New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter III - Policy and Certificate Provisions
Subchapter A - Life, Accident and Health Insurance
Part 42 - Term Life Issuance And Renewal Restrictions; Nonforfeiture Values For Certain Life Insurance Policies
Subpart 42-2 - Term Life Issuance And Renewal Restrictions; Nonforfeiture Values For Certain Life Policies Issued On Or After January 1, 2008
Section 42-2.1 - Purpose

(a) The purpose of this Subpart is to prescribe rules and guidelines for minimum nonforfeiture values on individual life insurance policies other than policies subject to section 54.7(b) of this Title or policies subject to section 4221(n-1) of the Insurance Law. Section 4221 of the Insurance Law sets forth the nonforfeiture standards for individual life insurance policies.

(b) Section 4221 (l)(3) of the Insurance Law requires that "the cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this section, as determined by the superintendent." Such plans include those which provide for future premium determination, the amounts of which are to be determined by the insurer or fraternal benefit society based on then estimates of future experience, and plans which are of such a nature that minimum values cannot be determined by the methods described in section 4221 of the Insurance Law.

(c) Other than for policies subject to section 4221(n-1) of the Insurance Law, section 4221 of the Insurance Law sets forth the minimum requirements for the end of each policy year assuming annual premiums specified in the policy are paid. In practice, premiums are paid on a variety of modes and policies may be allowed to surrender or lapse at times other than on policy anniversaries. In addition, the benefits may not be level during each policy year and the death benefit may be affected by the premium mode used. Section 4221(m)(1) requires that any cash surrender value and any paid-up nonforfeiture benefit, available under any such policy or contract in the event of default in the payment of any premium or stipulated payment due at any time other than on the policy or contract anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums or stipulated payments beyond the beginning of the policy or contract year in which the default occurs.