New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter III - Policy and Certificate Provisions
Subchapter A - Life, Accident and Health Insurance
Part 43 - Individual Life Insurance Market-value Adjustment
Section 43.2 - Definitions
Current through Register Vol. 46, No. 39, September 25, 2024
As used in this Part, the following terms have the following meanings:
(a) Benefit charges means mortality charges made for life insurance on the insured person or persons and any charges made for riders or supplementary benefits.
(b) Cash surrender benefits means the amount payable on surrender of a policy.
(c) Cash surrender value means an amount equal to the policy value (including the value of the loan account), less any surrender charge, before reduction for indebtedness. Unadjusted cash surrender value means the cash surrender value before application of the market-value adjustment formula, and market-value adjusted cash surrender value means the cash surrender value after the application of such formula.
(d) Company means an insurer authorized to do life insurance business in this State and includes fraternal benefit societies but only to the extent that the Insurance Law authorizes such societies to conduct the life insurance business.
(e) Expense charges means charges (other than service charges) deducted from gross premiums before premiums are credited to the policy value or otherwise deducted from the policy value.
(f) Fair value means, with respect to an asset that is not a publicly traded security, a reasonable estimate of what a knowledgeable buyer would be willing to pay and a knowledgeable seller would be willing to accept for the asset on an arms' length basis.
(g) Fixed scheduled premium policy or fixed premium policy means a policy, including a single premium policy, under which the amount and timing of payments are fixed by the company under or pursuant to the terms of the policy and the failure to pay a scheduled premium results in paid-up benefits and requires reinstatement to resume premium payments. For this Part, fixed premium policies with guaranteed rates shall be governed by the same rules as are applicable to flexible premium policies.
(h) Flexible premium policy means a policy other than a fixed premium policy.
(i) Guaranteed-benefit date means the date on which an unadjusted cash surrender benefit is to be made available under a policy after a specified time interval.
(j) Guaranteed rate means an interest rate to be credited to the unborrowed portion of the policy value, not less frequently than annually, that (1) is guaranteed for a specified period of time equal to the specified time interval as defined below; (2) is constant or conforms to a schedule of rates provided in, or declared in advance of crediting pursuant to, the policy; (3) is not based on actual investment experience; and (4) is a high interest rate such that not more than a minimal increase (as defined from time to time by the superintendent) in the interest rate is likely to be credited not less frequently than annually (as distinguished, for example, from a contractually guaranteed minimum rate of interest over which additional interest is likely to be declared and credited).
(k) Hedging instrument means:
(l) Interest credited means the amount of interest credited to the policy value.
(m) Indebtedness means the amount borrowed from the company under a policy pursuant to the terms of a policy plus the amount of unpaid accrued interest thereon.
(n) Investment grade obligation means an obligation that (1) has been placed in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the superintendent; (2) has been identified in writing by such a rating agency to be of investment grade quality; or (3) has been determined to be investment grade (as indicated by a "yes" rating) by the Securities Valuation Office of the National Association of Insurance Commissioners. An obligation not of investment grade means an obligation that is not an investment grade obligation.
(o) Loan account means an interest-bearing account to which is allocated amounts equal to loans made under a policy. The accumulated amount in the loan account is part of the policy value.
(p) Market-value means (1) in the case of any publicly traded security, the price at which such security is traded or, if no such price is available, a price that appropriately reflects the latest bid price or the latest bid and asked prices for such security; and (2) in the case of any other asset, its fair value; in either case determined in accordance with the policy and the procedures set forth in the plan of operations filed pursuant to section 43.10 of this Part.
(q) Market-value adjustment formula means a formula which is described in the policy for increasing and decreasing unadjusted cash surrender values that meet the minimum requirements of section 4221 (n)(1) of the Insurance Law and which takes into account (1) changes in interest rates on publicly traded obligations or other investments not owned or managed by the company or in interest rates provided in, or declared pursuant to, policies of the same class as the policy being surrendered; and (2) the length of time between the date on which the policy is surrendered and the next date on which the policy would have provided cash surrender benefits determined without the use of any market-value adjustment formula.
(r) New guarantee rate means the guaranteed rate which (1) is applicable to new policies, or to new deposits or additional amounts credited to policies, of the same class as the policy under which cash surrender benefits are being determined in accordance with a market-value adjustment formula; and (2) is to be in effect for a period approximately equal to the remaining period of the specified time interval during which a guaranteed rate is applicable to the policy value corresponding to such cash surrender benefits. For purposes of this definition, new guarantee rate includes the guaranteed rate to be credited on the policy value under such policies immediately after a guaranteed benefit date.
(s) Obligations means bonds, debentures, mortgage notes and other evidences of indebtedness (whether or not liability for payment extends beyond the security therefor) as well as participation interests in any of the foregoing.
(t) Policy means any policy or certificate of life insurance under which additional amounts may be credited pursuant to section 4232 (b) or 4518 of the Insurance Law and which provides for cash surrender benefits determined in accordance with a market-value adjustment formula.
(u) Policy loan value means an amount equal to a percentage specified in the policy (of not less than 75 percent) of the sum of (1) the amount of any loan outstanding; and (2) the remaining portion of the market-value adjusted cash surrender value determined at the time the loan is applied for, but, if the policy so provides, not in excess of the unadjusted cash surrender value. The company may reduce the policy loan value (in addition to the indebtedness deducted in determining such value) by any unpaid premium balance for the current policy year.
(v) Policy value means an amount (before any adjustment in accordance with the market-value adjustment formula) equal to gross premiums paid under a policy (excluding separately identified premiums for riders or supplementary benefits that are not credited to the policy value) plus interest credited less the amount of any partial withdrawals and the following charges as specified in the policy:
(w) Publicly traded security means a security that the company can sell to any person without registering such security under the Securities Act and that is listed on a national securities exchange or for which a public market is maintained by dealers in the security.
(x) Qualified actuary means any individual who satisfies the qualification standards set forth in section 95.5 of this Title.
(y) Securities Act means the Securities Act of 1933, 15 USC sections 77 a - 77aa, as amended from time to time.
(z) Surrender charge means a deferred charge made to the policy value in the event of a full or partial surrender of the policy, a reduction in the face amount of insurance or in the premium, or a default in a premium payment.
(aa) Service charges means charges for the cost of transactions requested by the policyholder, such as partial withdrawals and benefit illustrations.
(ab) Short-term debt means an obligation which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.
(ac) Specified time interval means the period of time provided for in the policy, not to exceed 10 years, beginning when a premium is remitted (or when additional amounts are credited) and ending when a guaranteed benefit date occurs or, if a guaranteed benefit date has already occurred, beginning on such guaranteed benefit date and ending when another guaranteed benefit date occurs. In the case of contracts sold in the pension market providing optional retirement dates, a guaranteed benefit date should be the later of the earliest optional date and of age 55 and thereafter the contractholder must have the option of having guaranteed benefit dates at specified time intervals not exceeding five years.
(ad) Superintendent means the Superintendent of Insurance of this State, and any employee of the Insurance Department of this State authorized to act on behalf of the superintendent.
