California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 3.5 - Minimum Reserve Standards for Valuation of Disability Insurance Contracts
Section 2314 - Reserves for Waiver of Premium

Universal Citation: 10 CA Code of Regs 2314

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) Because the disability valuation tables promulgated by the NAIC are based on exposures that include contracts on premium waiver as in-force contracts, contract reserves based on these tables are NOT reserves on "active lives" but rather reserves on contracts "in force." This is true for the 1964 CDT and for both the 1985 CIDA and CIDB tables.

Accordingly, tabular reserves using any of these tables shall value reserves on the following basis:

(1) Claim reserves shall include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.

(2) Premium reserves shall include contracts on premium waiver as in-force contracts, valuing as a minimum the unearned modal valuation net premium being waived.

(3) Contract reserves shall include recognition of the waiver of premium benefit in addition to other contract benefits, valuing as a minimum the valuation net premium to be waived.

(b) If an insurer is, instead, valuing reserves on what is truly an active life table, or if a specific valuation table is not being used but the insurer's gross premiums are calculated on a basis that includes in the projected exposure only those contracts for which premiums are being paid, then it may not be necessary to provide specifically for waiver of premium reserves. Any insurer using such a true "active life" basis shall determine whether additional liability shall be recognized because of premiums waived during periods of disability or during claim continuation.

1. New section filed 11-4-94; operative 12-5-94 (Register 94, No. 44).

Note: Authority cited: Sections 997(a) and 10489.95, Insurance Code. Reference: Sections 985, 997 and 10489.15(a), Insurance Code.

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