Current through Register Vol. 50, No. 9, September 20, 2024
A.
General
1. Policies with a secondary
guarantee include:
a. a policy with a
guarantee that the policy will remain in force at the original schedule of
benefits, subject only to the payment of specified premiums;
b. a policy in which the minimum premium at
any duration is less than the corresponding one year valuation premium,
calculated using the maximum valuation interest rate and the 1980 CSO valuation
tables with or without 10-year select mortality factors, or any other table
adopted after the effective date of this regulation by the NAIC and promulgated
by regulation by the commissioner for this purpose; or
c. a policy with any combination of
Subparagraph a and b.
2.
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 shall 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 are unilaterally changed by the insurer after issue
shall be considered to have been made at issue. Reserves described in
Subsections B and C below shall be recalculated from issue to reflect these
changes.
3. 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. For purposes of this Section, the minimum
premium for any policy year is the premium that, when paid into a policy with a
zero account value at the beginning of the policy year, produces a zero account
value at the end of the policy year. The minimum premium calculation shall use
the policy cost factors (including mortality charges, loads and expense
charges) and the interest crediting rate, which are all guaranteed at
issue.
5. The one-year valuation
premium means the net one-year premium based upon the original schedule of
benefits for a given policy year. The one-year valuation premiums for all
policy years are calculated at issue. The select mortality factors defined in
§10909. B 2, 3, and 4
may not be used to calculate the one-year valuation premiums.
6. The one-year valuation premium should
reflect the frequency of fund processing, as well as the distribution of deaths
assumption employed in the calculation of the monthly mortality charges to the
fund.
B. Basic Reserves
for the Secondary Guarantees. Basic reserves for the secondary guarantees shall
be the segmented reserves for the secondary guarantee period. In calculating
the segments and the segmented reserves, the gross premiums shall 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 as defined in
§10907
C. Deficiency Reserves for the Secondary
Guarantees. Deficiency reserves, if any, for the secondary guarantees shall be
calculated for the secondary guarantee period in the same manner as described
in §10911.
B with gross premiums set equal to the
specified premiums, if any, or otherwise to the minimum premiums that keep the
policy in force.
D. Minimum
Reserves. The minimum reserves during the secondary guarantee period are the
greater of:
1. the basic reserves for the
secondary guarantee plus the deficiency reserve, if any, for the secondary
guarantees; or
2. the minimum
reserves required by other rules or regulations governing universal life
plans.
AUTHORITY NOTE:
Promulgated in accordance with
R.S.22:3,
22:163,
22:168 and
the Administrative Procedure Act,
R.S.
49:950 et
seq.
