Current through Register Vol. 63, No. 9, September 1, 2024
(1) The
following standards apply for purposes of this rule:
(a) Policies with a secondary guarantee
include:
(A) A policy with a guarantee that
the policy will remain in force at the original schedule of benefits, subject
only to the payment of specified premiums;
(B) A policy in which the minimum premium at
any duration is less than the corresponding one year valuation premium,
calculated using the maximum valuation interest rate and the 1980 CSO valuation
tables with or without ten-year select mortality factors, or any other table
adopted after January 1, 2000, by the NAIC and adopted by the Director of the
Department of Consumer and Business Services by rule for this purpose;
or
(C) A policy with any
combination of paragraphs (A) and (B) of this subsection.
(b) A secondary guarantee period is the
period for which the policy is guaranteed to remain in force subject only to a
secondary guarantee. When a policy contains more than one secondary guarantee,
the minimum reserve shall be the greatest of the respective minimum reserves at
that valuation date of each unexpired secondary guarantee, ignoring all other
secondary guarantees. Secondary guarantees that are unilaterally changed by the
insurer after issue shall be considered to have been made at issue. Reserves
described in sections (2) and (3) of this rule shall be recalculated from issue
to reflect these changes.
(c)
Specified premiums mean the premiums specified in the policy, the payment of
which guarantees that the policy will remain in force at the original schedule
of benefits, but which otherwise would be insufficient to keep the policy in
force in the absence of the guarantee if maximum mortality and expense charges
and minimum interest credits were made and any applicable surrender charges
were assessed.
(d) For purposes of
this rule, the minimum premium for any policy year is the premium that, when
paid into a policy with a zero account value at the beginning of the policy
year, produces a zero account value at the end of the policy year. The minimum
premium calculation shall use the policy cost factors (including mortality
charges, loads and expense charges) and the interest crediting rate, which are
all guaranteed at issue.
(e) The
one-year valuation premium means the net one-year premium based upon the
original schedule of benefits for a given policy year. The one-year valuation
premiums for all policy years are calculated at issue. The select mortality
factors defined in OAR
836-031-0765(2)(b), (c) and
(d) may not be used to calculate the one-year
valuation premiums.
(f) The
one-year valuation premium should reflect the frequency of fund processing, as
well as the distribution of deaths assumption employed in the calculation of
the monthly mortality charges to the fund.
(2) Basic reserves for the secondary
guarantees shall be the segmented reserves for the secondary guarantee period.
In calculating the segments and the segmented reserves, the gross premiums
shall be set equal to the specified premiums, if any, or otherwise to the
minimum premiums, that keep the policy in force and the segments will be
determined according to the contract segmentation method as defined in OAR
836-031-0760(2).
(3) Deficiency reserves, if any, for the
secondary guarantees shall be calculated for the secondary guarantee period in
the same manner as described in OAR
836-031-0770(2)
with gross premiums set equal to the specified premiums, if any, or otherwise
to the minimum premiums that keep the policy in force.
(4) The minimum reserves during the secondary
guarantee period are the greater of::
(a) The
basic reserves for the secondary guarantee plus the deficiency reserve, if any,
for the secondary guarantees; or
(b) The minimum reserves required by other
rules governing universal life plans.
Stat. Auth.: ORS
731.244
Stats. Implemented: ORS
733.030, ORS
733.210 & ORS
733.300 - ORS
733.322
