Code of Massachusetts Regulations
211 CMR - DIVISION OF INSURANCE
Title 211 CMR 28.00 - Life Insurance Illustrations
Section 28.04 - Definitions
For the purposes of 211 CMR 28.00:
Actuarial Standards Board means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.
Contract Premium means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.
Currently Payable Scale means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days.
Disciplined Current Scale means a scale of non-guaranteed elements constituting a limit on illustrations currentlybeingillustrated byan insurer that is reasonably based on actualrecent historicalexperience, as certified annually by an illustration actuary designated by theinsurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards:
(a) Are consistent with all provisions of 211 CMR 28.00;
(b) Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;
(c) Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and
(d) Do not permit assumed expenses to be less than minimum assumed expenses.
Generic Name means a short title descriptive of the policy being illustrated such as "whole life," "term life" or "flexible premium adjustable life."
Guaranteed Elements means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.
Illustrated Scale means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:
(a) The disciplined current scale; or
(b) The currently payable scale.
Illustration means a presentation or depictionthat includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined in 211 CMR 28.04:
Illustration (a) through (c):
(a) Basic illustration: a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.
(b) Supplemental illustration: an illustration furnished in addition to a basic illustration that meets the applicable requirements of 211 CMR 28.00, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.
(c) In force illustration: an illustration furnished at anytime after the policythat it depicts has been in force for one year or more.
Illustration Actuary means an actuary meeting the requirements of Section 11 who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.
Lapse-supported Illustration means an illustrationofa policyform failing the test of self-supporting as defined in 211 CMR 28.00, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100% policy persistency thereafter.
MinimumAssumed Expenses means the minimum expenses that may be used in the calculation of the disciplined current scale for a policyform. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:
(a) Fully allocated expenses;
(b) Marginal expenses; and
(c) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the commissioner.
Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.
Nonguaranteed Elements means the benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.
Non-term Group Life means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:
(a) Every plan of coverage was selected by the employer or other group representative;
(b) Some portion of the premium is paid by the group or through payroll deduction; and
(c) Group underwriting or simplified underwriting is used.
Policy Owner means the owner named in the policy or the certificate holder in the case of a group policy.
Premium Outlay means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.
Self-supporting Illustration means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value ofallpolicy cash flows equals or exceeds the total policy owner value available. For this purpose, policyowner value willinclude cash surrender values and any other illustrated benefit amounts available at the policy owner's election.
