Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This rule specifies standards for valuation
of specifically identified life insurance, health and accident insurance
policies. This rule was adopted pursuant to the provisions of section
374.045,
RSMo and implements sections
376.380,
376.390,
376.405,
376.410 and 376.670, RSMo.
(1) Life Insurance.
(A) Group Insurance.
1. Yearly renewable term life insurance
(including waiver of premium and accidental death benefits).
A. Gross pro rataunearned
premium method.
B. The
Commissioners 1960 Standards Group Mortality Table with interest as specified
in section
376.380,
RSMo.
C. Any other valuation basis
producing higher reserves.
2. Inasmuch as the Federal Employees Group
Life Insurance Act of 1954,
5
U.S.C.A. Section 8701, provides that
appointive or elective officers or employees of the United States government,
at a time and under conditions of eligibility as the Civil Service Commission
by regulation may prescribe, shall be eligible to be insured for specified
amounts of group life insurance and specified amounts of group accidental death
and dismemberment insurance, as provided in the Act; and since as the Act
requires the maintenance of a special contingency reserve upon group insurance
issued or reinsured in accordance with its provisions, the provisions of this
rule shall not be applicable to any group insurance issued or reinsured by a
life insurance company in accordance with the provision of the Act.
3. Inasmuch as the Servicemen's Group Life
Insurance Act of 1965, 38 U.S.C.A. section 765, provides that members of the
uniformed services on active duty shall be eligible to be insured for specified
amounts of group life insurance, as provided in the Act; and inasmuch as the
Act requires that maintenance of a special contingency reserve upon group
insurance issued or reinsured in accordance with its provisions, the provisions
of this rule shall not be applicable to any group insurance issued or reinsured
by any life insurance company in accordance with the provisions of the
Act.
(B) Credit Life
Insurance. All credit life insurance shall be valued on the 1958 Commissioners
Standards Ordinary Mortality Table with interest assumption of three and
one-half percent (3 1/2%) or any other valuation basis producing higher
reserves.
(C) Other Standards.
1. Extra or additional reserves, calculated
according to the previously mentioned standards, will be required in all cases
to cover the nondeduction of deferred fractional premiums or return of
premiums, in the event of death. No extra reserve is required when the basic
policy reserve makes a provision for this, for example, when continuous
functions are used.
2. Other
valuation standards may be used so long as the reserves computed on those
standards for each of the previously mentioned categories are greater in the
aggregate than the reserves computed according to minimum standards.
3. Reserves for annuity and pure endowment
contracts, for disability and accidental death benefits in all policies and
contracts, for life insurance policies providing for a varying amount of
insurance or requiring the payment of varying premiums, and for all other
benefits, except life insurance and endowment benefits in life insurance
policies, shall be calculated by a method consistent with the principles of the
commissioner's reserve valuation method, as defined in section 376.380.2(b),
RSMo. In the calculation of reserves for life policies containing coupon or
annual pure endowment benefits, each benefit shall be treated as a pure
endowment maturing for its cash value on the date it becomes due. This coupon
or annual pure endowment benefit shall be considered to be a part of the
guaranteed benefits provided for by the policies.
(2) Policies of Accident or Health
Insurance, or Combination Policies of Accident and Health Insurance.
(A) On all such policies actually written
there shall be maintained an unearned gross premium reserve computed according
to the provisions of sections
376.410(1),
RSMo.
(B) On all such policies
written on a non-cancellable plan and under the terms of which the company is
obligated to renew or continue for a stated period, or to a stated age or for
life, there shall be maintained active life reserves and reserves for losses in
amounts not less than active life and loss reserves determined in accordance
with the applicable minimum reserve standards prescribed by the National
Association of Insurance Commissioners (NAIC) in its Accounting
Practices and Procedures Manual.
(C) On all such policies other than those
written on a noncancellable plan there shall be maintained reserves for losses
in amounts not less than loss reserves determined in accordance with the
applicable minimum reserve standards prescribed by the NAIC in its
Accounting Practices and Procedures Manual.
(D) In addition to the minimum reserves
mentioned in section
376.410,
RSMo, and elsewhere in this section, companies shall maintain reserves for
extraordinary losses in amounts not less than extraordinary loss reserves
determined in accordance with the applicable minimum reserve standards
prescribed by the NAIC in its Accounting Practices and Procedures
Manual.
(E) Credit
Accident and Health Insurance. All credit accident and health insurance (both
individual and group) shall be established and maintained on the basis of not
less than the unearned gross premium computed on the basis of the sum of digits
formula, commonly known as the Rule of 78.
(F) This section shall not apply to total and
permanent disability benefits, or to accidental death benefits, contained in or
supplemental to life insurance policies or other contracts and for which
benefits the standard of valuation is prescribed by section
376.380,
RSMo, or other sections of this or other rules of the Department of Commerce
and Insurance.
(3) The
new operative date with respect to this rule, means the date on or before
January 1, 1989 when the company files a written notice with the director of
its election to comply with the provisions of section
376.380(3),
RSMo or if no election is filed, the date is January 1, 1989.
*Original authority: 374.045, RSMo 1967 amended 1993, 1995;
376.380, RSMo 1939, amended 1943, 1947, 1959, 1961, 1965, 1971, 1975, 1979,
1982, 1993; 376.390, RSMo 1939, amended 1943; 376.405, RSMo 1959, amended 1984;
376.410, RSMo 1945; and 376.670, RSMo 1943, amended 1959, 1961, 1965, 1975,
1979, 1982.
Survivors Ben. Ins. Co. v. Farmer, 514 SW2d
565 (Mo. 1974). Superintendent of insurance has the
duty to approve or disapprove life insurance contracts and forms and no
contract or form may be used in Missouri without the approval of the
superintendent.