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 42-2.11 - Calculation of minimum nonforfeiture values for polices with increases in either guaranteed death benefits or required premiums based on an index

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 42-2.11

Current through Register Vol. 46, No. 39, September 25, 2024

This section shall apply to policies of life insurance that provide for periodic adjustments in either the amount of the death benefit or in the required premium based on the Consumer Price Index or other cost of living index.

(a) For the purposes of subdivision (b) of this section, the reasonable annual increase shall be based on the amount of death benefit and the contractual limitations, if any, on the annual increase in the death benefit.

(1) Multiple policies on a single life shall be aggregated and only those policies aggregating not more than $10,000 in death benefits shall be considered under paragraph (4) of this subdivision.

(2) For the purposes of this section, the limitations on the annual increase in death benefit shall be defined as follows:
(i) Annual and non-cumulative maximum means a maximum where each annual increase is limited to the lower of the maximum or the increase in the index without carry forward of excess index increases.

(ii) Annual and cumulative maximum means a maximum where each annual increase is limited to the lower of the maximum or the increase in the index with carry forward of excess index increases.

(3) For policies where any death benefit for any policy year would exceed $10,000 even in the absence of any annual increases based on the index, the assumption as to what is a reasonable annual increase in death benefits based on the index shall not be less than the greater of:
(i) one percent; and

(ii) maximum valuation interest rate for the year of issue less:
(a) two percent, if the annual increase is limited to an annual and non-cumulative maximum of zero percent through five percent;

(b) one and one half percent, if the annual increase is limited to an annual and cumulative maximum of zero percent through five percent;

(c) one and one half percent, if the annual increase is limited to an annual and non-cumulative maximum of greater than five percent and less than or equal to 10 percent;

(d) one and one quarter percent, if the annual increase is limited to an annual and cumulative maximum greater than five percent and less than or equal to 10 percent; or

(e) one percent for all other policies.

(4) For policies where any death benefit for any policy year would not exceed $10,000 in the absence of any annual increases based on the index, the assumption as to what is a reasonable annual increase in death benefits based on the index shall not be less than:
(i) four and one half percent, if the annual increase based on the index is limited to a maximum of zero percent through five percent;

(ii) four and one quarter percent, if the annual increase based on the index is limited to a maximum of greater than five percent and less than or equal to 10 percent; or

(iii) four percent for all other policies.

(b) For policies subject to this section, the value of the minimum nonforfeiture benefit at any time shall be based on the nonforfeiture interest rate and mortality table specified in section 4221 (k) of the Insurance Law and based on the death benefit and premium pattern adjusted as provided in the policy by assumed reasonable annual increases. The assumed reasonable annual increases must satisfy the requirements of subdivision (a) of this section. The present value of future benefits component shall be further adjusted each year by the ratio of the then current amount of death benefit to the initially projected amount of death benefit. If the policy provides for future premiums and such premiums are also adjusted periodically with the Consumer Price Index or other cost of living index, the present value of future premiums component shall likewise be further adjusted each year by the ratio of the then current amount of death benefit to the initially projected amount of death benefit.

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