215 ILCS 5/229.2
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 5/ - Illinois Insurance Code.|Article XIV - Legal Reserve Life Insurance

 (from Ch. 73, par. 841.2)Sec. 229.2. Standard Non-forfeiture Law for Life Insurance.(1) No policy  of life insurance, except as stated in subsection (8),  shall be delivered or issued for delivery in this  State unless it contains in  substance the following provisions or corresponding provisions which in  the opinion of the Director are at least as favorable to the defaulting  or surrendering policyholder and are essentially in compliance with subsection  (7) of this law:(i) That, in the event of default in any premium payment, the  company will grant, upon proper request not later than 60 days after the  due date of the premium in default, a paid-up nonforfeiture  benefit on  a plan stipulated in the policy, effective as of such due date, of such  amount as may be hereinafter specified.  In lieu of such  stipulated paid-up nonforfeiture benefit, the company may substitute, upon  proper request not later than 60 days after the due date of the premium  in default, an actuarially equivalent alternative paid-up nonforfeiture  benefit which provides a greater amount or longer period of death benefits  or, if applicable, a greater amount or earlier payment of endowment benefits.(ii) That, upon surrender of the policy within 60 days after the due  date of any premium payment in default after premiums have been paid for  at least 3 full years in the case of Ordinary insurance or 5 full years  in the case of Industrial insurance, the company will pay, in lieu of  any paid-up nonforfeiture benefit, a cash surrender value of such  amount as may be hereinafter specified.(iii) That a specified paid-up nonforfeiture benefit  shall become  effective as specified in the policy unless the person entitled to make  such election elects another available option not later than 60 days  after the due date of the premium in default.(iv) That, if the policy shall have become paid-up by completion of  all premium payments or if it is continued under any paid-up  nonforfeiture benefit which became effective on or  after the third  policy anniversary in the case of Ordinary insurance or the fifth policy  anniversary in the case of Industrial insurance, the company will pay,  upon surrender of the policy within 30 days after any policy  anniversary, a cash surrender value of such amount as may be hereinafter  specified.(v) In the case of policies which cause on a basis guaranteed in the  policy unscheduled changes in benefits or premiums, or which provide an  option for changes in benefits or premiums other than a change to a new  policy, a statement of the mortality table, interest rate, and method used  in calculating cash surrender values and the paid-up nonforfeiture benefits  available under the policy.  In the case of all other policies,  a statement of the mortality table and interest rate used in  calculating the cash surrender values and the paid-up nonforfeiture  benefits available under the policy, together with a table showing the  cash surrender value, if any, and paid-up nonforfeiture  benefit, if  any, available under the policy on each policy anniversary either during  the first 20 policy years or during the term of the policy, whichever is  shorter, such values and benefits to be calculated upon the assumption  that there are no dividends or paid-up additions credited to the policy  and that there is no indebtedness to the company on the policy.(vi) A statement that the cash surrender values and the paid-up  nonforfeiture benefits available under the policy  are not less than the  minimum values and benefits required by or pursuant to the insurance law  of the state in which the policy is delivered; an explanation of the  manner in which the cash surrender values and the paid-up nonforfeiture  benefits are altered by the existence of any paid-up additions credited  to the policy or any indebtedness to the company on the policy; if a  detailed statement of the method of computation of the values and  benefits shown in the policy is not stated therein, a statement that  such method of computation has been filed with the insurance supervisory  official of the state in which the policy is delivered; and a statement  of the method to be used in calculating the cash surrender value and  paid-up nonforfeiture benefit available under the  policy on any policy  anniversary beyond the last anniversary for which such values and  benefits are consecutively shown in the policy.Any of the foregoing provisions or portions thereof not applicable by  reason of the plan of insurance may, to the extent inapplicable, be  omitted from the policy.The company shall reserve the right to defer the payment of any cash  surrender value for a period of 6 months after demand therefor with  surrender of the policy.(2) (i) Any cash surrender value available under the policy in the event  of default in a premium payment due on any policy anniversary, whether  or not required by subsection (1), shall be an amount not less than the  excess, if any, of the present value, on such anniversary, of the future  guaranteed benefits which would have been provided for by the policy,  including any existing paid-up additions, if there had been no default,  over the sum of (i) the then present value of the adjusted premiums as  defined in subsections 4, 4(a), 4(b) and 4(c), corresponding  to premiums which  would have fallen due on and after such anniversary, and (ii) the amount  of any indebtedness to the company on the policy.(ii) For any policy issued on or after the operative date of subsection  4(c), which provides supplemental life insurance or annuity benefits at  the option of the insured for an identifiable additional premium by rider  or supplemental policy provision,  the cash surrender value shall be an amount not less than the sum of the  cash surrender value as determined in paragraph (i) for an otherwise similar  policy issued at the same age without such rider or supplemental policy  provision and the cash surrender value as determined in such paragraph for  a policy which provides only the benefits otherwise provided by such rider  or supplemental policy provision.(iii) For any family policy issued on or after the operative date of subsection  4(c), which defines a primary insured and provides term insurance on the  life of the spouse of the primary insured expiring before the spouse attains  age 71, the cash surrender value shall be an amount not less than the sum  of the cash surrender value as determined in paragraph (i) for an otherwise  similar policy issued at the same age without such term insurance on the  life of the spouse and the cash surrender value as determined in such paragraph  for a policy which provides only the benefits otherwise provided by such  term insurance on the life of the spouse.(iv) Any cash surrender  value available within 30 days after any policy anniversary under any  policy paid up by completion of all premium payments or any policy  continued under any paid-up nonforfeiture benefit, whether or not  required by subsection (1), shall be an amount not less than the present  value, on such anniversary, of the future guaranteed benefits provided  for by the policy, including any existing paid-up additions, decreased  by any indebtedness to the company on the policy.(3) Any paid-up nonforfeiture benefit available  under the policy in  the event of default in a premium payment due on any policy anniversary  shall be such that its present value as of such anniversary shall be at  least equal to the cash surrender value then provided for by the policy,  or if none is provided for, that cash surrender value which would have  been required by this section in the absence of the condition that  premiums shall have been paid for at least a specified period.(4) This subsection (4) shall not apply to policies issued on or after  the operative date of subsection (4c). Except as provided in the third  paragraph of this subsection,  the adjusted premiums for any policy shall be calculated on an annual  basis and shall be such uniform percentage of the respective premium  specified in the policy for each policy year, excluding any extra  premiums charged because of impairments or special hazards, that the  present value, at the date of issue of the policy, of all such adjusted  premiums shall be equal to the sum of (i) the then present value of the  future guaranteed benefits provided for by the policy; (ii) 2% of the  amount of insurance, if the insurance be uniform in amount, or of the  equivalent uniform amount, as hereinafter defined, if the amount of  insurance varies with duration of the policy; (iii) 40% of the adjusted  premium for the first policy year; (iv) 25% of either the adjusted  premium for the first policy year or the adjusted premium for a whole  life policy of the same uniform or equivalent uniform amount with  uniform premiums for the whole of life issued at the same age for the  same amount of insurance, whichever is less. Provided, however, that in  applying the percentages specified in (iii) and (iv) above, no adjusted  premium shall be deemed to exceed 4% of the amount of insurance or  uniform amount equivalent thereto. The date of issue of a policy for the  purpose of this subsection shall be the date as of which the rated age  of the insured is determined.In the case of a policy providing an amount of insurance varying with  duration of the policy, the equivalent uniform amount thereof for the  purpose of this subsection shall be deemed to be the level amount of  insurance, provided by an otherwise similar policy, containing the same  endowment benefit or benefits, if any, issued at the same age and for  the same term, the amount of which does not vary with duration and the  benefits under which have the same present value at the inception of the  insurance as  the benefits under the policy; provided, however, that in the case of a  policy providing a varying amount of insurance issued on the life of a  child under age 10, the equivalent uniform amount may be computed as  though the amount of insurance provided by the policy prior to the  attainment of age 10 were the amount provided by such policy at age 10.The adjusted premiums for any policy providing term insurance  benefits by rider or supplemental policy provision shall be equal to (a)  the adjusted premiums for an otherwise similar policy issued at the same  age without such term insurance benefits, increased, during the period  for which premiums for such term insurance benefits are payable, by (b)  the adjusted premiums for such term insurance, the foregoing items (a)  and (b) being calculated separately and as specified in the first 2  paragraphs of this subsection except that, for the purposes of (ii),  (iii) and (iv) of the first such paragraph, the amount of insurance or  equivalent uniform amount of insurance used in the calculation of the  adjusted premiums referred to in (b) shall be equal to the excess of the  corresponding amount determined for the entire policy over the amount  used in the calculation of the adjusted premiums in (a).Except as otherwise provided in subsections (4a) and (4b), all  adjusted premiums and present values referred to in this section shall  for all policies of Ordinary insurance be calculated on the basis of the  Commissioners 1941 Standard Ordinary Mortality Table, provided that for  any category of Ordinary insurance issued on female risks adjusted  premiums and present values may be calculated according to an age not  more than 3 years younger than the actual age of the insured, and such  calculations for all policies of Industrial insurance shall be made on  the basis of the 1941 Standard Industrial Mortality Table. All  calculations shall be made on the basis of the rate of interest, not  exceeding 3 1/2% per annum, specified in the policy for calculating cash  surrender values and paid-up nonforfeiture benefits.  Provided, however,  that in calculating the present value of any paid-up term insurance with  accompanying pure endowment, if any, offered as a nonforfeiture  benefit, the rates of mortality assumed may be not more than 130% of the  rates of mortality according to such applicable table. Provided,  further, that for insurance issued on a substandard basis, the  calculation of any such adjusted premiums and present values may be  based on such other table of mortality as may be specified by the  company and approved by the Director.(4a) This subsection (4a) shall not apply to Ordinary policies issued  on or after the operative date of subsection (4c). In the case of Ordinary  policies issued on or after the  operative date of this subsection (4a) as defined herein, all adjusted  premiums and present values referred to in this Section shall be  calculated on the basis of the Commissioners 1958 Standard Ordinary  Mortality Table and the rate of interest specified in the policy for calculating  cash surrender values and  paid-up nonforfeiture benefits, provided that such  rate of interest shall not exceed 3 1/2% per annum except that a rate of  interest not exceeding 5 1/2% per annum may be used for policies issued  on or after September 8, 1977, except that for any single premium  whole life or endowment insurance policy a rate of interest not exceeding  6 1/2% per annum may be used and provided that for any category of  Ordinary insurance issued on female risks, adjusted premiums and present  values may be calculated according to an age not more than 6 years  younger than the actual age of the insured. Provided, however, that in  calculating the present value of any paid-up term insurance with  accompanying pure endowment, if any, offered as a nonforfeiture  benefit, the rates of mortality assumed may be not more than those shown  in the Commissioners 1958 Extended Term Insurance Table. Provided,  however, that for insurance issued on a substandard basis, the  calculation for any such adjusted premiums and present values may be  based on such other table of mortality as may be specified by the  company and approved by the Director. After the effective date of this  subsection (4a), any company may file with the Director written notice  of its election to comply with the provisions of this subsection after a  specified date before January 1, 1966. After the filing of such notice,  then upon such specified date (which shall be the operative date of this  subsection for such company), this subsection shall become operative  with respect to the Ordinary policies thereafter issued by such company.  If a company makes no such election, the operative date of this  subsection for such company shall be January 1, 1966.(4b) This subsection (4b) shall not apply to Industrial policies issued  on or after the operative date of subsection (4c). In the case of Industrial  policies issued on or after the  operative date of this subsection (4b) as defined herein, all adjusted  premiums and present values referred to in this Section shall be  calculated on the basis of the Commissioners 1961 Standard Industrial  Mortality Table and the rate of interest specified in the policy for calculating  cash surrender values and  paid-up nonforfeiture benefits, provided that such  rate of interest shall not exceed 3 1/2% per annum except that a rate of  interest not exceeding  5 1/2% per annum may be used for policies issued on or after September  8, 1977, except  that for any single premium whole life or endowment insurance policy a rate  of interest not exceeding 6 1/2% per annum may be used.  Provided, however,  that in calculating  the present value of any paid-up term insurance with accompanying pure  endowment, if any, offered as a nonforfeiture benefit,  the rates of  mortality assumed may be not more than those shown in the Commissioners  1961 Industrial Extended Term Insurance Table. Provided, further, that  for insurance issued on a substandard basis, the calculations of any  such adjusted premiums and present values may be based on such other  table of mortality as may be specified by the company and approved by  the Director. After the effective date of this subsection (4b), any  company may file with the Director a written notice of its election to  comply with the provisions of this subsection after a specified date  before January 1, 1968. After the filing of such notice, then upon such  specified date (which shall be the operative date of this subsection for  such company), this subsection shall become operative with respect to  the Industrial policies thereafter issued by such company. If a company  makes no such election, the operative date of this subsection for such  company shall be January 1, 1968.(4c)(a) This subsection shall apply to all policies issued on or after  its operative date.  Except as provided in paragraph (g), the adjusted premiums  for any policy shall be calculated on an annual basis and shall be such  uniform percentage of the respective premiums specified in the policy for  each policy year, excluding amounts payable as extra premiums to cover impairments  or special hazards and any uniform annual contract charge or policy fee  specified in the policy in a statement of the method to be used in calculating  the cash surrender value and paid-up nonforfeiture benefits of the policy,  that the present value, at the date of issue of the policy, of all adjusted  premiums shall be equal to the sum of (i) the then present value of the  future guaranteed benefits provided for by the policy; (ii) 1% of either  the amount of insurance, if the insurance is uniform in amount, or the average  amount of insurance at the beginning of each of the first 10 policy years;  and (iii) 125% of the nonforfeiture net level premium as hereinafter defined.  In applying the percentage specified in (iii), however,  no nonforfeiture net level premium shall exceed 4% of either the amount  of insurance, if the insurance is uniform in amount, or the average amount  of insurance at the beginning of each of the first 10 policy years.  The  date of issue of a policy for the purpose of this subsection is the date  as of which the rated age of the insured is determined.(b) The nonforfeiture net level premium equals the present value, at the  date of issue of the policy, of the guaranteed benefits provided for by  the policy divided by the present value, at the date of issue of the policy,  of an annuity of one per annum payable on the date of issue of the policy  and on each anniversary of such policy on which a premium falls due.(c) In the case of a policy which causes, on a basis guaranteed in such  policy, unscheduled changes in benefits or premiums, or which provides an  option for changes in benefits or premiums other than a change to a new  policy, adjusted premiums and present values shall initially be calculated  on the assumption that future benefits and premiums do not change from those  stipulated at the date of issue of such policy.  At the time of any such  change in the benefits or premiums, the future adjusted premiums, nonforfeiture  net level premiums and present values shall be recalculated on the assumption  that future benefits and premiums do not change from those stipulated by  such policy immediately after the change.(d) Except as otherwise provided in paragraph (g), the recalculated future  adjusted premiums for any policy shall be such uniform percentage of the  respective future premiums specified in the policy for each policy year,  excluding amounts payable as extra premiums to cover impairments and special  hazards and any uniform annual contract charge or policy fee specified in  the policy in a statement of the method to be used in calculating the cash  surrender values and paid-up nonforfeiture benefits, that the present value,  at the time of change to the newly defined benefits or premiums, of all  such future adjusted premiums shall be equal to the excess of (A) the sum  of (i) the then present value of the then future guaranteed benefits provided  for by the policy and (ii) the additional expense allowance, if any, over  (B) the then cash surrender value, if any, or present value of any paid-up  nonforfeiture benefit under the policy.(e) The additional expense allowance at the time of the change to the  newly defined benefits or premiums shall be the sum of  (i) 1% of the excess, if positive, of the average amount of insurance at  the beginning of each of the first 10 policy years subsequent to the change  over the average amount of insurance prior to the change at the beginning  of each of the first 10 policy years subsequent to the time of the most  recent previous change, or, if there has been no previous change, the date  of issue of the policy; and (ii) 125% of the increase, if positive, in  the nonforfeiture net level premium.(f) The recalculated nonforfeiture net level premium equals the result  obtained by dividing X by Y, where(i) X equals the sum of(A) the nonforfeiture net level premium applicable prior to the change  times the present value of an annuity of one per annum payable on each anniversary  of the policy on or subsequent to the date of the change on which a premium  would have fallen due had the change not occurred, and(B) the present value of the increase in future guaranteed benefits provided  for by the policy; and(ii) Y equals the present value of an annuity of one per annum payable  on each anniversary of the policy on or subsequent to the date of change  on which a premium falls due.(g) Notwithstanding any other provisions of this subsection to the contrary,  in the case of a policy issued on a substandard basis which provides reduced  graded amounts of insurance so that, in each policy year, such policy has  the same tabular mortality cost as an otherwise similar policy issued on  the standard basis which provides higher uniform amounts of insurance, adjusted  premiums and present values for such substandard policy may be calculated  as if it were issued to provide such higher uniform amounts of insurance  on the standard basis.(h) All adjusted premiums and present values referred to in this Section  shall for all policies of ordinary insurance be calculated on the basis  of the Commissioners 1980 Standard Ordinary Mortality Table or, at the election  of the company for any one or more specified plans of life  insurance, the Commissioners 1980 Standard Ordinary Mortality Table with  Ten-Year Select Mortality Factors.  All adjusted premiums and present values  referred to in this Section shall for all policies of Industrial insurance  be calculated on the basis of the Commissioners 1961 Standard Industrial  Mortality Table. All adjusted premiums and present values referred to in  this Section for all policies issued in a particular calendar year shall  be calculated on the basis of a rate of interest not exceeding  the nonforfeiture interest rate as defined in this subsection for policies  issued in that calendar year. The provisions of this paragraph are subject  to the provisions set forth in subparagraphs (i) through (vii).(i) At the option of the company, calculations for all policies issued  in a particular calendar year may be made on the basis of a rate of interest  not exceeding the nonforfeiture interest rate, as defined in this subsection,  for policies issued in the immediately preceding calendar year.(ii) Under any paid-up nonforfeiture benefit, including any paid-up dividend  additions, any cash surrender value available, whether or not required by  subsection (1), shall be calculated on the basis of the mortality table  and rate of interest used in determining the amount of such paid-up nonforfeiture  benefit and paid-up dividend additions, if any.(iii) A company may calculate the amount of any guaranteed paid-up nonforfeiture  benefit, including any paid-up additions under the policy, on the basis  of an interest rate no lower than that specified in the policy for calculating  cash surrender values.(iv) In calculating the present value of any paid-up term insurance with  an accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the rates of mortality assumed may be not more than those shown in the Commissioners  1980 Extended Term Insurance Table for policies of ordinary insurance and  not more than the Commissioner 1961 Industrial Extended Term Insurance Table  for policies of industrial insurance.(v) For insurance issued on a substandard basis, the calculation of any  such adjusted premiums and present values may be based on appropriated modifications  of the aforementioned tables.(vi) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Mortality Table adopted after 1980 by the National Association  of Insurance Commissioners and approved by regulations promulgated  by the Director for use in determining the minimum nonforfeiture standard  may be substituted for the Commissioners 1980 Standard Ordinary Mortality  Table with or without Ten-Year Select Mortality Factors or for the Commissioners  1980 Extended Term Insurance Table.For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Ordinary Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Ordinary Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.(vii) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Industrial Mortality Table adopted after 1980 by the National  Association of Insurance Commissioners and approved by regulations promulgated  by the Director for use in determining the minimum nonforfeiture standard  may be substituted for the Commissioners 1961 Standard Industrial Mortality  Table or the Commissioners 1961 Industrial Extended Term Insurance Table.For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Industrial Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Industrial Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.(i) The nonforfeiture interest rate is defined as follows:(i) For policies issued prior to the operative date     of the Valuation Manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125% of the calendar year statutory valuation interest rate for such policy, as defined in the Standard Valuation Law, rounded to the nearest .25%, provided, however, that the nonforfeiture interest rate shall not be less than 4.00%.(ii) For policies issued on and after the operative     date of the Valuation Manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the Valuation Manual.(j) Notwithstanding any other provision in this Code to the contrary,  any refiling of nonforfeiture values or their methods of computation for  any previously approved policy form which involves only a change in the  interest rate or mortality table used to compute nonforfeiture values shall  not require refiling of any other provisions of that policy form.(k) After the effective date of this subsection, any company may, with  respect to any category of insurance, file with the Director a written notice  of its election to comply with the provisions of this subsection after a  specified date before January 1, 1989.  That date  shall be the operative date of this subsection for that category of insurance  for such company. If  a company makes no such election, the operative date of this subsection  for that category of insurance issued by such company shall be January 1, 1989.(5) In the case of any plan of life insurance which provides for future  premium determination, the amounts of which are to be determined by the  insurance company based on then estimates of future experience, or in the  case of any plan of life insurance which is of such a nature that minimum  values cannot be determined by the methods described in subsections (1),  (2), (3), (4), (4a), (4b) or (4c), then(a) the Director shall satisfy himself that the benefits provided under  such plan are substantially as favorable to policyholders and insured parties  as the minimum benefits otherwise required by subsections (1), (2), (3),  (4), (4a), (4b) or (4c);(b) the Director shall satisfy himself that the benefits and the pattern  of premiums of that plan are not such as to mislead prospective policyholders  or insured parties; and(c) the cash surrender values and paid-up nonforfeiture benefits provided  by such plan shall not be less than the minimum values and benefits computed  by a method consistent with the principles of this Standard Nonforfeiture  Law for Life Insurance, as determined by regulations promulgated by the Director.(6) Any cash surrender value and any paid-up nonforfeiture benefit,  available under the policy in the event of default in a premium payment  due at any time other than on the policy anniversary, shall be  calculated with allowance for the lapse of time and the payment of  fractional premiums beyond the last preceding policy anniversary. All  values referred to in subsections (2), (3), (4), (4a), (4b)  and (4c) may be  calculated upon the assumption that any death benefit is payable at the  end of the policy year of death. The net value of any paid-up additions,  other than paid-up term additions, shall be not less than the amounts  used to provide such additions. Notwithstanding the provisions of  subsection (2), additional benefits payable (i) in the event of death or  dismemberment by accident or accidental means, (ii) in the event of  total and permanent disability, (iii) as reversionary annuity or  deferred reversionary annuity benefits, (iv) as term insurance benefits  provided by a rider or supplemental policy provision to which, if issued  as a separate policy, this section would not apply, (v) as term  insurance on the life of a child or on the lives of children provided in  a policy on the life of a parent of the child, if such term insurance  expires before the child's age is 26, is uniform in amount after the  child's age is one, and has not become paid-up by reason of the death of  a parent of the child, and (vi) as other policy benefits additional to  life insurance and endowment benefits, and premiums for all such  additional benefits, shall be disregarded in ascertaining cash surrender  values and nonforfeiture benefits required by this section, and no such  additional benefits shall be required to be included in any paid-up  nonforfeiture benefits.(7) This subsection shall apply to all policies issued on or after January  1, 1987.  Any cash surrender value available under the policy in the event  of default in a premium payment due on any policy anniversary shall be in  an amount which does not differ by more than .2% of either the amount of  insurance if the insurance is uniform in amount, or the average amount of  insurance at the beginning of each of the first 10 policy years, from the  sum of (a) the greater of zero and the basic cash value hereinafter specified  and (b) the present value of any existing paid-up additions less the amount  of any indebtedness to the company under the policy.The basic cash value equals the present value, on such anniversary, of  the future guaranteed benefits which would have been provided for by the  policy, excluding any existing paid-up additions and before deduction of  any indebtedness to the company, if there had been no default, less the  then present value of the nonforfeiture factors, as hereinafter defined,  corresponding to premiums which would have fallen due on and after such  anniversary.  The effects on the basic cash value of supplemental life insurance  or annuity benefits or of family coverage, as described in subsection (2)  or (4), whichever is applicable, shall, however, be the same as are the  effects specified in subsection (2) or (4), whichever is applicable, on  the cash surrender values defined in that subsection.The nonforfeiture factor for each policy year equals a percentage of the  adjusted premium for the policy year, as defined in subsection (4) or (4c),  whichever is applicable.  Except as is required by the next succeeding sentence  of this paragraph, such percentage(a) shall be the same percentage for each policy year between the second  policy anniversary and the later of (i) the fifth policy anniversary and  (ii) the first policy anniversary at which there is available under the  policy a cash surrender value in an amount, before including any paid-up  additions and before deducting any indebtedness, of at least .2% of either  the amount of insurance, if the insurance is uniform in amount, or the average  amount of insurance at the beginning of each of the first 10 policy years; and(b) shall be such that no percentage after the later of the 2 policy anniversaries  specified in the preceding item (a) may apply to fewer than 5 consecutive policy years.No basic cash value may be less than the value which would be obtained  if the adjusted premiums for the policy, as defined in subsection (4) or  (4c), whichever is applicable, were substituted for the nonforfeiture factors  in the calculation of the basic cash value.All adjusted premiums and present values referred to in this subsection  shall for a particular policy be calculated on the same mortality and interest  bases as those used in accordance with the other  subsections of this law.  The cash surrender values referred to in this  subsection shall include any endowment benefits provided for by the policy.Any cash surrender value available other than in the event of default in  a premium payment due on a policy anniversary, and the amount of any paid-up  nonforfeiture benefit available under the policy in the event of default  in a premium payment shall be determined in manners consistent with the  manners specified for determining the analogous minimum amounts in subsections  1, 2, 3, 4c, and 6.  The amounts of any cash surrender values and of any  paid-up nonforfeiture benefits granted in connection with additional benefits  such as those listed as items (i) through (vi) in subsection (6) shall conform  with the principles of this subsection (7).(8) This Section shall not apply to any of the following:(a) reinsurance,(b) group insurance,(c) a pure endowment,(d) an annuity or reversionary annuity contract,(e) a term policy of uniform amount, which provides no guaranteed nonforfeiture  or endowment benefits, or renewal thereof, of 20 years or  less expiring before age 71, for which uniform premiums are payable  during the entire term of the policy,(f) a term policy of  decreasing amount, which provides no guaranteed nonforfeiture or endowment  benefits, on which each adjusted premium, calculated as  specified in subsections (4), (4a), (4b) and (4c), is less  than the adjusted  premium so calculated, on a term policy of uniform  amount, or renewal thereof, which provides no guaranteed nonforfeiture or  endowment benefits, issued at the same  age and for the same initial amount of insurance and for a term of 20  years or less expiring before age 71, for which uniform premiums are payable  during the entire term of the policy,(g) a policy, which provides no guaranteed nonforfeiture or endowment  benefits, for which no cash surrender value, if any, or present value of  any paid-up nonforfeiture benefit, at the beginning of any policy year,  calculated as specified in subsections (2), (3), (4), (4a), (4b) and (4c),  exceeds 2.5% of the amount of insurance at the beginning of the same policy year,(h) any policy  which shall be delivered outside this State through an agent or other  representative of the company issuing the policy.For purposes of determining the applicability of this Section, the age  of expiry for a joint term life insurance policy shall be the age of expiry  of the oldest life.(9) For the purposes of this Section:"Operative date of the Valuation Manual" means the January 1 of the first calendar year that the Valuation Manual is effective."Valuation Manual" has the same meaning as set forth in Section 223 of this Code. (Source: P.A. 99-162, eff. 1-1-16.)