01.
General. (4-6-23)
a. Policies
with a secondary guarantee include: (4-6-23)
i. A policy with a guarantee that the policy
will remain in force at the original schedule of benefits, subject only to
paying specified premiums; (4-6-23)
ii. A policy in which the minimum premium at
any duration is less than the corresponding one (1) year valuation premium,
calculated using the maximum valuation interest rate and the 1980 CSO valuation
tables with or without "ten year select factors;" or (4-6-23)
iii. A policy with any combination of
Subparagraphs 013.01.a.i. and 013.01.a.ii. (4-6-23)
b. A secondary guarantee period is the period
for which the policy is guaranteed to remain in force subject only to a
secondary guarantee. When a policy contains more than one secondary guarantee,
the minimum reserve will be the greatest of the respective minimum reserves at
that valuation date of each unexpired secondary guarantee, ignoring all other
secondary guarantees. Secondary guarantees that the insurer unilaterally
changes after issue will be considered to have been made at issue. Reserves
described in Subsections
013.02 and
013.03 below will be
recalculated from issue to reflect these changes. (4-6-23)
c. Specified premiums mean the premiums
specified in the policy, the payment of which guarantees that the policy will
remain in force at the original schedule of benefits, but which otherwise would
be insufficient to keep the policy in force in the absence of the guarantee if
maximum mortality and expense charges and minimum interest credits were made
and any applicable surrender charges were assessed. (4-6-23)
d. For Section
013, the minimum premium for any
policy year is the premium that, when paid into a policy with a zero (0)
account value at the start of the policy year, produces a zero (0) account
value at the end of the policy year. The minimum premium calculation will use
the policy cost factors (including mortality charges, loads and expense
charges) and the interest crediting rate, which are all guaranteed at issue.
(4-6-23)
e. The one (1) year
valuation premium means the net one (1) year premium based on the original
schedule of benefits for a given policy year. The one (1) year valuation
premiums for all policy years are calculated at issue. The select mortality
factors defined in Paragraphs 011.02.b., 011.02.c., and 011.02.d. cannot be
used to calculate the one (1) year valuation premiums. (4-6-23)
f. The one (1) year valuation premium should
reflect the frequency of fund processing, and the distribution of deaths
assumption employed in the calculation of the monthly mortality charges to the
fund. (4-6-23)
02.
Basic Reserves for Secondary Guarantees. Basic reserves for
secondary guarantees will be the segmented reserves for the secondary guarantee
period. In calculating the segments and the segmented reserves, the gross
premiums will be set equal to the specified premiums, if any, or otherwise to
the minimum premiums, that keep the policy in force and the segments will be
determined according to the "contract segmentation method." (4-6-23)
03.
Deficiency Reserves for Secondary
Guarantees. Any deficiency reserves for secondary guarantees will be
calculated for the secondary guarantee period as described in Subsection
012.02 with gross premiums set
equal to the specified premiums, if any, or otherwise to the minimum premiums
that keep the policy in force. (4-6-23)
04.
Minimum Reserves. The
minimum reserves during the secondary guarantee period are the greater of:
(4-6-23)
a. The basic reserves for the
secondary guarantee plus the deficiency reserve, if any, for the secondary
guarantees; or (4-6-23)
b. The
minimum reserves prescribed by other rules or rules governing universal life
plans. (4-6-23)