New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter B - Life Insurers
Part 98 - Valuation Of Life Insurance Reserves
Section 98.5 - Contract segmentation method

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 98.5

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

(a) Contract segmentation method means the method of dividing the period from issue to the mandatory expiry date of a policy into successive segments, with the length of each segment being the period from the end of the prior segment (from policy inception, for the first segment) to the end of the appropriate policy year determined in accordance with subdivision (b) of this section.

(b) The length of a particular contract segment shall be set equal to the minimum of the value of t for which Gt is greater than Rt (if Gt never exceeds Rt such segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiry date of the policy), where Gt and Rt are defined in paragraphs (1) and (2) of this subdivision. If GPx+k+t is greater than zero and GPx+k+t-1 is equal to zero, Gt shall be deemed to be 1000. If GPx+k+t and GPx+k+t-1 are both equal to zero, Gt shall be deemed to be zero.

1

Gt = (GPx + k + t/GPx + k + t - 1)

where:

(i) x = original issue age;

(ii) k = the number of years from the date of issue to the beginning of the particular segment; and

(iii) t = 1, 2, . . ., t is reset to 1 at the beginning of each segment; and

(iv) GPx + k + t- 1 = the gross premium per thousand of face amount, ignoring policy fees, if such policy fees are a level dollar amount for the entire premium paying period of the policy, for year t of the segment.

2

Rt = (qx + k + t/qx + k + t - 1), but not less than one

where:

(i) x, k, and t are defined in paragraph (1) of this subdivision;

(ii) qx + k + t = the valuation mortality rate for deficiency reserves for policy year k + t + 1, but setting X equal to 1 for this purpose if the mortality of standard of section 98.4(b)(5) of this Part is elected, except as noted in the next sentence. Where a segment break occurs such that t is the length of the segment and a different valuation mortality table will be used in the next segment (e.g., the table will change from the special optional mortality factors of section 98.4[a][3] of this Part to the 1980 CSO table without 10-year select mortality factors), then qx + k + t is based on the valuation mortality table used in the current segment;

(iii) qx + k + t -1 = the valuation mortality rate for deficiency reserves for policy year k + t, but setting X equal to 1 for this purpose if the mortality of section 98.4(b)(5) of this Part is elected, except as noted in the next sentence. Where a segment break has just occurred such that t = 1 and a different valuation mortality table is being used in the current segment, then qx + k + t - 1 is based on the valuation mortality table in the current segment; and

(iv) at the option of the insurer, Rt may be increased or decreased by one percent in any policy year, but Rt shall not be less than one.

(c) For policies subject to a non-elective change in valuation mortality rates because the requirements for continued use of the prior rates were no longer satisfied, the insurer may, but shall not be required to, recalculate the segments.

(d) For policies subject to an insurer-election to substitute the 2001 Preferred Class Structure Mortality Table for the 2001 CSO Mortality Table:

(1) if the policy was issued on a policy form filed for approval prior to January 1, 2009, the insurer may, but shall not be required to, recalculate the segments; and

(2) If the policy was issued on a policy form filed for approval on or after January 1, 2009 and prior to January 1, 2020, the insurer shall recalculate the segments using the new valuation mortality rates.

(e) For policies subject to an insurer-election to substitute the 2017 CSO Preferred Class Structure Mortality Table for the 2017 CSO Mortality Table the in surer shall recalculate the segments using the new valuation mortality rates.

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