Current through Register Vol. XLI, No. 38, September 20, 2024
5.1. Reserve Liabilities Under Standard Valuation
Law. Reserve liabilities for variable life insurance policies shall be established
under W. Va. Code §
33-7-9 in
accordance with actuarial procedures that recognize the variable nature of the
benefits provided and any mortality guarantees.
5.2. Reserve Liabilities for the Guaranteed
Minimum Death Benefit. 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 the guarantee, and shall be maintained in the general account of the
insurer and may not be less than the greater of the following minimum reserves:
5.2.a. The aggregate total of the term costs, 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, on each variable life insurance contract,
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
5.2.b. 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 paragraph 1of this
subdivision, 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 paragraph 2 of this subdivision.
5.2.b.1. 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 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.
5.2.b.2.
The payment referred to in this paragraph 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 such guarantee, and (C) is any "residue," as described in
paragraph 1 of this subdivision, of the prior year's "attained age level" reserve on
such variable life insurance contract. 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 but in no event may exceed the maximum
interest rate permitted for the valuation of life contracts.
5.2.c. The valuation interest rate and mortality
table used in computing the two minimum reserves described in subdivision a and b of
this subsection 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.
5.3. Incidental
Insurance Benefit. Reserve liabilities 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.
