Current through Register Vol. 46, No. 39, September 25, 2024
(a)
(1) Gross modal premiums means the premiums
specified in the policy for the policy year, excluding amounts payable as extra
premiums to cover impairments or special hazards and also excluding any uniform
annual contract charge or policy fee specified in the policy in a statement of
the method to be used in calculating the cash surrender values and paid-up
nonforfeiture benefits.
(2) Modal
adjusted nonforfeiture premiums for a policy year means the modal equivalent of
the annual adjusted nonforfeiture premium for that year as defined in section
4221 of the
Insurance Law.
(3) Calculated value
for a policy anniversary means the present value, on the anniversary of the
future guaranteed benefits that are provided for by the policy, including any
existing paid-up additions, over the sum of the then present value of the
adjusted premiums as defined in section
4221 of the
Insurance Law, corresponding to the premium that would have fallen due on and
after the anniversary. The interest rate and mortality used for discounting
shall be the same as required to demonstrate compliance with section
4221
(c)(1) of the Insurance Law. The calculated
value is not subject to a minimum value of zero.
(b) If a policy has nonforfeiture values, the
nonforfeiture values during a policy year shall not be less than the
nonforfeiture value produced by either subdivision (c) or (d) of this section.
However, a policy does not have to provide for a voluntary surrender between
premium due dates.
(c) Actuarial
method.
(1) The nonforfeiture value is the
greater of zero or the following:
(i)
(i)
(a) the
present value at the end of the policy month of valuation of the calculated
value on the next policy anniversary; and
(b) the present value at the end of the
policy month of valuation of the guaranteed benefits that would have been
provided for by the policy including any paid-up additions from the end of the
policy month of valuation to the next policy anniversary; less
(ii)
(ii)
(a)
the present value at the end of the policy month of valuation of the modal
adjusted nonforfeiture premiums due on or after the end of the policy month of
valuation and before the next policy anniversary;
(b) any indebtedness to the life insurance
company or fraternal benefit society on the policy including interest due or
accrued; and
(c) the lesser of $1
per $1,000 of death benefit or 10 percent of the due and paid premium for the
period beyond the date of valuation.
(2) The nonforfeiture interest rate and
mortality assumptions for discounting in this subdivision are those required to
demonstrate compliance with section
4221
(c)(1) of the Insurance Law.
(3) The modal adjusted nonforfeiture premiums
for a policy year shall be calculated such that:
(i) the ratio of the modal adjusted
nonforfeiture premium for each premium due date during the policy to the
corresponding premium due on each premium due date is a constant percentage
throughout the policy year;
(ii)
the present value of the modal adjusted nonforfeiture premiums for a policy
year shall equal the annual adjusted nonforfeiture premium for that year as
defined in section
4221 of the
Insurance Law; and
(iii) the
interest rate and mortality used for discounting in subparagraph (ii) of this
paragraph shall be the same as required to demonstrate compliance with section
4221
(c)(1) of the Insurance Law.
(d) Interpolation
method. For policies with level premium and level benefits during the policy
year, the minimum nonforfeiture value is the greater of zero and the minimum
nonforfeiture value calculated in accordance with either paragraph (1) or (2)
of this subdivision. For policies that do not have level premium and level
benefits during the policy year, the minimum nonforfeiture value is the greater
of zero and the minimum nonforfeiture value calculated in accordance with
paragraph (2) of this subdivision. The methods described in paragraphs (1) and
(2) produce identical results for policies that have level premium and level
benefits during the policy year.
(1) Straight
line interpolation method. The minimum nonforfeiture values during a policy
year using the straight line interpolation method are equal to:
(i) the sum of:
(a) the calculated value at the end of the
prior policy anniversary times the fraction of the year from the end of the
month of valuation to the next policy anniversary;
(b) the calculated value at the end of the
next policy anniversary times the fraction of the year from the beginning of
the year to the end of the month of valuation; and
(c) the fraction of the year from the end of
the policy month of valuation to the next paid to date times, as elected by the
insurer for that policy, either the sum of the gross modal premiums for the
policy year or the adjusted nonforfeiture premium for the policy year;
less
(ii) the sum of:
(a) any indebtedness to life insurance
company or fraternal benefit society on the policy including interest due or
accrued; and
(b) the lesser of $1
per $1,000 of death benefit or 10 percent of either the gross premiums or the
adjusted premium, as elected under clause (i)(c) of this paragraph, due and
paid for the period beyond the date of valuation.
(2) Weighted linear interpolation
method. The minimum nonforfeiture values during a policy year using the
weighted linear interpolation method are equal to:
(i) the sum of:
(a) the calculated value at the end of the
prior policy anniversary; and
(b)
as elected by the insurer for that policy either the gross modal premium due
and paid since the beginning of the policy year or the ratio of the gross modal
premiums due and paid since the beginning of the policy year to the sum of the
gross modal premiums for the policy year multiplied by adjusted nonforfeiture
premium for the policy year; less
(ii) the sum of:
(a) the cost of insurance as calculated in
accordance with paragraph (3) of this subdivision;
(b) any indebtedness to life insurance
company or fraternal benefit society on the policy including interest due or
accrued; and
(c) the lesser of $1
per $1,000 of death benefit or 10 percent of either the gross premiums or the
adjusted premium, as elected under clause (i)(b) of this paragraph, due and
paid for the period beyond the date of valuation.
(3) The cost of insurance for
subparagraph (2)(ii) of this subdivision is found by multiplying the cost of
insurance rate for the year by the sum of insurance provided at the beginning
of each month, including any paid-up additions, from the prior policy
anniversary through the end of the policy month of valuation. The cost of
insurance rate is the result of dividing the difference of A minus B by C,
where:
(i) A is either the gross modal
premium for the policy year or the adjusted premium for the year consistent
with the election made in clause (2)(i)(b) of this subdivision;
(ii) B is the calculated value at the next
policy anniversary less the calculated value at the end of the prior policy
anniversary; and
(iii) C is the sum
of the amount of guaranteed insurance, including any paid-up additions, at the
beginning of each month during the current policy year.
(e) The nonforfeiture value in
subdivision (c) of this section may be calculated upon the assumption that the
death benefit is payable either at the time of death or at the end of the
policy year in which the death occurred. For non-level death benefits payable
during a year or a part thereof, a time and amount weighted average of the
death benefits may be substituted.
(f) The nonforfeiture value in subdivisions
(c) and (d) of this section may be calculated as of the exact day of surrender
instead of the end of the policy month.
(g) A policy may provide for a refund of
premium actually paid for any period beyond the date of surrender. The refund
shall not be considered a nonforfeiture benefit for the purposes of section
4221
(o) of the Insurance Law.
