(a) Reserve
liabilities for the guaranteed minimum death benefit 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 guarantee, shall be maintained in the general account of the
insurer, and may not be less than the greater of the following minimum
reserves:
(1) The aggregate total of the term
costs, if any, covering a period of 1 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, on each variable life
insurance contract, assuming an immediate 1/3 depreciation in the current value
of the assets of the separate account followed by a net investment return equal
to the assumed investment rate.
(2)
The aggregate total of the "attained age level" reserves on each variable life
insurance contract. The "attained age level" reserve on each variable life
insurance contract may not be less than zero and shall equal the "residue," as
described in subparagraph (i), of the prior year's "attained age level" reserve
on the contract, with any "residue" increased or decreased by a "payment
computed on an attained age basis," as described in subparagraph (ii).
(i) The "residue" of the prior year's
"attained age level" reserve on each variable life insurance contract may 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 the guarantee, and by 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 computed on an attained age
basis" shall be computed so that the present value of a level payment of that
amount each year over the future period for which charges for this risk will be
collected under the contract 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 the
guarantee, and C is any "residue," as described in subparagraph (i), of the
prior year's "attained age level" reserve on the variable life insurance
contract. If no further charges for this risk shall be collected under the
contract, the payment shall equal A minus B minus C.
(iii) The present value of future death
benefits that would be payable in the absence of a minimum guarantee, as
referred to in subparagraph (ii) of this paragraph, 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, or both, but may not
exceed the maximum interest rate permitted for the valuation of life insurance
contracts.
