benefits payable during the term of the policy
and the present value at the beginning of the term of the policy of the next
unusual guaranteed cash surrender value, if any, subtracting from that figure
the amount of the last unusual guaranteed cash surrender value, if any,
scheduled at the beginning of the term of the policy, and dividing the
resulting figure by the present value at the beginning of the term of the
policy of the scheduled gross premiums payable during the term of the
policy.
(b)
For purposes of this section, a policy with an unusual pattern of cash
surrender values is a policy in which any future guaranteed cash surrender
value exceeds the previous year's guaranteed cash surrender value by more than
the sum of
(1) 1.1 times the scheduled gross
premium for that year;
(2) 1.1
times one year's accrued interest on the sum of the guaranteed cash surrender
value in the previous year and the scheduled gross premium using the
nonforfeiture interest rate used in calculating policy guaranteed cash
surrender values; and
(3).05 times
the first policy year surrender charge, if any.
(c) An insurer may elect to calculate
reserves for yearly renewable term reinsurance in which only mortality risk is
reinsured by
(1) setting the valuation net
premium for each future policy year equal to the tabular cost of insurance for
that year;
(2) setting basic
reserves to an amount not less than the tabular cost of insurance for the
period as described in
3
AAC 21.910(d);
(3) setting deficiency reserves equal to the
present value at the date of valuation of the greater of the following amounts:
(B) the valuation net premium minus the
maximum guaranteed gross premium in each policy year;
(4) using the maximum valuation interest rate
and the Commissioner's 1980 Standard Ordinary Mortality Tables with or without
10-year Select Mortality Factors; or
(5) using the mortality table specified in
3
AAC 21.905(f) and (g) and minimum
interest rate required under
AS
21.18.110.
(d) An insurer that elects to calculate
reserves under (c) of this section may not take a reinsurance reserve credit
for an amount greater than the amount of reserve held by the assuming insurer
for the same insurance policies.
(e) An insurer may elect to calculate
reserves for an attained-age-based yearly renewable term life insurance policy
by
(1) setting the valuation net premium for
each future policy year equal to the tabular cost of insurance for that
year;
(2) setting basic reserves to
an amount not less than the tabular cost of insurance for the appropriate
period as described in
3
AAC 21.910(d);
(3) setting deficiency reserves equal to the
present value at the date of valuation of the greater of the following amounts:
(B) the valuation net premium minus the
maximum guaranteed gross premium in each policy year; and
(4) using the maximum valuation interest rate
and the Commissioner's 1980 Standard Ordinary Mortality Tables with or without
10-year Select Mortality Factors, or using the mortality table specified in
3
AAC 21.905(f) and (g) and minimum
interest rate specified in
AS
21.18.110.
(f) If a policy becomes an attained-age-based
yearly renewable term life insurance policy after an initial period of
coverage, an insurer may elect to calculate reserves under (e) of this section
if
(1) the initial period is constant for all
insureds of the same gender, risk class, and plan of insurance; or
(2) the initial period runs to a common
attained age for all insureds of the same gender, risk class, and plan of
insurance.
(g) In (e) of
this section, a life insurance policy is an "attained-age-based yearly
renewable term" life insurance policy if
(1)
the premium rates on both the initial current premium scale and the guaranteed
maximum premium scale are based on the attained age of the insured such that
the premium rate for each policy and attained age is independent of the year
the policy was issued; and
(2) the
premium rates on both the initial current premium scale and the guaranteed
maximum premium scale are equal to the premium rates for policies covering
insureds of the same gender, risk class, plan of insurance, and attained
age.
(h) An insurer is
not required to calculate unitary basic reserves and unitary deficiency
reserves for a renewable term life insurance policy if
(1) the policy contains a series of equal
length periods, except for the final period; the final period may be truncated
or extended as needed to meet the expiration date, if
(A) the final period is less than 10 years
and less than twice the length of the previous periods; and
(B) for each period, the premium rates on
both the initial current premium scale and the guaranteed maximum premium scale
are level;
(2) the
guaranteed gross premiums in all periods are not less than the corresponding
net premiums based on the Commissioner's 1980 Standard Ordinary Mortality
Tables with or without 10-year Select Mortality Factors; and
(3) the policy does not develop cash
surrender values in any policy year.
(i) An insurer is not required to calculate
unitary basic reserves and unitary deficiency reserves for a juvenile life
insurance policy if, based upon the initial current premium scale at issue,
(1) the insured is under 25 years of age at
issue;
(2) until the insured
reaches the end of the juvenile period, at or before 25 years of age,
(A) the gross premiums and death benefits are
level; and
(B) the policy does not
develop cash surrender values; or
(3) after the end of the juvenile period, at
or before 25 years of age,
(A) gross premiums
are level for the remainder of the premium payment period; and
(B) death benefits are level for the
remainder of the life of the policy.
Authority:AS
21.06.090
AS 21.18.110
AS
21.18.160
