N.Y. ISC Law § 4228 — New York Code / Act ISC / Article 42 / Section 4228
Life insurance and annuity business; limitations of expenses
Status: in_force

§ 4228. Life insurance and annuity business; limitations of expenses.\n(a) The provisions of this section shall apply to all domestic life\ninsurance companies and to all foreign and alien life insurance\ncompanies doing business in this state, but not the alien branches of\nsuch companies or such companies' subsidiaries not licensed in this\nstate to do an insurance business, except as provided in subsection (h)\nof this section, engaged in the direct sale of individual life insurance\npolicies or individual annuity contracts, hereinafter referred to as\n"companies". Except as provided in subsection (h) of this section, the\nprovisions hereof shall apply only to individual life insurance policies\nand riders and individual annuity contracts and riders and shall not\napply to fraternal benefit societies nor to the following categories of\ninsurance: (1) accident and health insurance having the meaning ascribed\nin section one thousand one hundred thirteen of this chapter, group life\ninsurance having the meaning ascribed in section four thousand two\nhundred sixteen of this article, group annuity contracts having the\nmeaning ascribed in section four thousand two hundred thirty-eight of\nthis article, and credit insurance having the meaning ascribed in\nsection four thousand two hundred sixteen and four thousand two hundred\nthirty-five of this article; (2) debit life insurance, except as\notherwise expressly provided herein; or (3) policies and contracts\nissued for delivery outside the United States and its possessions.\nNeither these categories of insurance nor reinsurance either assumed or\nceded will be included in any calculations or tests conducted for any\npurpose in connection with this section or any regulations or schedules\npromulgated hereunder.\n  (b) For purposes of this section:\n  (1) "Advance" and "loan" shall have the following meanings: "advance"\nmeans any amount paid to an agent, up to an amount not exceeding the\nvalue of three months' expected compensation payments, that is expected\nto be repaid within the next twelve months through reductions in future\ncompensation. "Loan" means any payment to an agent, other than an\nadvance, that is expected to be repaid from future compensation. An\namount paid to an agent in an annualization as defined in this\nsubsection is not an advance or loan.\n  (2) "Agent" shall have the meaning ascribed in section two thousand\none hundred one of this chapter and "broker" shall have the meaning\nascribed in section two thousand one hundred four of this chapter.\n  (3) "Annualization" means: with respect to any amounts paid to an\nagent or broker, the paying or crediting to an agent or broker at the\nbeginning of a policy year compensation or other payments based on all\nor a portion of the amount of premiums scheduled to be received by the\ncompany with respect to such policy year; with respect to the\ncalculation of any limits of payment or expense prescribed in this\nsection, the calculation of such limit is based on the assumption that a\ncompany receives, at the beginning of a policy year, all or a portion of\nthe amount of premiums scheduled to be received by the company with\nrespect to such policy year.\n  (4) "Benchmark gross level premium", is calculated as of the issue\ndate of a policy, or as of any subsequent date on which the face amount\nof the policy, or the types or amounts of supplemental benefits provided\nunder the policy, are increased, whether by addition of a rider or\notherwise, at the request of the policy owner. The benchmark gross level\npremium is calculated as one hundred twenty-five percent of the net\nlevel premium for a whole life insurance policy with level premiums\npayable during the life of the insured, with payments starting on the\nsame date and for the same face amount as the policy for which the\nbenchmark gross level premium is being computed, based on three and\none-half percent interest and male aggregate (smoker and non-smoker\ncombined), Commissioners 1980 Standard Ordinary Mortality Table,\nultimate mortality, age last birthday and immediate payment of death\nclaims, further adjusted as follows:\n  (A) An amount of one hundred dollars shall be added to the benchmark\ngross level premium for a policy; however, this amount shall not be\nadded to the benchmark gross level premium for a rider.\n  (B) The benchmark gross level premium for a policy providing\nsupplemental insurance benefits, whether by rider or otherwise, shall be\nincreased (i) if the company makes an additional premium charge for such\nbenefits, by the amount of such premium charge, and (ii) if the company\ndoes not make an additional premium charge for such benefits, by one\nhundred twenty-five percent of the amount of the levelized annual cost\nof insurance charge for such benefits; such levelized charge is to be\nbased on the actual schedule of charges applicable to the policy at the\ntime with respect to which the calculation is made, levelized using the\nmortality table and interest rate defined in this section.\n  (C) The benchmark gross level premium for a policy in which the\nguaranteed table of mortality charges exceeds the Commissioners 1980\nStandard Ordinary Mortality Table for male smokers for age last birthday\nmay be appropriately adjusted to reflect any excess of the amount of the\nbenchmark gross level premium computed based on the actual mortality\nguarantees of the policy over the benchmark gross level premium computed\nbased on the Commissioners 1980 Standard Ordinary Mortality Table for\nmale smokers for age last birthday; however, if the company makes an\nadditional premium charge because the insured is a substandard risk, the\ncompany may, instead, increase the amount of the benchmark gross level\npremium by the amount of such charge.\n  (D) The benchmark gross level premium for a policy providing life\ninsurance benefits, other than supplemental benefits, for more than one\nperson shall be adjusted to reflect the joint mortality status of the\ninsured lives, consistent with the nature of the life insurance coverage\nprovided by the policy, using the mortality table and interest rates\ndefined in this section.\n  (E) The benchmark gross level premium for a policy, including all of\nits riders and benefits, is the sum of the benchmark gross level premium\nfor the policy and the benchmark gross level premium for each rider,\neach adjusted as provided in subparagraphs (A), (B), (C) and (D) of this\nparagraph.\n  (F) The benchmark gross level premium for a policy with premiums\npayable more frequently than annually shall be the benchmark gross level\npremium based on annual premium payments, adjusted by the company's\nactual adjustment factors for the actual mode of premium payment.\n  (5) "Commission" means a payment to an agent or broker, as\ncompensation for the sale or service of a specific policy or contract,\nbased upon a percentage of the premium or consideration for that policy\nor contract.\n  (6) A "compensation arrangement" means any arrangement by a company\nfor compensating its agents or brokers on business that includes any of\nthe following:\n  (A) A commission that, for any policy or contract in policy or\ncontract years two through four, exceeds the limit set forth in\nparagraph two, three or four, whichever is applicable, of subsection (d)\nof this section for that year or, with respect to any year after the\nfourth policy or contract year that exceeds the limit set forth in\nparagraph two, three or four of subsection (d) of this section for the\nfourth policy or contract year;\n  (B) A fund-based compensation arrangement that, for any policy or\ncontract year, exceeds two percent of the fund annually in any of the\npolicy's or contract's first four years;\n  (C) Any plan providing for a training allowance subsidy pursuant to\nthe provisions of subparagraphs (A) through (F) of paragraph three of\nsubsection (e) of this section;\n  (D) Any plan of agent or broker compensation other than\ncommission-based and fund-based compensation pursuant to paragraph two\nof subsection (e) of this section; and\n  (E) Any plan involving the payment of an expense allowance, other than\nplans under which the company provides no goods and services to the\nrecipient of the expense allowance payments and the expense allowance\npayments are described as percentages of qualifying first year premium,\nexcess premium, single consideration, or periodic consideration, or any\nof them, and none of the percentages exceeds the corresponding\npercentages set forth in paragraph five of subsection (d) of this\nsection.\n  (7) "Contract" means an individual annuity contract. A rider to a\ncontract will be treated as a separate policy or contract for all\npurposes hereunder, unless otherwise specified. The determination of a\npolicy or contract type is done separately for each policy, contract and\nrider.\n  (8) "Debit life insurance" means all life insurance with premiums\npayable monthly or more frequently, normally collectible by an agency\nforce organized to make systematic house to house collections of\npremiums.\n  (9) "Effective date" means the first day of January next succeeding\nthe date on which this section shall have become a law.\n  (10) "Excess premiums" are premiums in the first policy year that\nexceed the benchmark gross level premium.\n  (11) "Expense allowance" is a payment to an agent or broker in lieu of\nreimbursement for expenses incurred in connection with the sale or\nservicing of the company's policies or contracts.\n  (12) "Filing" shall mean the delivery of information by a company to\nthe superintendent or his designee concerning plans under which a\ncompany makes payments to its agents and to brokers.\n  (13) "Fund" is a policy or contract accumulation account or any other\nsimilar policy or contract value at a particular time, before\napplication of any surrender charges and market value adjustments, if\nany, whether or not it is immediately available to the owner of a policy\nor contract. At the option of the company "fund" may mean the company's\nstatutory reserve for the policy or contract.\n  (14) "General agent" is an agent who is appointed directly by a\ncompany, other than a local salaried representative of such company, who\nrecruits, trains or supervises other agents or who has the right to\nappoint agents.\n  (15) "Goods and services" as used in this section shall refer to (A)\nreimbursements to an agent or broker for vouchered expenses made or\nincurred in connection with the production or servicing of policies or\ncontracts on behalf of the company and (B) similar expenses assumed\ndirectly by the company. These expenses do not include those that the\ncompany incurs for the recruitment, training, supervision or management\nof such agent, nor the cost of security benefits provided to such agent,\nnor those expenses described in item (iv) of subparagraph (D) of\nparagraph two of subsection (c) of this section.\n  (16) A "periodic premium policy" or "periodic consideration contract"\nis any policy or contract, respectively, other than a single premium\npolicy or single consideration contract. The determination of a policy\nor contract type is done separately for each policy or contract.\n  (17) "Periodic premiums" and "periodic considerations" are premiums\nand considerations, respectively, recorded by a company for a policy or\ncontract other than single premiums and single considerations.\n  (18) "Policy" means an individual life insurance policy. A rider to a\npolicy will be treated as a separate policy or contract for all purposes\nhereunder, unless otherwise specified. The determination of a policy or\ncontract type is done separately for each policy, contract and rider.\n  (19) "Premiums" and "considerations" include all amounts (including\namounts for supplementary benefits) recorded for a policy or contract,\nexcept dividends applied to purchase additional insurance under the same\npolicy, as well as amounts meeting the requirements of subparagraphs (B)\nand (C) of paragraph twenty-five of this subsection. Premiums and\nconsiderations include all amounts so recorded that arise from the\napplication of values inherent in a policy or contract, such as dividend\ndeposits, any excess of actual policy or contract cash values over\nguaranteed cash values, dividend additions, premiums paid in advance,\nand policy loans.\n  (20) A "qualified annuity contract" is an annuity defined by the\nInternal Revenue Code sections 401, 403 or 457, and any other similar\nannuities defined by the superintendent.\n  (21) "Qualifying first year premiums" are premiums under each policy,\nincluding all of its riders and benefits, which are:\n  (A) in the first policy year, premiums recorded, including the entire\namount of a premium recorded in the first policy year of a conversion of\na term policy or rider to a permanent policy up to the benchmark gross\nlevel premium for the policy, including all of its riders and benefits;\nor\n  (B) in any year after the first, premiums recorded up to the benchmark\ngross level premium for the current face amount of the policy, including\nall of its riders and benefits, less the total previous qualifying first\nyear premiums, but not less than zero; or\n  (C) all premiums recorded up to the benchmark gross level premium to\nrenew a policy on more favorable terms than those guaranteed in the\npolicy when such renewal is subject to new underwriting and a new\ncontestable period.\n  (22) "Recorded" shall mean the crediting of an amount to the company's\npremium or consideration accounts for purposes of the company's\nstatutory annual statement.\n  (23) "Renewal premiums" are all periodic premiums other than\nqualifying first year premiums or excess premiums.\n  (24) A "security benefit" is any benefit provided to an agent that is\nboth (A) provided under an employee benefit plan, as defined in the\nEmployee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et\nseq. and (B) either (i) a benefit under an employee benefit plan that\nqualifies as such under the relevant sections of the Internal Revenue\nCode and regulations thereunder that require compliance with standards\nof non-discrimination in benefit coverage and eligibility, or (ii) a\nbenefit that does not permit an agent to obtain a cash payment other\nthan at the time of death, permanent and total disability, or\nretirement. "Permanent and total disability" as used herein shall mean\nany condition caused by injury or disease that prevents the agent from\nperforming substantially all of the work normally performed by the\nagent. If the definition of "employee benefit plan" under the Employee\nRetirement Income Security Act of 1974 is repealed, replaced or\nsignificantly amended, the superintendent shall promulgate a regulation\nestablishing a definition for the purposes of this section. Benefits\nthat would meet the requirements of subparagraph (A) or (B) of this\nparagraph but for the fact that the agent covered under such benefits is\nan independent contractor rather than an employee are security benefits.\n  (25) "Single considerations" are:\n  (A) all amounts (including amounts for supplementary benefits)\nrecorded as single considerations or single deposits for contracts; or\n  (B) contract values that are applied under the same contract at the\nlater of (i) the end of a surrender charge period or (ii) five years\nafter issuance of the contract or, if a previous such application of\ncontract values has occurred, five years after such application, when\nsuch application results in new sales loads or surrender charges; or\n  (C) settlement option proceeds generated from the death of an\nindividual or maturity of a policy or contract that are applied to\npurchase a new contract or that are applied to the purchase of annuity\nbenefits under the existing contract.\n  (26) "Single premiums" are:\n  (A) all amounts (including amounts for supplementary benefits)\nrecorded as single premiums for policies, except dividends applied to\npurchase additional insurance under the same policy; or\n  (B) policy values that are applied under the same policy at the later\nof (i) the end of a surrender charge period or (ii) five years after\nissuance of the policy or, if a previous such application of policy\nvalues has occurred, five years after such application, when such\napplication results in new sales loads or surrender charges.\n  (27) A "single premium policy" or "single consideration contract" is a\npolicy or contract that, according to its terms, provides for the\npayment of a single premium or consideration at time of purchase and no\nsubsequent premiums or considerations during the life of the policy or\ncontract. The determination of a policy or contract type is done\nseparately for each policy, contract and rider.\n  (28) "Supplemental benefits" are any benefits provided as part of a\npolicy or contract, whether by rider or otherwise, excluding life\ninsurance coverage on named insureds under the policy.\n  (29) "Training allowance subsidy" is the excess of the amount that is\npaid to an agent under a training allowance plan over the amount that\nwould be paid in commissions and expense allowance to an experienced\nagent, in the same sales force, producing the same sales of policies and\ncontracts.\n  (c)(1) No company shall pay or incur in any calendar year total\nselling expenses as calculated hereunder in excess of its total selling\nexpense limit referred to in paragraph four of this subsection, except\nthat the total selling expense limit shall not apply to a company in any\ncalendar year in which the company does not sell any policies or\ncontracts subject to this section.\n  (2) Total selling expenses shall include the following expenses\nincurred directly or indirectly by the company, without regard to\nwhether they are incurred in the company's home office or in a field or\nregional office:\n  (A) commissions;\n  (B) the increase during the year in the amount of outstanding advances\nand loans to agents, including any accrued and unpaid interest thereon,\nand including amounts charged off by the company, however, if such\namount is negative, it shall be treated as a reduction of the amount of\ntotal selling expenses;\n  (C) the expense of direct solicitation advertising that either\nincludes an application or solicits a response to obtain an application\nfor a policy or contract regulated under this section;\n  (D) distribution, marketing and sales support expenses directly\nrelated to the procurement of new business, which includes but is not\nlimited to:\n  (i) recruiting and training of agents, including related\nrecordkeeping;\n  (ii) sales management and supervision; and\n  (iii) clerical functions in sales offices;\n  (E) any expense allowance paid to the agent or broker by the company\nor any expenses of the agent, agency or broker, assumed or reimbursed by\nthe company;\n  (F) the travel expenses, meals and entertainment paid for by the\ncompany; and\n  (G) all other compensation paid to or expense incurred on behalf of\nactive and retired agents and brokers, including the cost of any\nsecurity benefits.\n  (3) Total selling expenses shall not include expenses related to the\nfollowing activities and the compensation of individuals working\nfull-time on the following activities and other activities not included\nwithin paragraph two of this subsection, even if they are working in a\nsales office:\n  (A) development and maintenance of products, systems and software;\n  (B) medical examinations and inspections of proposed risks;\n  (C) underwriting;\n  (D) policy issue;\n  (E) policy conservation;\n  (F) premium billing and collection;\n  (G) policy administration;\n  (H) claim administration and management;\n  (I) investment management;\n  (J) statutory and regulatory filing and compliance;\n  (K) overall company management and direction;\n  (L) taxes, licenses and fees; and\n  (M) all other activities not related to selling.\n  (4) The total selling expense limit shall be the sum of the amounts\ndetermined pursuant to subparagraphs (A), (B), (C), (D), (E), (F), (G),\n(H), (I) and (J) of this paragraph, except as any of those subparagraphs\nmay be adjusted pursuant to the provisions of subparagraph (K) of this\nparagraph.\n  (A) For each life insurance policy, fifty-five percent of the\nqualifying first year premium.\n  (B) Five percent of excess premiums, single premiums and all\nconsiderations.\n  (C) One hundred ten percent of the sum of the amount determined\npursuant to subparagraphs (A) and (B) of this paragraph.\n  (D) For all new life insurance paid for during the year, other than\nterm insurance for less than one year, for which any premium is paid\nduring the year, one dollar for each one thousand dollars of such\ninsurance.  New life insurance paid for shall include:\n  (i) life insurance on new policies paid for during the calendar year;\n  (ii) life insurance on term conversions during the calendar year to\npermanent life insurance;\n  (iii) life insurance on policies which were renewed under more\nfavorable terms than those guaranteed in the policy, subject to new\nunderwriting requirements and new contestable period; and\n  (iv) increases in the death benefit of life insurance during the\ncalendar year, other than those provided for in the policy, on policies\nin force.\n  (E) Seventy dollars for each new policy, other than policies for term\ninsurance for less than one year, and for each new contract paid for\nduring such year. For purposes of this subparagraph, riders will not be\nconsidered as separate policies or contracts. New policies paid for\nduring the year shall include policies referred to in items (i), (ii)\nand (iii) of subparagraph (D) of this paragraph.\n  (F) Twelve percent of renewal premiums.\n  (G) Fifteen cents for each one thousand dollars of face amount of\npolicies in force at the end of such year.\n  (H) The sum of the amounts below:\n  (i) one dollar for each one thousand dollars of the first one billion\ndollars of life insurance in force;\n  (ii) fifty cents for each one thousand dollars of the next one billion\ndollars of life insurance in force;\n  (iii) five one-hundredths of one percent of the first one billion\ndollars of annuity reserves; and\n  (iv) two and one-half of one hundredths of one percent of the next one\nbillion dollars of annuity reserves.\n  (I) For each agent who qualifies under paragraph three of subsection\n(e) of this section, thirty thousand dollars for each such agent\nappointed to represent the company during the year, twenty thousand\ndollars for each such agent who was initially appointed during the\nimmediately preceding year and is still contracted with the company on\nJanuary first of the current year, and ten thousand dollars for each\nsuch agent who was initially appointed during the second preceding year\nand is still contracted with the company on January first of the current\nyear.\n  (J) The excess, if any, of the total selling expense limit over the\ntotal selling expenses for the immediately preceding calendar year;\nhowever, such excess shall not exceed five percent of the total selling\nexpense limit for such preceding calendar year, calculated without\nregard to the effect of this subparagraph.\n  (K) For a company that makes commitments to pay compensation to agents\nor brokers or to incur other agent-related or broker-related expense\nwith respect to policies or contracts in their renewal years:\n  (i) with respect to policies, if such commitment includes compensation\nor other agent-related or broker-related expense expressed as a\npercentage of premium and if it exceeds twelve percent of premium with\nrespect to any policy year after the first, the company may, at its\noption reduce the amount of the limit calculated pursuant to\nsubparagraph (A) of this paragraph in the calendar year in which such\npolicies are sold and increase the amount of the limit calculated\npursuant to subparagraph (F) of this paragraph in subsequent calendar\nyears;\n  (ii) with respect to policies, if such commitment includes\ncompensation or other agent-related or broker-related expense expressed\nas a percentage of the policy fund with respect to the second or any\nlater policy year, the company may, at its option reduce the amount of\nthe limit calculated pursuant to subparagraph (F) of this paragraph in\nsubsequent calendar years and add, in such subsequent calendar years, an\namount based on the reserves of such policies;\n  (iii) with respect to contracts, if such commitment includes\ncompensation or other agent-related or broker-related expense expressed\nas a percentage of the contract fund with respect to any contract year,\nthe company may, at its option, reduce the amount of the limit\ncalculated pursuant to subparagraph (B) of this paragraph in the\ncalendar year in which such contracts are sold and add, in such calendar\nyear and subsequent calendar years, an amount based on the reserves of\nsuch contracts.\n  (L) Such adjustment shall:\n  (i) in the case of item (i) of subparagraph (K) of this paragraph, be\nbased on the relationship that a reduction of three percent of premiums\nin the amount of the limit calculated pursuant to subparagraph (A) of\nthis paragraph in the year of sale is equivalent to an increase of one\npercent of premiums in the amount of the limit calculated pursuant to\nsubparagraph (F) of this paragraph if the commitment applies to all\nlater policy years;\n  (ii) in the case of item (ii) of subparagraph (K) of this paragraph,\nbe based on the relationship that a reduction of one percent of premiums\nin the amount of the limit calculated pursuant to subparagraph (F) of\nthis paragraph in all later policy years is equivalent to an increase in\nthe limit of fifteen one-hundredths of one percent of policy reserves if\nthe commitment applies to all later policy years;\n  (iii) in the case of item (iii) of subparagraph (K) of this paragraph,\nbe based on the relationship that a reduction of one-half of one percent\nof considerations in the amount of the limit calculated pursuant to\nsubparagraph (B) of this paragraph in the year of sale is equivalent to\nan increase in the limit of fifteen one-hundredths of one percent of\ncontract reserves if the commitment applies to all contract years.\n  The superintendent shall by regulation describe the bases for\nadjustments in other situations, consistent with these relationships.\nReasonable use of averaging methods shall be allowed. In particular, the\nregulation shall provide that a company shall approximate the percentage\nof its policies, contracts, premiums, and reserves with respect to which\nit has opted to make such adjustments, and shall derive adjustment\nfactors such that, when such factors are applied to all of its business\nissued or in force, they will approximate the results that would be\nobtained if more precise calculations were made.\n  (5) A company may make arrangements, such as entering into agent\ncontracts, incurring expenses, and generally organizing its activities,\nin such a manner that some or all of its expenses are applicable\npartially to policies and contracts subject to this section and\npartially to other business or to other companies with which it has\nbusiness arrangements and, in such cases, the company shall determine\nthe portion of such expenses subject to this subsection by using an\nequitable basis of allocation, consistent with the company's allocation\nmethodology for annual statement reporting.\n  (d) A company may pay agents and brokers as it sees fit for the sale\nand service of policies and contracts. However:\n  (1) No company shall pay or permit to be paid to an agent or broker a\ncommission in excess of the sum of (A) fifty-five percent of any\nqualifying first year premium and (B) seven percent of any excess\npremium; or to a general agent with respect to business not personally\nproduced by such general agent, a commission in excess of the sum of (C)\nsixty-three percent of any qualifying first year premium and (D) eight\npercent of any excess premium.\n  (2) Except as provided in paragraph four of this subsection, no\ncompany shall pay or permit to be paid to an agent or broker commission\nin excess of seven percent of any single consideration or any periodic\nconsideration received in the first four contract years; or to a general\nagent, on business not personally produced by such general agent, a\ncommission in excess of eight percent of any single consideration or any\nperiodic consideration.\n  (3) No company shall pay or permit to be paid to an agent or broker a\ncommission in excess of twenty-two percent of renewal premiums for the\nsecond policy year, twenty percent of renewal premiums for the third\npolicy year, or eighteen percent of renewal premiums for the fourth\npolicy year; or to a general agent on business not personally produced\nby such general agent, a commission in excess of twenty-seven percent of\nrenewal premiums in the second policy year, twenty-three percent of\nrenewal premiums in the third policy and twenty percent of renewal\npremiums in the fourth policy year.\n  (4) Notwithstanding the limitations set forth in paragraph two of this\nsubsection, with respect to a qualified annuity contract, no company\nshall pay or permit to be paid to an agent or broker a commission in\nexcess of fourteen and one-half percent of periodic considerations\nincurred in the first contract year and four and one-half percent of\nperiodic considerations incurred respectively in each of three contract\nyears following the first, or to a general agent on business not\npersonally produced by the general agent, a commission in excess of\nsixteen percent of periodic considerations incurred in the first\ncontract year and six percent of periodic considerations incurred\nrespectively in each of the three contract years following the first.\n  (5) With respect to premiums and considerations recorded within a\nperiod of twelve consecutive months on business written by any agent or\nbroker, no company shall pay or permit to be paid to an agent or broker\nexpense allowance greater than the excess, if any, of the sum of:\n  (A) ninety-one percent of all qualifying first year premiums; and\n  (B) with respect to qualified annuity contracts, fourteen and one-half\npercent of periodic considerations incurred in the first contract year;\nand\n  (C) seven percent of any excess premiums, single considerations and\nperiodic considerations, other than those addressed in subparagraph (B)\nof this paragraph, incurred in the first four contract years,\nover the sum of commissions paid pursuant to paragraphs one, two and\nfour of this subsection, and the value of any goods and services\nprovided to such agent or broker by the company. With respect to\npremiums and considerations recorded within a period of twelve\nconsecutive months on business written under the supervision of any\ngeneral agent, no company shall pay or permit to be paid to a general\nagent, on business not personally produced by such general agent,\nexpense allowances greater than the excess, if any of the sum of\n  (D) ninety-nine percent of all qualifying first year premiums; and\n  (E) with respect to qualified annuity contracts, sixteen percent of\nperiodic considerations incurred in the first contract year; and\n  (F) eight and one-half percent of any excess premiums, single\nconsiderations and periodic considerations, other than those addressed\nin subparagraph (E) of this paragraph, incurred in the first four\ncontract years,\nover the sum of commissions paid pursuant to paragraphs one, two and\nfour of this subsection, and any goods and services provided to such\ngeneral agent by the company. The company may, in implementing this\nsubsection, use reasonable estimation techniques in arriving at the\namount of goods and services, including but not limited to the\nestimation of the average value of goods and services provided to a\ngroup of agents or brokers to whom similar goods and services are\nprovided.\n  (e) Notwithstanding any limitations set forth in subsection (d) of\nthis section:\n  (1) (A) A company may compensate an agent or broker wholly or in part\nupon a plan that bases compensation on the fund underlying the policy or\ncontract. For policies other than single premium policies, a company may\npay up to three-tenths of one percent of the fund in each of policy\nyears two through four for each one percent of premium by which the\ncommission paid to the agent or broker in such policy years is less than\nthe percentages set forth in paragraph three of subsection (d) of this\nsection. For single premium policies and all contracts, a company may\npay up to three-tenths of one percent of the fund in each of policy or\ncontract years one through four for each one percent by which the sum of\ncommissions and expense allowance paid to the agent or broker in policy\nor contract years one through four is less than the percentages set\nforth in subparagraph (C) or (D) of paragraph five of subsection (d) of\nthis section, whichever is applicable.\n  (B) Any company may compensate an agent or broker on a plan of\nfund-based compensation using translations other than those set forth in\nsubparagraph (A) of this paragraph, provided that the translation\nfactors are equivalent to those set forth therein, based on reasonable\nand consistent assumptions as to mortality, policy or contract\npersistency and interest.\n  (2) (A) A company may compensate an agent or broker pursuant to a plan\nof agent compensation that consists wholly or partly of elements other\nthan commission-based compensation and fund-based compensation.\n  (B) When a company implements such a plan, it must be able to\ndemonstrate, after the plan has been in operation for two years, that an\nagent or broker being compensated under the plan and meeting its\nrequirements for continuation in the plan will receive no more\ncompensation under the plan, over the period of a projected career, than\ncould have been earned under a plan consisting entirely of commissions\nand expense allowance, each limited as described in subsection (d) of\nthis section. In making this demonstration, the company may take into\naccount commission compensation that would have been paid, under its\nrenewal commission plans, with respect to policies and contracts in\ntheir fifth and later policy and contract years.\n  (C) To the extent that an agent being compensated under such plan is\neligible to receive a training allowance under the provisions of\nparagraph three of this subsection, the comparison in subparagraph (B)\nof this paragraph shall take into account, as well, the amount of\ntraining allowance subsidy that could have been paid to such agent.\n  (D) To the extent that an agent or broker being compensated under such\nplan is assigned servicing responsibilities for policies or contracts\nthat have been in force for more than four years, the comparison in\nsubparagraph (B) of this paragraph shall take into account, as well, the\nrenewal commissions that the company pays with respect to such policies\nand contracts.\n  (E) The comparison in subparagraph (B) of this paragraph shall be\nbased on reasonable assumptions as to mortality, policy or contract\npersistency, and interest and agent or broker sales.\n  (F) If a company employs one or more salaried employees whose\nprincipal function is not the sale of new policies or contracts and not\nthe supervision of agents or agencies, and if no more than twenty-five\npercent of the total compensation of such employees is related to\nbusiness personally produced by such employees, the provisions of this\nsubsection or subsection (d) of this section shall not apply to such\nemployees' total compensation, notwithstanding that they may be licensed\nas life insurance agents.\n  (G) If a company compensates an agent or broker within the limits in\nsubsection (d) of this section, and that agent or broker retains as\nassistants other agents or brokers who are compensated by the agent or\nbroker on the basis of a plan of compensation other than commissions,\nsuch arrangement between such agent or broker and that agent's or\nbroker's assistant is not subject to the provisions of this subsection\nand subsection (d) of this section.\n  (3)(A) A company may pay reasonable training allowance subsidies to\nagents pursuant to a plan of agent compensation, provided that such\nagents are full-time agents of the company and the principal business\nactivity of such agents is the solicitation of policies and contracts\nprimarily but not necessarily exclusively for the company, and its\naffiliates, and such agents are not simultaneously receiving training\nallowance from any other life insurance company.\n  (B) Agents receiving training allowance subsidies may also receive\nexpense allowance payments.\n  (C) An agent is eligible to receive such a training allowance subsidy,\nprovided (i) such agent has earned less than forty thousand dollars from\nthe sale of policies and contracts cumulatively during the three years\nprior to such agent's appointment, (ii) less than twenty-five percent of\nsuch agent's earned income has been received from the sale of policies\nand contracts during each of the three years prior to appointment, or\n(iii) less than twenty-five percent of such agent's worktime during each\nof the three years prior to appointment was allocated to individual life\nand annuity sales. The company may establish that an agent is eligible\nto receive a training allowance subsidy by requiring the agent to attest\nthat such agent meets one of the criteria set forth in this subparagraph\nprior to appointment. Such attestation shall be sufficient to establish\neligibility, provided the company does not have actual knowledge to\nreject the attestation based on the agent's credentials and background.\n  (D) An agent receiving such training allowance subsidies may not\nreceive, on a cumulative basis, for an agent in the first year of such\nsubsidies, the greater of fifty-four thousand dollars and sixty percent\nof the first year commission limit, and for an agent in the second year\nof such subsidies, the greater of eighty-five thousand dollars and sixty\npercent of the first year commission limit in the first year and forty\npercent of the first year commission limit in the second year, and for\nan agent in the third year of such subsidies, the greater of one hundred\nfive thousand dollars and sixty percent of the first year commission\nlimit in the first year and forty percent of the first year commission\nlimit in the second year, and twenty percent of the first year\ncommission limit for the third year, and for an agent in the fourth year\nof such subsidies, the greater of one hundred sixteen thousand dollars\nand sixty percent of the first year commission limit in the first year\nand forty percent of the first year commission limit in the second year,\ntwenty percent of the first year commission limit in the third year, and\nten percent of the first year commission limit in the fourth year.\n  (E) With respect to any agent eligible to receive training allowance\nsubsidy who has earned at least one hundred twenty-seven thousand\ndollars of income during either of the two calendar years immediately\npreceding commencement of receipt of training allowance subsidies, a\ncompany may pay additional training allowance subsidies of two thousand\ndollars to such agent during each of the first two years of his receipt\nof training allowance subsidies for every four thousand dollars of such\nearned income in excess of one hundred twenty-seven thousand dollars,\nprovided that the cumulative training allowance subsidy does not exceed\neighty-seven thousand dollars in such agent's first year of receipt of\ntraining allowance subsidy and provided further that the agent receives\nnot greater than one hundred sixteen thousand dollars in total training\nallowance subsidies.\n  (F) For purposes of this paragraph, the period of time that a person\nworked for a company under a company-sponsored training program and was\nnot acting as an agent for that company shall not be counted as time\nspent receiving training allowance subsidies, and any salary paid by the\ncompany to that person during that time shall not count toward the\ncumulative maximum training allowance subsidy.\n  (G) The superintendent shall periodically adjust the cumulative\nmaximum training allowance subsidy limits set forth in this paragraph.\nThe superintendent may also, at any time, approve training allowance\nsubsidies with cumulative maximum amounts that exceed the limits set\nforth in this paragraph.\n  (H) A company may, upon approval of the superintendent, establish a\nplan for training allowance subsidies for which the conditions of\neligibility or the amounts or periods of subsidy, of any of these,\ndiffer from those set forth in this subsection. The superintendent shall\napprove such a plan, subject to such conditions as he may prescribe, if\nhe finds that it is likely to meet the objective of developing new\nagents for the sale of policies or contracts or both in a cost-effective\nmanner.\n  (4) A company may pay additional compensation to a general agent\npursuant to a plan of agent compensation for a period not exceeding ten\nyears; provided, however, that if such general agent has had prior\nservice as a general agent or agency manager, with any life insurance\ncompany or companies, whether as an individual, partner or officer of a\ncorporation, and such prior service was for a period of less than five\nyears, additional compensation may be paid only during the balance of\nsuch five years, but if such prior service was of five years duration or\nmore, then no additional compensation may be paid; provided, further,\nthat the company shall not permit to be paid expense allowances to\nagents under his supervision on business written while such additional\ncompensation is paid in excess of those permitted to agents pursuant to\nparagraph five of subsection (d) of this section. For the purposes of\nthis paragraph only, service as a general agent or agency manager shall\nnot include service as an assistant general manager, assistant agency\nmanager, agency supervisor, or service in a similar position regardless\nof its title. The additional compensation in the sixth year of the\nperiod shall not be in excess of twenty percent of the first year\ncommission limit of the business of the agency, sixteen percent in the\nseventh year of the period, twelve percent in the eighth year of the\nperiod, eight percent in the ninth year of the period and four percent\nin the tenth year of the period, and shall not be payable pursuant to a\nplan of agent compensation on any business personally obtained by such\ngeneral agent.\n  (5) The cost of all security benefits provided to agents shall not be\nincluded in applying the limits established in subsection (d) of this\nsection.\n  (6) A company, including any person, firm or corporation on its behalf\nor under any agreement with it, may pay or award, or permit to be paid\nor awarded, prizes and awards to agents and brokers pursuant to a plan\nof agent or broker compensation, provided that no single prize or award\nmay exceed a value of five hundred dollars, and that the total value of\nsuch prizes and awards paid or awarded to any agent or broker within a\ncalendar year may not exceed two thousand dollars. Notwithstanding the\nforegoing, a company may also pay or award not more frequently than\nmonthly a prize or award valued at not more than fifty dollars. The\ncosts of all such prizes and awards shall not be included in applying\nthe limits established in subsection (d) of this section. The\nsuperintendent may authorize higher limits on the value of prizes and\nawards than those set forth herein.\n  (7) A company may conduct agent conventions, conferences and business\nmeetings, and no portion of the expenses associated with agent\nconventions, conferences or business meetings, nor the value thereof,\nwill be considered to be a prize or award, or additional commissions or\ncompensation, or a payment pursuant to an expense allowance plan, a\ndirect payment of an expense or an assumption of any expense for\npurposes of paragraph five of subsection (d) of this section, or any\nother type of compensation or payment described in this subsection or\nsubsection (d) of this section, if, for conventions, conferences or\nbusiness meetings held in the United States, a company's expenses for\nsame meet the Internal Revenue Code's current standard for ordinary and\nnecessary business expenses and\n  (A) are not includable in the recipient's gross income for federal\nincome tax purposes, and\n  (B) represent reasonable allowances for agents' incidental ordinary\nand necessary business expenses associated with the convention,\nconference or business meeting, such as meals, local transportation and\nsimilar items, and for conventions, conferences and business meetings\nheld outside the United States, a company's expenses for same would have\nmet those current standards if the convention, conference or business\nmeeting was held within the United States. The expenses paid by a\ncompany shall be included in the limit established in subsection (c) of\nthis section. Any portion of such expenses paid by a company that do not\ncomply with this paragraph must be considered to be compensation\nhereunder and, if not recovered from the recipient, charged against the\nlimits of subsection (d) of this section in the year the expense is\nincurred.\n  (8) A company that, with respect to any policy or contract year, pays\nan agent or broker with respect to the business of that agent or broker\na commission based on a percentage lower than the percentage set forth\nin paragraph one, two, three or four of subsection (d) of this section,\nwhichever is appropriate, for such policy or contract year may, with\nrespect to any later policy or contract year of the same policy or\ncontract, pay the agent or broker (or a successor agent or broker to\nwhom the policy or contract has been assigned) a commission based on a\nhigher percentage than the percentage set forth in paragraph two, three\nor four of subsection (d) of this section, whichever is appropriate, for\nsuch later policy or contract year, to the extent that the total of the\npercentages on which actual commissions were calculated in the preceding\npolicy or contract years was lower than the total of the percentages set\nforth in paragraph one, two, three or four of subsection (d) of this\nsection, whichever is appropriate, for such preceding policy or contract\nyears.\n  (9) (A) A company may make an advance to any of its agents pursuant to\na plan of agent compensation. A company may, but is not required to,\ncharge interest on outstanding advances.\n  (B) A company may make a loan to any of its agents pursuant to a plan\nof agent compensation. The maximum amount of any loan shall not exceed\nthe expected compensation of the agent over the next twelve months. A\ncompany shall charge interest on loans at a rate not less than a rate\nconsistent with current short-term borrowing rates. If the interest rate\ncharged on a loan is less than a rate consistent with current short-term\nborrowing rates, the amount by which the interest actually charged is\nlower than the interest that would have been charged based on a rate\nconsistent with current short-term borrowing rates, the difference will\nbe subject to the limits of either paragraph one, two, four or five of\nsubsection (d) of this section.\n  (C) A company shall secure adequate collateral for any advance or loan\nto an agent; such collateral shall, as a minimum, consist of any\ncompensation earned by the agent from sales of new policies or\ncontracts.\n  (10) (A) If a broker or an agent who is not a general agent performs\nservices for a company other than those related to the sale or servicing\nof a policy or contract, or if a general agent performs services for a\ncompany other than those related to the sale or servicing of a policy or\ncontract, or the recruiting, training or supervision of agents, the\ncompany may compensate the broker or agent for the performance of such\nservices. Such payments are not subject to the limits in subsection (d)\nof this section. No company shall pay or cause to be paid to any broker\nor agent for the services described herein, any amounts that exceed the\nreasonable value of the services performed.\n  (B) If an agent of a company also performs the duties of a local\nsalaried representative of such company, the company may compensate the\nagent within the limits of this section with respect to policies or\ncontracts sold or serviced by such agent for which agent compensation is\nsubject to the limits of this section, and may also compensate such\nagent for services performed as a local salaried representative of the\ncompany; however, such compensation as a local salaried representative\nshall not include any compensation with respect to policies or contracts\nsold or serviced by such agent.\n  (11) If a company pays an agent or a general agent for the production\nof policies or contracts issued by the company, the company shall not be\nrequired to monitor for compliance with this section the payments and\nallowances paid by such agent or general agent to any agent or general\nagent with respect to such policies or contracts if the agent or general\nagent receiving such payments:\n  (A) receives no company-provided security benefits;\n  (B) does not receive additional compensation as permitted by paragraph\nfour of this subsection, compensation or expense allowance from a paying\nentity that itself is receiving additional compensation from the company\nas permitted by paragraph four of this subsection;\n  (C) receives no prizes or awards from the company; and\n  (D) is not eligible to qualify for attendance at company-sponsored\nagent conventions, conferences, or business meetings based on the amount\nof business produced by such agent or general agent.\n  (12) A company that, with respect to premiums and considerations\nrecorded within a period of twelve consecutive months on policies or\ncontracts written by any agent or broker pursuant to a plan of agent or\nbroker compensation, pays an agent, general agent or broker an amount of\nexpense allowance smaller than the limiting amount defined in paragraph\nfive of subsection (d) of this section, may pay the agent, general agent\nor broker, in any later twelve month period or periods, the amount by\nwhich the amount of expense allowance paid in the prior period was less\nthan the limiting amount, provided such agent, general agent or broker\nstill is engaged in selling or servicing the company's policies or\ncontracts pursuant to one of the company's compensation or expense\nallowance plans. Such subsequent payments may be made in addition to any\nexpense allowance payments for which the agent, general agent or broker\nis otherwise eligible within the limits of paragraph five of subsection\n(d) of this section for such subsequent period.\n  (13) Notwithstanding any limitation or restriction imposed by this\nsection, the superintendent may approve compensation arrangements for\nany company to permit it to compensate its agents or brokers, or any of\nthem, in whole or in part, upon any plan other than those described in\nthis section, provided that the aggregate limits imposed in subsection\n(c) of this section are not exceeded and that the limits in subsection\n(d) of this section are generally observed over policy years and agent\ncareers.\n  (14) A company may, but is not required to, use annualization in\ncalculating any of the limits set forth in this section.\n  (f) (1) Filing requirements for agent and broker compensation plans\nare as follows:\n  (A) A company shall make annual information filings with respect to\nany newly-introduced plans or changes under which the company makes\npayments to agents or brokers if such plans are commission plans for\nwhich the commission percentages are, in all policy or contract years,\nno greater than the commission percentages set forth in paragraphs one,\ntwo, three and four of subsection (d) of this section, expense allowance\nplans other than those meeting the definition of a compensation\narrangement, plans subject to the provisions of paragraph one of\nsubsection (e) of this section under which compensation is not in excess\nof two percent of the fund annually in any of the first four policy or\ncontract years, or plans subject to the provisions of paragraph four of\nsubsection (e) of this section. These filings shall consist of a summary\nof information in enough detail to generally describe the filing\ncontent, and shall be made not later than the last day of February next\nfollowing the year in which such plans were placed in use or changed.\nThe first such filing shall be due not later than the last day of\nFebruary following the end of the year which includes the effective date\nof this section.\n  (B) Filings are required on or before the effective date of any\nchanges to compensation arrangements as defined in this section, or to\nplans described in paragraphs one and two of subsection (g) of this\nsection.  These filings shall consist of a summary of information in\nenough detail to generally describe the filing's contents. A company may\nimplement such compensation arrangements immediately upon filing same.\nIf the superintendent notifies the company within ninety days of the\nreceipt of the filing, that in his opinion the compensation arrangement\ndescribed in such filing is not permitted under the law, and if the\ncompany within sixty days of the superintendent's notice, is not able to\nsatisfy the superintendent's concern, with or without modifying the\nplan, the superintendent may order the company to cease using the plan.\nThe company may request a formal hearing, but the plan that is the\nsubject of the hearing may not be used unless and until permitted as a\nresult of the hearing.\n  (C) Filings for prior approval of the superintendent are required\nbefore plans described in subparagraph (B) of paragraph one,\nsubparagraph (H) of paragraph three and paragraphs twelve and thirteen\nof subsection (e) of this section can be used. The filings will consist\nof descriptive information, including assumptions and techniques when\napplicable, in enough detail for the superintendent's review. Plans not\napproved or disapproved by the superintendent within ninety days\nfollowing their filing will be deemed approved.\n  (D) For plans described under subparagraphs (A), (B), (C) and (D) of\nparagraph two of subsection (e) of this section, if the plan is still to\nbe used six months after the end of the two year period described in\nsubparagraph (B) of paragraph two of subsection (e) of this section, the\ncompany must, within six months after the end of the two year period,\nmake a filing with the superintendent and obtain his approval for the\ncontinued use of the plan.\n  (E) All filings and related correspondence shall be proprietary and\nconfidential, and not disclosed by the superintendent.\nChanges whose effect is to reduce or not increase the compensation\npayable to every individual covered by the arrangement in each and every\nyear, need not be filed with the superintendent, but must be maintained\nin the company's records for at least six years.\n  (2) The annual statement schedule for reporting compliance on an\naggregate basis with subsection (c) of this section shall be signed by a\nknowledgeable officer of the company. The signing of the schedule shall\nbe deemed confirmation by the officer that the officer has performed a\npersonal review of the information included and responses provided to\nthe interrogatories. The signature is to be preceded by the following\nstatement: "I have reviewed the sources of total selling expenses and,\nto the best of my knowledge and belief, on the basis of the projected\nexperience over the next three years based on reasonable assumptions,\nincluding changes currently being contemplated, the company's expenses\nwill not exceed the limit imposed thereon by New York Insurance Law\nSection 4228." If the officer cannot attest to the final clause of this\nstatement, the officer must disclose the year or years in which expenses\nare expected to exceed the limit and the amount by which the limit is\nexpected to be exceeded.\n  (3) Any company that exceeds the limit in subsection (c) of this\nsection in any year shall:\n  (A) File a plan of action with the superintendent by June thirtieth of\nthe following year, which shall:\n  (i) describe actions the company will take promptly to bring expenses\ninto compliance; and\n  (ii) demonstrate how the company will meet the limit in the second\nyear following the year the company first exceeded the limit and will\nremain under the limit in the next subsequent year;\n  (B) Monitor the company's progress under such plan of action and\nimmediately notify the superintendent if at any time it appears that\ncompliance will not be accomplished as planned; and\n  (C) Report the company's interim progress during the period described\nin item (ii) of subparagraph (A) of this paragraph as frequently as the\nsuperintendent may request.\n  (4) (A) If the superintendent finds that any plan of action filed\npursuant to paragraph three of this subsection will not cause the\ncompany to comply with the limit in subsection (c) of this section, or\nthat the company is not itself complying with the provisions of such a\nplan of action, the superintendent may impose controls on the company's\nactivities, such as limitations on recruiting or production incentives,\nor a requirement that projections of experience anticipated for\ncompensation arrangements be submitted to the superintendent prior to\nthe introduction of new, or changes to existing, compensation\narrangements, until such company meets that limit.\n  (B) In addition to the actions set forth in subparagraph (A) of this\nparagraph, and upon finding that a company's actions constitute a\nwillful violation of the provisions of subsection (c) of this section,\nthe superintendent is authorized to impose a fine on the company in an\namount not to exceed the lesser of one million dollars or one-half of\none percent of the company's total selling expense limit for the most\nrecent calendar year, and the superintendent may impose controls as\ndescribed in subparagraph (A) of this paragraph until the completion of\na year in which the company meets the limit in subsection (c) of this\nsection. For purposes of determining the amount of the fine in any one\nproceeding, each day or each act of a continuing willful violation shall\nnot be deemed a separate and distinct violation.\n  (C) Any action under subparagraph (A) of this paragraph or any fine or\npenalty under subparagraph (B) of this paragraph shall be ordered by the\nsuperintendent only after notice and hearing.\n  (5) Any company making one or more payments that exceed any limit in\nsubsection (d) of this section that is unable to recover such excess\npayments shall notify the superintendent within ninety days of the date\nthat it learns or realizes that it exceeded the limit; however, if the\ncompany recovers such excess payments prior to the required notification\ndate, or, for agents or brokers who are no longer appointed with the\ncompany, the company has made reasonable efforts to recover such excess\npayments, it need not make such notification. At that time, the company\nshall report the reason the company exceeded the limit, the number of\nagents and brokers to whom payments in excess of the limit were made,\nand the amount of money paid in excess of the limit, and shall describe\nthe actions the company will take promptly to prevent any further\ninstances of it exceeding this limit.\n  (A) If the superintendent finds that the company is not taking the\nactions it described to prevent any further instances of exceeding a\nlimit in subsection (d) of this section, the superintendent may require\nthat the company file for prior approval future changes to compensation\narrangements and plans, for a period not to exceed one year.\n  (B) In addition to the actions set forth in the preceding\nsubparagraph, and upon finding that a company's actions constitute a\nwillful violation of the provisions of subsection (d) of this section,\nthe superintendent is authorized to impose a fine on the company in an\namount not to exceed the lesser of one thousand dollars per violation or\nthree times the amount of any overpayments that are found to constitute\na willful violation.\n  (C) Any action under subparagraph (A) of this paragraph or any fine or\npenalty under subparagraph (B) of this paragraph shall be ordered by the\nsuperintendent only after notice and hearing.\n  (g) The following rules shall apply, beginning on the effective date\nof this section, for the periods of time indicated in this subsection:\n  (1) With respect to commissions paid by the company to an agent\nsubsequent to the fourth policy or contract year on business in force on\nthe effective date of this subsection, any increase in such commission\nwithin four years of the effective date of this subsection, provided the\nincrease is contingent upon the volume of new business written by such\nagent, in excess of one percent of periodic premiums and considerations\nincurred in each such year with respect to such business in force on the\neffective date of this subsection, shall be treated as expense allowance\npayments in determining the maximum amount of expense allowance that can\nbe paid to such an agent in that year.\n  (2) With respect to fund-based compensation paid by the company to an\nagent subsequent to the fourth policy or contract year on business in\nforce on the effective date of this subsection, any increase in such\nfund-based compensation within four years of the effective date of this\nsubsection, provided the increase is contingent upon the volume of new\nbusiness written by such agent, in excess of three-tenths of one percent\nannually of the funds of such policies or contracts, shall be treated as\nexpense allowance payments in determining the maximum amount of expense\nallowance that can be paid to such agent in that year.\n  (3) Any company that, as of any part of the year before the effective\ndate of this subsection, was using a plan approved by the superintendent\nfor any plan of renewal commissions, including such plan that, in whole\nor in part, conditions the payment of such commissions upon the\nefficiency of service of the agent receiving the commissions or upon the\namount and quality of the business renewed under his supervision, may,\nnotwithstanding the limits of paragraph three of subsection (d) of this\nsection, continue to employ such plan, consistent with the terms of its\napproval, for a period of four years after the effective date of this\nsubsection.\n  (4) A company may, for a period of one year after the effective date\nof this subsection, continue to employ any plan of compensation,\nincluding any expense allowance plan, that it was using as of the\neffective date, unless the superintendent shall determine that such plan\nwas not approvable at the time it was placed in effect.\n  (5) For the first year after the effective date, the total selling\nexpense limit described in subsection (c) of this section shall be\nincreased by five percent of the sum of the amounts determined pursuant\nto subparagraphs (A), (B), (C), (D), (E), (F), (G), (H), and (I) of\nparagraph four of subsection (c) of this section.\n  (h) No company shall offer for sale any life insurance policy form or\nannuity contract form covered by this section or any debit life\ninsurance policy form which shall not appear to be self-supporting on\nreasonable assumptions as to interest, mortality, persistency, taxes,\nagents' and brokers' survival and expenses resulting from the sale of\nthe policy or contract form. For all such forms offered for sale in this\nstate, and for all forms filed for use outside this state by domestic\nlife insurance companies, a statement that the requirements of this\nsubsection have been met, signed by an actuary who is a member in good\nstanding of the American Academy of Actuaries and meets the requirements\nprescribed by the superintendent by regulation shall be submitted with\neach such life insurance policy or annuity contract form filed pursuant\nto paragraph one or six of subsection (b) of section three thousand two\nhundred one of this chapter. A demonstration supporting each such\nstatement, signed by an actuary meeting such qualifications, shall be\nretained in the company's home office, while such form is being offered\nin this state and for a period of six years thereafter and be available\nfor inspection. The superintendent shall promulgate a regulation\nestablishing the guidelines applicable to such demonstration.\n