Current through Register Vol. 46, No. 39, September 25, 2024
(a) Reserve liabilities for variable life
insurance policies shall be established in accordance with provisions of
section
4240
(d) of the Insurance Law, in accordance with
actuarial procedures that recognize the variable nature of the benefits
provided and any mortality guarantees. The requirements of this section apply
to policies issued on and after January 1, 2000 and supersede the requirements
of section
54.8 of this Title for such
policies.
(b) In addition to the
requirements of this subdivision, the requirements of sections
98.4(a)(1)(i), (3)-(5), (b)(5)-(8), (c)-(e),
(h)-(i), (l)-(u) and
98.9 of this Part shall apply to
variable life insurance policies. Variable universal life insurance policies
are also subject to section
98.7 of this Part. In projecting
future benefits for determining basic reserves and deficiency reserves for
variable universal life products, use the calendar year statutory valuation
interest rate for life insurance policies with guarantee durations in excess of
20 years.
(c) The reserve for a
variable life insurance policy shall not be less than the greater of:
(1) the sum of the reserves required by
subdivisions (a), (b) and (d) of this section ignoring paragraph (d)(2) of this
section; or
(2) the sum of reserves
required by subdivisions (a) and (b) of this section ignoring any guaranteed
minimum death benefit and the reserves required by subdivision (d) of this
section.
(d) Reserves
for the guaranteed minimum death benefit for each variable life insurance
policy shall be the reserve needed to provide for the contingency of death
occurring when the guaranteed minimum death benefit exceeds the death benefit
that would be paid in the absence of the guarantee, and shall be maintained in
the general account of the insurer and shall not be less than the greater of
the reserves required by paragraph (1) of this subdivision or the reserves
required by paragraph (2) of this subdivision:
(1) the term cost, if any, covering a period
of one full year from the valuation date or, if less, covering the period
provided for in the guarantee not otherwise provided for by the reserves held
in the separate account assuming an immediate one-third depreciation in the
current value of the assets in the separate account followed by a net
investment return equal to the assumed investment rate or, if no assumed
investment rate is specified in the policy, the calendar year statutory
valuation interest rate for life insurance policies with guarantee durations in
excess of 20 years; or
(2) the
attained age level reserve shall be no less than zero and shall equal the
residue, as described in subparagraph (i) of this paragraph, of the prior
year's "attained age level" reserve on the contract, with any such residue
increased or decreased by a payment computed on an attained age basis as
described in subparagraph (ii) of this paragraph:
(i) the residue of the prior year's attained
age level reserve shall not be less than zero and shall be determined by adding
interest at the valuation interest rate to the prior year's reserve, deducting
the tabular claims based on the excess, if any, of the guaranteed minimum death
benefit over the death benefit that would be payable in the absence of a
guarantee, and dividing the net result by the tabular probability of survival.
The excess referred to in the preceding sentence shall be based on the actual
level of death benefits that would have been in effect during the preceding
year in the absence of the guarantee, taking appropriate account of the reserve
assumptions regarding the distribution of death claim payments over the
year;
(ii) the payment referred to
in this paragraph shall be computed so that the present value of a level
payment of such amount each year over the future period for which charges for
this risk will be collected under the policy, is equal to (A) minus (B) minus
(C), where (A) is the present value of the future guaranteed minimum death
benefits, (B) is the present value of the future death benefits that would be
payable in the absence of such guarantee, and (C) is any residue, as described
in subparagraph (i) of this paragraph, of the prior year's attained age level
reserve. The level payment is calculated by dividing the result of (A) minus
(B) minus (C) by an annuity of one dollar for the period the premiums or
charges are collected, but not beyond the duration the account value would go
to zero. If no future charges for this risk will be collected under the
contract, the payment shall equal (A) minus (B) minus (C). The amounts of the
future death benefits referred to in (B) shall be computed assuming a net
investment return of the separate account which may differ from the assumed
investment rate or the valuation interest rate but in no event may exceed the
maximum interest rate permitted for the valuation of life policies;
(3) the valuation interest rate
and mortality table used in computing the two minimum reserves described in
paragraphs (1) and (2) of this subdivision shall conform to permissible
standards for the valuation of life insurance contracts. In determining such
minimum reserves, the company may employ suitable approximations and estimates,
including but not limited to groupings and averages.
(e) Reserves for all fixed incidental
insurance benefits and any guarantees associated with variable incidental
insurance benefits shall be maintained in the general account, and reserve
liabilities for all variable aspects of the variable incidental insurance
benefits shall be maintained in a separate account, in amounts determined in
accordance with the actuarial procedures appropriate to the benefit.
