NY Ins L § 4228 (2021)
2021 New York Laws ISC - Insurance Article 42 - Life Insurance Companies and Accident and Health Insurance Companies and Legal Services Insurance Companies 4228 - Life Insurance and Annuity Business; Limitations of Expenses.

§  4228. Life insurance and annuity business; limitations of expenses. (a) The provisions of this section shall  apply  to  all  domestic  life insurance  companies  and  to  all  foreign  and  alien  life  insurance companies doing business in this state, but not the  alien  branches  of such  companies  or  such  companies'  subsidiaries not licensed in this state to do an insurance business, except as provided in subsection  (h) of this section, engaged in the direct sale of individual life insurance policies  or  individual  annuity  contracts, hereinafter referred to as "companies". Except as provided in subsection (h) of this  section,  the provisions hereof shall apply only to individual life insurance policies and  riders  and  individual  annuity contracts and riders and shall not apply to fraternal benefit societies nor to the following categories  of insurance: (1) accident and health insurance having the meaning ascribed in section one thousand one hundred thirteen of this chapter, group life insurance  having  the  meaning  ascribed  in  section four thousand two hundred sixteen of this article,  group  annuity  contracts  having  the meaning  ascribed  in  section four thousand two hundred thirty-eight of this article, and  credit  insurance  having  the  meaning  ascribed  in section  four thousand two hundred sixteen and four thousand two hundred thirty-five of  this  article;  (2)  debit  life  insurance,  except  as otherwise  expressly  provided  herein;  or  (3)  policies and contracts issued for delivery outside  the  United  States  and  its  possessions. Neither  these categories of insurance nor reinsurance either assumed or ceded will be included in any calculations or tests  conducted  for  any purpose  in connection with this section or any regulations or schedules promulgated hereunder.  (b) For purposes of this section:  (1) "Advance" and "loan" shall have the following meanings:  "advance" means  any  amount  paid  to an agent, up to an amount not exceeding the value of three months' expected compensation payments, that is  expected to  be repaid within the next twelve months through reductions in future compensation. "Loan" means any  payment  to  an  agent,  other  than  an advance,  that  is  expected  to  be repaid from future compensation. An amount paid  to  an  agent  in  an  annualization  as  defined  in  this subsection is not an advance or loan.  (2)  "Agent"  shall  have the meaning ascribed in section two thousand one hundred one of this chapter and  "broker"  shall  have  the  meaning ascribed in section two thousand one hundred four of this chapter.  (3)  "Annualization"  means:  with  respect  to any amounts paid to an agent or broker, the paying or crediting to an agent or  broker  at  the beginning  of  a policy year compensation or other payments based on all or a portion of the amount of premiums scheduled to be received  by  the company   with  respect  to  such  policy  year;  with  respect  to  the calculation of any limits of  payment  or  expense  prescribed  in  this section, the calculation of such limit is based on the assumption that a company receives, at the beginning of a policy year, all or a portion of the  amount  of  premiums  scheduled  to be received by the company with respect to such policy year.  (4) "Benchmark gross level premium", is calculated  as  of  the  issue date  of a policy, or as of any subsequent date on which the face amount of the policy, or the types or amounts of supplemental benefits provided under the policy, are increased, whether  by  addition  of  a  rider  or otherwise, at the request of the policy owner. The benchmark gross level premium  is  calculated  as  one  hundred twenty-five percent of the net level premium for a whole life  insurance  policy  with  level  premiums payable  during  the  life of the insured, with payments starting on the same date and for the same face amount  as  the  policy  for  which  the benchmark  gross  level  premium  is  being computed, based on three and  one-half percent interest and  male  aggregate  (smoker  and  non-smoker combined),   Commissioners   1980  Standard  Ordinary  Mortality  Table, ultimate mortality, age last birthday and  immediate  payment  of  death claims, further adjusted as follows:  (A)  An  amount of one hundred dollars shall be added to the benchmark gross level premium for a policy; however,  this  amount  shall  not  be added to the benchmark gross level premium for a rider.  (B)   The  benchmark  gross  level  premium  for  a  policy  providing supplemental insurance benefits, whether by rider or otherwise, shall be increased (i) if the company makes an additional premium charge for such benefits, by the amount of such premium charge, and (ii) if the  company does  not  make  an  additional premium charge for such benefits, by one hundred twenty-five percent of the amount of the levelized  annual  cost of  insurance  charge  for such benefits; such levelized charge is to be based on the actual schedule of charges applicable to the policy at  the time  with respect to which the calculation is made, levelized using the mortality table and interest rate defined in this section.  (C) The benchmark gross level  premium  for  a  policy  in  which  the guaranteed  table  of  mortality  charges exceeds the Commissioners 1980 Standard Ordinary Mortality Table for male smokers for age last birthday may be appropriately adjusted to reflect any excess of the amount of the benchmark gross level premium computed based  on  the  actual  mortality guarantees of the policy over the benchmark gross level premium computed based  on  the  Commissioners 1980 Standard Ordinary Mortality Table for male smokers for age last birthday; however, if  the  company  makes  an additional premium charge because the insured is a substandard risk, the company  may,  instead, increase the amount of the benchmark gross level premium by the amount of such charge.  (D) The benchmark gross level premium  for  a  policy  providing  life insurance  benefits, other than supplemental benefits, for more than one person shall be adjusted to reflect the joint mortality  status  of  the insured lives, consistent with the nature of the life insurance coverage provided  by  the  policy,  using the mortality table and interest rates defined in this section.  (E) The benchmark gross level premium for a policy, including  all  of its riders and benefits, is the sum of the benchmark gross level premium for  the  policy  and  the benchmark gross level premium for each rider, each adjusted as provided in subparagraphs (A), (B), (C) and (D) of this paragraph.  (F) The benchmark gross level  premium  for  a  policy  with  premiums payable more frequently than annually shall be the benchmark gross level premium  based  on  annual  premium  payments, adjusted by the company's actual adjustment factors for the actual mode of premium payment.  (5)  "Commission"  means  a  payment  to  an  agent  or   broker,   as compensation  for  the sale or service of a specific policy or contract, based upon a percentage of the premium or consideration for that  policy or contract.  (6)  A  "compensation  arrangement" means any arrangement by a company for compensating its agents or brokers on business that includes any  of the following:  (A)  A  commission  that,  for  any  policy  or  contract in policy or contract years  two  through  four,  exceeds  the  limit  set  forth  in paragraph two, three or four, whichever is applicable, of subsection (d) of  this  section  for  that year or, with respect to any year after the fourth policy or contract year that  exceeds  the  limit  set  forth  in paragraph  two,  three or four of subsection (d) of this section for the fourth policy or contract year;  (B) A fund-based compensation arrangement  that,  for  any  policy  or contract  year,  exceeds  two percent of the fund annually in any of the policy's or contract's first four years;  (C)  Any  plan  providing for a training allowance subsidy pursuant to the provisions of subparagraphs (A) through (F) of  paragraph  three  of subsection (e) of this section;  (D)   Any   plan   of   agent   or   broker  compensation  other  than commission-based and fund-based compensation pursuant to  paragraph  two of subsection (e) of this section; and  (E) Any plan involving the payment of an expense allowance, other than plans  under  which  the  company  provides no goods and services to the recipient of the expense allowance payments and  the  expense  allowance payments  are described as percentages of qualifying first year premium, excess premium, single consideration, or periodic consideration, or  any of   them,  and  none  of  the  percentages  exceeds  the  corresponding percentages set forth in  paragraph  five  of  subsection  (d)  of  this section.  (7)  "Contract"  means  an  individual  annuity contract. A rider to a contract will be treated as  a  separate  policy  or  contract  for  all purposes  hereunder,  unless otherwise specified. The determination of a policy or contract type is done separately for each policy, contract and rider.  (8) "Debit life insurance" means  all  life  insurance  with  premiums payable  monthly  or  more frequently, normally collectible by an agency force organized  to  make  systematic  house  to  house  collections  of premiums.  (9)  "Effective  date"  means the first day of January next succeeding the date on which this section shall have become a law.  (10) "Excess premiums" are premiums in  the  first  policy  year  that exceed the benchmark gross level premium.  (11) "Expense allowance" is a payment to an agent or broker in lieu of reimbursement  for  expenses  incurred  in  connection  with the sale or servicing of the company's policies or contracts.  (12) "Filing" shall mean the delivery of information by a  company  to the  superintendent  or  his  designee  concerning  plans  under which a company makes payments to its agents and to brokers.  (13) "Fund" is a policy or contract accumulation account or any  other similar   policy   or  contract  value  at  a  particular  time,  before application of any surrender charges and market  value  adjustments,  if any, whether or not it is immediately available to the owner of a policy or  contract. At the option of the company "fund" may mean the company's statutory reserve for the policy or contract.  (14) "General agent" is an  agent  who  is  appointed  directly  by  a company, other than a local salaried representative of such company, who recruits,  trains  or  supervises  other  agents or who has the right to appoint agents.  (15) "Goods and services" as used in this section shall refer  to  (A) reimbursements  to  an  agent  or  broker for vouchered expenses made or incurred in connection with the production or servicing of  policies  or contracts  on  behalf  of  the  company and (B) similar expenses assumed directly by the company. These expenses do not include  those  that  the company  incurs for the recruitment, training, supervision or management of such agent, nor the cost of security benefits provided to such agent, nor those expenses  described  in  item  (iv)  of  subparagraph  (D)  of paragraph two of subsection (c) of this section.  (16)  A "periodic premium policy" or "periodic consideration contract" is any policy or contract, respectively, other  than  a  single  premium  policy  or  single consideration contract. The determination of a policy or contract type is done separately for each policy or contract.  (17)  "Periodic  premiums"  and "periodic considerations" are premiums and considerations, respectively, recorded by a company for a policy  or contract other than single premiums and single considerations.  (18)  "Policy" means an individual life insurance policy. A rider to a policy will be treated as a separate policy or contract for all purposes hereunder, unless otherwise specified. The determination of a policy  or contract type is done separately for each policy, contract and rider.  (19)  "Premiums"  and  "considerations" include all amounts (including amounts for supplementary benefits) recorded for a policy  or  contract, except dividends applied to purchase additional insurance under the same policy, as well as amounts meeting the requirements of subparagraphs (B) and  (C)  of  paragraph  twenty-five  of  this  subsection. Premiums and considerations include all amounts  so  recorded  that  arise  from  the application of values inherent in a policy or contract, such as dividend deposits,  any  excess  of  actual  policy  or contract cash values over guaranteed cash values, dividend additions, premiums  paid  in  advance, and policy loans.  (20)  A  "qualified  annuity  contract"  is  an annuity defined by the Internal Revenue Code sections 401, 403 or 457, and  any  other  similar annuities defined by the superintendent.  (21)  "Qualifying first year premiums" are premiums under each policy, including all of its riders and benefits, which are:  (A) in the first policy year, premiums recorded, including the  entire amount of a premium recorded in the first policy year of a conversion of a  term  policy or rider to a permanent policy up to the benchmark gross level premium for the policy, including all of its riders and  benefits; or  (B) in any year after the first, premiums recorded up to the benchmark gross level premium for the current face amount of the policy, including all of its riders and benefits, less the total previous qualifying first year premiums, but not less than zero; or  (C)  all  premiums recorded up to the benchmark gross level premium to renew a policy on more favorable terms  than  those  guaranteed  in  the policy  when  such  renewal  is  subject  to  new underwriting and a new contestable period.  (22) "Recorded" shall mean the crediting of an amount to the company's premium  or  consideration  accounts  for  purposes  of  the   company's statutory annual statement.  (23)   "Renewal   premiums"  are  all  periodic  premiums  other  than qualifying first year premiums or excess premiums.  (24) A "security benefit" is any benefit provided to an agent that  is both  (A)  provided  under  an  employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§  1001,  et seq.  and  (B)  either (i) a benefit under an employee benefit plan that qualifies as such under the relevant sections of  the  Internal  Revenue Code  and  regulations thereunder that require compliance with standards of non-discrimination in benefit coverage and  eligibility,  or  (ii)  a benefit  that  does  not  permit an agent to obtain a cash payment other than  at  the  time  of  death,  permanent  and  total  disability,   or retirement.  "Permanent  and total disability" as used herein shall mean any condition caused by injury or disease that prevents the  agent  from performing  substantially  all  of  the  work  normally performed by the agent. If the definition of "employee benefit plan" under  the  Employee Retirement  Income  Security  Act  of  1974  is  repealed,  replaced  or significantly amended, the superintendent shall promulgate a  regulation establishing  a  definition  for  the purposes of this section. Benefits  that would meet the requirements of subparagraph  (A)  or  (B)  of  this paragraph but for the fact that the agent covered under such benefits is an independent contractor rather than an employee are security benefits.  (25) "Single considerations" are:  (A)   all  amounts  (including  amounts  for  supplementary  benefits) recorded as single considerations or single deposits for contracts; or  (B) contract values that are applied under the same  contract  at  the later  of  (i)  the  end of a surrender charge period or (ii) five years after issuance of the contract or, if a  previous  such  application  of contract  values  has  occurred, five years after such application, when such application results in new sales loads or surrender charges; or  (C)  settlement  option  proceeds  generated  from  the  death  of  an individual  or  maturity  of  a  policy  or contract that are applied to purchase a new contract or that are applied to the purchase  of  annuity benefits under the existing contract.  (26) "Single premiums" are:  (A)   all  amounts  (including  amounts  for  supplementary  benefits) recorded as single premiums for policies, except  dividends  applied  to purchase additional insurance under the same policy; or  (B)  policy values that are applied under the same policy at the later of (i) the end of a surrender charge period or  (ii)  five  years  after issuance  of  the  policy  or,  if a previous such application of policy values has occurred,  five  years  after  such  application,  when  such application results in new sales loads or surrender charges.  (27) A "single premium policy" or "single consideration contract" is a policy  or  contract  that,  according  to  its  terms, provides for the payment of a single premium or consideration at time of purchase and  no subsequent  premiums  or considerations during the life of the policy or contract. The determination  of  a  policy  or  contract  type  is  done separately for each policy, contract and rider.  (28)  "Supplemental  benefits"  are any benefits provided as part of a policy or contract,  whether  by  rider  or  otherwise,  excluding  life insurance coverage on named insureds under the policy.  (29)  "Training allowance subsidy" is the excess of the amount that is paid to an agent under a training allowance plan over  the  amount  that would  be  paid  in  commissions and expense allowance to an experienced agent, in the same sales force, producing the same sales of policies and contracts.  (c)(1) No company shall pay  or  incur  in  any  calendar  year  total selling  expenses as calculated hereunder in excess of its total selling expense limit referred to in paragraph four of this  subsection,  except that the total selling expense limit shall not apply to a company in any calendar  year  in  which  the  company  does  not  sell any policies or contracts subject to this section.  (2) Total  selling  expenses  shall  include  the  following  expenses incurred  directly  or  indirectly  by  the  company,  without regard to whether they are incurred in the company's home office or in a field  or regional office:  (A) commissions;  (B) the increase during the year in the amount of outstanding advances and  loans to agents, including any accrued and unpaid interest thereon, and including amounts charged off  by  the  company,  however,  if  such amount  is negative, it shall be treated as a reduction of the amount of total selling expenses;  (C)  the  expense  of  direct  solicitation  advertising  that  either includes  an application or solicits a response to obtain an application for a policy or contract regulated under this section;  (D)  distribution,  marketing  and  sales  support  expenses  directly related  to  the  procurement of new business, which includes but is not limited to:  (i)   recruiting   and   training   of   agents,   including   related recordkeeping;  (ii) sales management and supervision;  (iii) clerical functions in sales offices; and  (iv) sales support functions, including but not  limited  to  advanced underwriting  support,  proposals,  illustrations,  competition aids and related systems and equipment, including personal  computers,  owned  by the company and used in the sales process;  (E)  any  expense allowance paid to the agent or broker by the company or any expenses of the agent, agency or broker, assumed or reimbursed by the company;  (F) the expenses of sales conferences, training  meetings  and  awards paid for by the company; and  (G)  all  other  compensation paid to or expense incurred on behalf of active and retired  agents  and  brokers,  including  the  cost  of  any security benefits.  (3)  Total  selling expenses shall not include expenses related to the following  activities  and  the  compensation  of  individuals   working full-time  on the following activities and other activities not included within paragraph two of this subsection, even if they are working  in  a sales office:  (A) development and maintenance of products, systems and software;  (B) medical examinations and inspections of proposed risks;  (C) underwriting;  (D) policy issue;  (E) policy conservation;  (F) premium billing and collection;  (G) policy administration;  (H) claim administration and management;  (I) investment management;  (J) statutory and regulatory filing and compliance;  (K) overall company management and direction;  (L) taxes, licenses and fees; and  (M) all other activities not related to selling.  (4)  The  total  selling expense limit shall be the sum of the amounts determined pursuant to subparagraphs (A), (B), (C), (D), (E), (F),  (G), (H), (I) and (J) of this paragraph, except as any of those subparagraphs may  be  adjusted pursuant to the provisions of subparagraph (K) of this paragraph.  (A)  For  each  life  insurance  policy,  fifty-five  percent  of  the qualifying first year premium.  (B)   Five  percent  of  excess  premiums,  single  premiums  and  all considerations.  (C) One hundred ten percent  of  the  sum  of  the  amount  determined pursuant to subparagraphs (A) and (B) of this paragraph.  (D)  For  all  new life insurance paid for during the year, other than term insurance for less than one year, for which  any  premium  is  paid during  the  year,  one  dollar  for  each  one thousand dollars of such insurance.  New life insurance paid for shall include:  (i) life insurance on new policies paid for during the calendar year;  (ii) life insurance on term conversions during the  calendar  year  to permanent life insurance;  (iii)  life  insurance  on  policies  which  were  renewed  under more favorable terms than those guaranteed in  the  policy,  subject  to  new underwriting requirements and new contestable period; and  (iv)  increases  in  the  death  benefit  of life insurance during the calendar year, other than those provided for in the policy, on  policies in force.  (E)  Seventy dollars for each new policy, other than policies for term insurance for less than one year, and for each  new  contract  paid  for during  such year. For purposes of this subparagraph, riders will not be considered as separate policies or  contracts.  New  policies  paid  for during  the  year  shall include policies referred to in items (i), (ii) and (iii) of subparagraph (D) of this paragraph.  (F) Twelve percent of renewal premiums.  (G) Fifteen cents for each one thousand  dollars  of  face  amount  of policies in force at the end of such year.  (H) The sum of the amounts below:  (i)  one dollar for each one thousand dollars of the first one billion dollars of life insurance in force;  (ii) fifty cents for each one thousand dollars of the next one billion dollars of life insurance in force;  (iii) five one-hundredths of one percent  of  the  first  one  billion dollars of annuity reserves; and  (iv) two and one-half of one hundredths of one percent of the next one billion dollars of annuity reserves.  (I)  For  each agent who qualifies under paragraph three of subsection (e) of this  section,  thirty  thousand  dollars  for  each  such  agent appointed  to  represent  the  company  during the year, twenty thousand dollars for each such agent  who  was  initially  appointed  during  the immediately  preceding  year and is still contracted with the company on January first of the current year, and ten  thousand  dollars  for  each such  agent who was initially appointed during the second preceding year and is still contracted with the company on January first of the current year.  (J) The excess, if any, of the total selling expense  limit  over  the total  selling  expenses  for  the  immediately preceding calendar year; however, such excess shall not exceed five percent of the total  selling expense  limit  for  such  preceding  calendar  year, calculated without regard to the effect of this subparagraph.  (K) For a company that makes commitments to pay compensation to agents or brokers or to incur other  agent-related  or  broker-related  expense with respect to policies or contracts in their renewal years:  (i) with respect to policies, if such commitment includes compensation or   other  agent-related  or  broker-related  expense  expressed  as  a percentage of premium and if it exceeds twelve percent of  premium  with respect  to  any  policy  year  after the first, the company may, at its option  reduce  the  amount  of  the  limit   calculated   pursuant   to subparagraph  (A)  of  this paragraph in the calendar year in which such policies are sold and  increase  the  amount  of  the  limit  calculated pursuant  to  subparagraph  (F) of this paragraph in subsequent calendar years;  (ii)  with  respect  to  policies,   if   such   commitment   includes compensation  or other agent-related or broker-related expense expressed as a percentage of the policy fund with respect to  the  second  or  any later  policy  year, the company may, at its option reduce the amount of the limit calculated pursuant to subparagraph (F) of this  paragraph  in subsequent calendar years and add, in such subsequent calendar years, an amount based on the reserves of such policies;  (iii)   with   respect  to  contracts,  if  such  commitment  includes compensation or other agent-related or broker-related expense  expressed as  a percentage of the contract fund with respect to any contract year, the company  may,  at  its  option,  reduce  the  amount  of  the  limit  calculated  pursuant  to  subparagraph  (B)  of  this  paragraph  in the calendar year in which such contracts are sold and add, in such calendar year and subsequent calendar years, an amount based on the  reserves  of such contracts.  (L) Such adjustment shall:  (i)  in the case of item (i) of subparagraph (K) of this paragraph, be based on the relationship that a reduction of three percent of  premiums in  the  amount  of the limit calculated pursuant to subparagraph (A) of this paragraph in the year of sale is equivalent to an increase  of  one percent  of  premiums  in the amount of the limit calculated pursuant to subparagraph (F) of this paragraph if  the  commitment  applies  to  all later policy years;  (ii)  in  the case of item (ii) of subparagraph (K) of this paragraph, be based on the relationship that a reduction of one percent of premiums in the amount of the limit calculated pursuant to  subparagraph  (F)  of this paragraph in all later policy years is equivalent to an increase in the limit of fifteen one-hundredths of one percent of policy reserves if the commitment applies to all later policy years;  (iii) in the case of item (iii) of subparagraph (K) of this paragraph, be based on the relationship that a reduction of one-half of one percent of  considerations  in  the  amount  of the limit calculated pursuant to subparagraph (B) of this paragraph in the year of sale is equivalent  to an  increase  in  the  limit of fifteen one-hundredths of one percent of contract reserves if the commitment applies to all contract years.   The  superintendent  shall  by  regulation  describe  the  bases   for adjustments  in  other  situations, consistent with these relationships. Reasonable use of averaging methods shall be allowed. In particular, the regulation shall provide that a company shall approximate the percentage of its policies, contracts, premiums, and reserves with respect to which it has opted to make  such  adjustments,  and  shall  derive  adjustment factors  such that, when such factors are applied to all of its business issued or in force, they will approximate  the  results  that  would  be obtained if more precise calculations were made.  (5)  A  company  may  make  arrangements,  such as entering into agent contracts, incurring expenses, and generally organizing its  activities, in  such  a  manner  that  some  or  all  of its expenses are applicable partially  to  policies  and  contracts  subject  to  this  section  and partially  to  other  business  or  to other companies with which it has business arrangements and, in such cases, the  company  shall  determine the  portion  of  such  expenses  subject to this subsection by using an equitable basis of allocation, consistent with the company's  allocation methodology for annual statement reporting.  (d)  A  company may pay agents and brokers as it sees fit for the sale and service of policies and contracts. However:  (1) No company shall pay or permit to be paid to an agent or broker  a commission  in  excess  of  the  sum  of  (A)  fifty-five percent of any qualifying first year premium  and  (B)  seven  percent  of  any  excess premium;  or  to a general agent with respect to business not personally produced by such general agent, a commission in excess of the sum of (C) sixty-three percent of any qualifying first year premium and  (D)  eight percent of any excess premium.  (2)  Except  as  provided  in  paragraph  four  of this subsection, no company shall pay or permit to be paid to an agent or broker  commission in  excess  of seven percent of any single consideration or any periodic consideration received in the first four contract years; or to a general agent, on business not personally produced  by  such  general  agent,  a commission in excess of eight percent of any single consideration or any periodic consideration.  (3)  No company shall pay or permit to be paid to an agent or broker a commission in excess of twenty-two percent of renewal premiums  for  the second  policy  year,  twenty  percent of renewal premiums for the third policy year, or eighteen percent of  renewal  premiums  for  the  fourth policy  year;  or to a general agent on business not personally produced by such general agent, a commission in excess of twenty-seven percent of renewal premiums in the second  policy  year,  twenty-three  percent  of renewal  premiums  in  the  third  policy  and twenty percent of renewal premiums in the fourth policy year.  (4) Notwithstanding the limitations set forth in paragraph two of this subsection, with respect to a qualified  annuity  contract,  no  company shall  pay  or  permit  to be paid to an agent or broker a commission in excess of fourteen  and  one-half  percent  of  periodic  considerations incurred  in  the  first  contract year and four and one-half percent of periodic considerations incurred respectively in each of three  contract years  following  the  first,  or  to  a  general  agent on business not personally produced by the general agent,  a  commission  in  excess  of sixteen  percent  of  periodic  considerations  incurred  in  the  first contract year  and  six  percent  of  periodic  considerations  incurred respectively in each of the three contract years following the first.  (5)  With  respect  to  premiums  and considerations recorded within a period of twelve consecutive months on business written by any agent  or broker,  no company shall pay or permit to be paid to an agent or broker expense allowance greater than the excess, if any, of the sum of:  (A) ninety-one percent of all qualifying first year premiums; and  (B) with respect to qualified annuity contracts, fourteen and one-half percent of periodic considerations incurred in the first contract  year; and  (C)  seven  percent  of any excess premiums, single considerations and periodic considerations, other than those addressed in subparagraph  (B) of this paragraph, incurred in the first four contract years, over  the  sum  of  commissions paid pursuant to paragraphs one, two and four of this subsection,  and  the  value  of  any  goods  and  services provided  to  such  agent  or  broker  by  the  company. With respect to premiums  and  considerations  recorded  within  a  period   of   twelve consecutive  months  on  business  written  under the supervision of any general agent, no company shall pay or permit to be paid  to  a  general agent,  on  business  not  personally  produced  by  such general agent, expense allowances greater than the excess, if any of the sum of  (D) ninety-nine percent of all qualifying first year premiums; and  (E) with respect to qualified annuity contracts,  sixteen  percent  of periodic considerations incurred in the first contract year; and  (F)  eight  and  one-half  percent  of  any  excess  premiums,  single considerations and periodic considerations, other than  those  addressed in  subparagraph  (E)  of  this  paragraph,  incurred  in the first four contract years, over the sum of commissions paid pursuant to  paragraphs  one,  two  and four  of  this  subsection,  and any goods and services provided to such general agent by the company. The  company  may,  in  implementing  this subsection,  use  reasonable  estimation  techniques  in arriving at the amount  of  goods  and  services,  including  but  not  limited  to  the estimation  of  the  average  value  of goods and services provided to a group of agents or brokers  to  whom  similar  goods  and  services  are provided.  (e)  Notwithstanding  any  limitations  set forth in subsection (d) of this section:  (1) (A) A company may compensate an agent or broker wholly or in  part upon a plan that bases compensation on the fund underlying the policy or  contract. For policies other than single premium policies, a company may pay  up  to  three-tenths  of  one percent of the fund in each of policy years two through four for each one percent  of  premium  by  which  the commission paid to the agent or broker in such policy years is less than the  percentages  set forth in paragraph three of subsection (d) of this section. For single premium policies and all contracts,  a  company  may pay  up  to three-tenths of one percent of the fund in each of policy or contract years one through four for each one percent by which the sum of commissions and expense allowance paid to the agent or broker in  policy or  contract  years  one  through  four is less than the percentages set forth in subparagraph (C) or (D) of paragraph five of subsection (d)  of this section, whichever is applicable.  (B)  Any  company  may  compensate  an  agent  or  broker on a plan of fund-based compensation using translations other than those set forth in subparagraph (A)  of  this  paragraph,  provided  that  the  translation factors  are  equivalent to those set forth therein, based on reasonable and  consistent  assumptions  as  to  mortality,  policy   or   contract persistency and interest.  (2) (A) A company may compensate an agent or broker pursuant to a plan of  agent  compensation that consists wholly or partly of elements other than commission-based compensation and fund-based compensation.  (B) When a company  implements  such  a  plan,  it  must  be  able  to demonstrate, after the plan has been in operation for two years, that an agent  or  broker  being  compensated  under  the  plan  and meeting its requirements  for  continuation  in  the  plan  will  receive  no   more compensation under the plan, over the period of a projected career, than could  have  been earned under a plan consisting entirely of commissions and expense allowance, each limited as described in  subsection  (d)  of this  section.  In  making this demonstration, the company may take into account commission compensation that would have  been  paid,  under  its renewal  commission  plans,  with  respect  to policies and contracts in their fifth and later policy and contract years.  (C) To the extent that an agent being compensated under such  plan  is eligible  to  receive  a  training  allowance  under  the  provisions of paragraph three of this subsection, the comparison in  subparagraph  (B) of  this  paragraph  shall  take  into  account,  as well, the amount of training allowance subsidy that could have been paid to such agent.  (D) To the extent that an agent or broker being compensated under such plan is assigned servicing responsibilities for  policies  or  contracts that  have  been  in  force  for more than four years, the comparison in subparagraph (B) of this paragraph shall take into account, as well, the renewal commissions that the company pays with respect to such  policies and contracts.  (E)  The  comparison  in  subparagraph  (B) of this paragraph shall be based on reasonable assumptions as  to  mortality,  policy  or  contract persistency, and interest and agent or broker sales.  (F)  If  a  company  employs  one  or  more  salaried  employees whose principal function is other than the sale of new policies  or  contracts and  other  than  the  supervision of agents or agencies, and if no more than twenty-five percent  of  the  compensation  of  such  employees  is related  to  sales  results,  the  compensation of such employees is not subject to the provisions of this subsection or subsection (d)  of  this section,  notwithstanding  that  they  may be licensed as life insurance agents.  (G) If a company compensates an agent or broker within the  limits  in subsection  (d)  of  this  section,  and that agent or broker retains as assistants other agents or brokers who are compensated by the  agent  or broker  on  the  basis of a plan of compensation other than commissions,  such arrangement between such  agent  or  broker  and  that  agent's  or broker's  assistant  is not subject to the provisions of this subsection and subsection (d) of this section.  (3)(A)  A  company  may pay reasonable training allowance subsidies to agents pursuant to a plan of  agent  compensation,  provided  that  such agents  are  full-time  agents of the company and the principal business activity of such agents is the solicitation of  policies  and  contracts primarily  but  not  necessarily  exclusively  for  the company, and its affiliates, and such agents are not  simultaneously  receiving  training allowance from any other life insurance company.  (B)  Agents  receiving  training  allowance subsidies may also receive expense allowance payments.  (C) An agent is eligible to receive such a training allowance subsidy, provided (i) such agent has earned less  than  twenty  thousand  dollars from  the  sale  of policies and contracts cumulatively during the three years prior to such agent's appointment, or (ii) less  than  twenty-five percent of such agent's earned income has been received from the sale of policies  and  contracts  during  each  of  the  three  years  prior  to appointment.  (D) An agent receiving  such  training  allowance  subsidies  may  not receive,  on  a cumulative basis, for an agent in the first year of such subsidies, the  greater  of  twenty-eight  thousand  dollars  and  sixty percent  of  the  first  year  commission limit, and for an agent in the second year of  such  subsidies,  the  greater  of  forty-four  thousand dollars  and  sixty  percent  of  the first year commission limit in the first year and forty percent of the first year commission limit  in  the second  year,  and for an agent in the third year of such subsidies, the greater of fifty-four thousand dollars and sixty percent  of  the  first year  commission  limit in the first year and forty percent of the first year commission limit in the second year,  and  twenty  percent  of  the first  year commission limit for the third year, and for an agent in the fourth year of such subsidies, the greater of sixty thousand dollars and sixty percent of the first year commission limit in the first  year  and forty  percent  of  the  first year commission limit in the second year, twenty percent of the first year commission limit in the third year, and ten percent of the first year commission limit in the fourth year.  (E) With respect to any agent eligible to receive  training  allowance subsidy  who  has  earned  at least sixty-six thousand dollars of income during  either  of  the  two  calendar   years   immediately   preceding commencement  of  receipt of training allowance subsidies, a company may pay additional training allowance subsidies of one thousand  dollars  to such agent during each of the first two years of his receipt of training allowance subsidies for every two thousand dollars of such earned income in  excess  of  sixty-six thousand dollars, provided that the cumulative training allowance subsidy does not exceed forty-five  thousand  dollars in  such agent's first year of receipt of training allowance subsidy and provided further that the agent receives not greater than sixty thousand dollars in total training allowance subsidies.  (F) For purposes of this paragraph, the period of time that  a  person worked  for a company under a company-sponsored training program and was not acting as an agent for that company shall not  be  counted  as  time spent receiving training allowance subsidies, and any salary paid by the company  to  that  person  during  that  time shall not count toward the cumulative maximum training allowance subsidy.  (G)  The  superintendent  shall  periodically  adjust  the  cumulative maximum  training  allowance subsidy limits set forth in this paragraph. The superintendent may also, at any  time,  approve  training  allowance  subsidies  with  cumulative  maximum  amounts that exceed the limits set forth in this paragraph.  (H)  A  company  may, upon approval of the superintendent, establish a plan for training  allowance  subsidies  for  which  the  conditions  of eligibility  or  the  amounts  or  periods  of subsidy, of any of these, differ from those set forth in this subsection. The superintendent shall approve such a plan, subject to such conditions as he may prescribe,  if he  finds  that  it  is  likely  to meet the objective of developing new agents for the sale of policies or contracts or both in a cost-effective manner.  (4) A company may pay  additional  compensation  to  a  general  agent pursuant  to a plan of agent compensation for a period not exceeding ten years; provided, however, that if  such  general  agent  has  had  prior service  as  a  general agent or agency manager, with any life insurance company or companies, whether as an individual, partner or officer of  a corporation,  and  such prior service was for a period of less than five years, additional compensation may be paid only during  the  balance  of such five years, but if such prior service was of five years duration or more,  then  no  additional compensation may be paid; provided, further, that the company shall not permit  to  be  paid  expense  allowances  to agents  under  his supervision on business written while such additional compensation is paid in excess of those permitted to agents pursuant  to paragraph  five  of  subsection (d) of this section. For the purposes of this paragraph only, service as a general agent or agency manager  shall not  include  service  as an assistant general manager, assistant agency manager, agency supervisor, or service in a similar position  regardless of  its  title.  The  additional  compensation  in the sixth year of the period shall not be in excess  of  twenty  percent  of  the  first  year commission  limit  of the business of the agency, sixteen percent in the seventh year of the period, twelve percent in the  eighth  year  of  the period,  eight  percent in the ninth year of the period and four percent in the tenth year of the period, and shall not be payable pursuant to  a plan  of  agent compensation on any business personally obtained by such general agent.  (5) The cost of all security benefits provided to agents shall not  be included  in  applying  the limits established in subsection (d) of this section.  (6) A company, including any person, firm or corporation on its behalf or under any agreement with it, may pay or award, or permit to  be  paid or  awarded,  prizes and awards to agents and brokers pursuant to a plan of agent or broker compensation, provided that no single prize or  award may  exceed  a  value  of  two hundred fifty dollars, and that the total value of such prizes and awards paid or awarded to any agent  or  broker within   a   calendar   year   may  not  exceed  one  thousand  dollars. Notwithstanding the foregoing, a company may also pay or award not  more frequently  than  monthly  a  prize  or  award  valued  at not more than twenty-five dollars. The costs of all such prizes and awards  shall  not be included in applying the limits established in subsection (d) of this section.  The superintendent may authorize higher limits on the value of prizes and awards than those set forth herein.  (7) A company may conduct agent conventions, conferences and  business meetings,   and  no  portion  of  the  expenses  associated  with  agent conventions, conferences or business meetings, nor  the  value  thereof, will  be considered to be a prize or award, or additional commissions or compensation, or a payment pursuant to  an  expense  allowance  plan,  a direct  payment  of  an  expense  or  an  assumption  of any expense for purposes of paragraph five of subsection (d) of  this  section,  or  any other  type  of  compensation or payment described in this subsection or  subsection (d) of this section,  if,  for  conventions,  conferences  or business  meetings  held  in the United States, a company's expenses for same meet the Internal Revenue Code's current standard for ordinary  and necessary business expenses and  (A)  are  not  includable  in the recipient's gross income for federal income tax purposes, and  (B) represent reasonable allowances for  agents'  incidental  ordinary and   necessary   business  expenses  associated  with  the  convention, conference or business meeting, such as meals, local transportation  and similar  items,  and  for conventions, conferences and business meetings held outside the United States, a company's expenses for same would have met those current standards if the convention,  conference  or  business meeting  was  held  within  the  United  States.  The expenses paid by a company shall be included in the limit established in subsection (c)  of this section. Any portion of such expenses paid by a company that do not comply  with  this  paragraph  must  be  considered  to  be compensation hereunder and, if not recovered from the recipient, charged against  the limits  of  subsection  (d)  of  this section in the year the expense is incurred.  (8) A company that, with respect to any policy or contract year,  pays an  agent or broker with respect to the business of that agent or broker a commission based on a percentage lower than the percentage  set  forth in  paragraph one, two, three or four of subsection (d) of this section, whichever is appropriate, for such policy or  contract  year  may,  with respect  to  any  later  policy  or  contract year of the same policy or contract, pay the agent or broker (or a successor  agent  or  broker  to whom  the  policy or contract has been assigned) a commission based on a higher percentage than the percentage set forth in paragraph two,  three or four of subsection (d) of this section, whichever is appropriate, for such  later policy or contract year, to the extent that the total of the percentages on which actual commissions were calculated in the preceding policy or contract years was lower than the total of the percentages set forth in paragraph one, two, three or four of  subsection  (d)  of  this section, whichever is appropriate, for such preceding policy or contract years.  (9) (A) A company may make an advance to any of its agents pursuant to a  plan  of  agent  compensation. A company may, but is not required to, charge interest on outstanding advances.  (B) A company may make a loan to any of its agents pursuant to a  plan of  agent  compensation. The maximum amount of any loan shall not exceed the expected compensation of the agent over the next  twelve  months.  A company  shall  charge  interest on loans at a rate not less than a rate consistent with current short-term borrowing rates. If the interest rate charged on a loan is less than a rate consistent with current short-term borrowing rates, the amount by which the interest  actually  charged  is lower  than  the  interest  that would have been charged based on a rate consistent with current short-term borrowing rates, the difference  will be  subject  to the limits of either paragraph one, two, four or five of subsection (d) of this section.  (C) A company shall secure adequate collateral for any advance or loan to an agent; such  collateral  shall,  as  a  minimum,  consist  of  any compensation  earned  by  the  agent  from  sales  of  new  policies  or contracts.  (10) (A) If a broker or an agent who is not a general  agent  performs services for a company other than those related to the sale or servicing of  a  policy or contract, or if a general agent performs services for a company other than those related to the sale or servicing of a policy or contract, or the recruiting, training  or  supervision  of  agents,  the  company  may  compensate the broker or agent for the performance of such services. Such payments are not subject to the limits in subsection  (d) of  this section. No company shall pay or cause to be paid to any broker or  agent for the services described herein, any amounts that exceed the reasonable value of the services performed.  (B) If an agent of a company also  performs  the  duties  of  a  local salaried  representative of such company, the company may compensate the agent within the limits of this section  with  respect  to  policies  or contracts sold or serviced by such agent for which agent compensation is subject  to  the  limits  of  this section, and may also compensate such agent for services performed as a local salaried representative  of  the company;  however,  such compensation as a local salaried representative shall not include any compensation with respect to policies or contracts sold or serviced by such agent.  (11) If a company pays an agent or a general agent for the  production of policies or contracts issued by the company, the company shall not be required  to  monitor  for compliance with this section the payments and allowances paid by such agent or general agent to any agent  or  general agent with respect to such policies or contracts if the agent or general agent receiving such payments:  (A) receives no company-provided security benefits;  (B) does not receive additional compensation as permitted by paragraph four of this subsection, compensation or expense allowance from a paying entity that itself is receiving additional compensation from the company as permitted by paragraph four of this subsection;  (C) receives no prizes or awards from the company; and  (D)  is  not  eligible  to qualify for attendance at company-sponsored agent conventions, conferences, or business meetings based on the amount of business produced by such agent or general agent.  (12) A company that,  with  respect  to  premiums  and  considerations recorded  within  a  period  of twelve consecutive months on policies or contracts written by any agent or broker pursuant to a plan of agent  or broker compensation, pays an agent, general agent or broker an amount of expense  allowance smaller than the limiting amount defined in paragraph five of subsection (d) of this section, may pay the agent, general agent or broker, in any later twelve month period or periods,  the  amount  by which  the amount of expense allowance paid in the prior period was less than the limiting amount, provided such agent, general agent  or  broker still  is  engaged  in  selling  or  servicing the company's policies or contracts pursuant to one  of  the  company's  compensation  or  expense allowance plans. Such subsequent payments may be made in addition to any expense  allowance payments for which the agent, general agent or broker is otherwise eligible within the limits of paragraph five of  subsection (d) of this section for such subsequent period.  (13)  Notwithstanding  any  limitation  or restriction imposed by this section, the superintendent may approve  compensation  arrangements  for any  company to permit it to compensate its agents or brokers, or any of them, in whole or in part, upon any plan other than those  described  in this  section,  provided that the aggregate limits imposed in subsection (c) of this section are not exceeded and that the limits  in  subsection (d)  of  this section are generally observed over policy years and agent careers.  (14) A company may, but is  not  required  to,  use  annualization  in calculating any of the limits set forth in this section.  (f)  (1)  Filing  requirements for agent and broker compensation plans are as follows:  (A) A company shall make annual information filings  with  respect  to any  newly-introduced  plans  or  changes  under which the company makes  payments to agents or brokers if such plans  are  commission  plans  for which  the  commission percentages are, in all policy or contract years, no greater than the commission percentages set forth in paragraphs  one, two, three and four of subsection (d) of this section, expense allowance plans  other  than  those  meeting  the  definition  of  a  compensation arrangement, plans  subject  to  the  provisions  of  paragraph  one  of subsection (e) of this section under which compensation is not in excess of  two  percent of the fund annually in any of the first four policy or contract years, or plans subject to the provisions of paragraph four  of subsection (e) of this section. These filings shall consist of a summary of  information  in  enough  detail  to  generally  describe  the filing content, and shall be made not later than the last day of February  next following  the  year  in which such plans were placed in use or changed. The first such filing shall be due  not  later  than  the  last  day  of February following the end of the year which includes the effective date of this section.  (B)  Filings  are  required  on  or  before  the effective date of any changes to compensation arrangements as defined in this section,  or  to plans  described  in  paragraphs  one  and two of subsection (g) of this section.  These filings shall consist of a  summary  of  information  in enough detail to generally describe the filing's contents. A company may implement  such  compensation arrangements immediately upon filing same. If the superintendent notifies the company within  ninety  days  of  the receipt  of the filing, that in his opinion the compensation arrangement described in such filing is not permitted under  the  law,  and  if  the company within sixty days of the superintendent's notice, is not able to satisfy  the  superintendent's  concern,  with  or without modifying the plan, the superintendent may order the company to cease using the  plan. The  company  may  request  a  formal  hearing, but the plan that is the subject of the hearing may not be used unless and until permitted  as  a result of the hearing.  (C)  Filings  for  prior  approval  of the superintendent are required before  plans  described  in  subparagraph   (B)   of   paragraph   one, subparagraph  (H)  of paragraph three and paragraphs twelve and thirteen of subsection (e) of this section can be used. The filings will  consist of  descriptive  information,  including assumptions and techniques when applicable, in enough detail for the superintendent's review. Plans  not approved  or  disapproved  by  the  superintendent  within  ninety  days following their filing will be deemed approved.  (D) For plans described under subparagraphs (A), (B), (C) and  (D)  of paragraph two of subsection (e) of this section, if the plan is still to be  used  six  months  after the end of the two year period described in subparagraph (B) of paragraph two of subsection (e) of this section, the company must, within six months after the end of the  two  year  period, make  a  filing  with the superintendent and obtain his approval for the continued use of the plan.  (E) All filings and related correspondence shall  be  proprietary  and confidential, and not disclosed by the superintendent. Changes  whose  effect  is  to  reduce  or not increase the compensation payable to every individual covered by the arrangement in each and every year, need not be filed with the superintendent, but must be  maintained in the company's records for at least six years.  (2)  The  annual  statement  schedule  for  reporting  compliance with subsection (c) of this  section  shall  be  signed  by  a  knowledgeable officer  of  the  company.  The  signing of the schedule shall be deemed confirmation by the officer that the officer has  performed  a  personal review  of  the  information  included  and  responses  provided  to the interrogatories. The signature  is  to  be  preceded  by  the  following  statement:  "I  have reviewed the sources of total selling expenses and, to the best of my knowledge and belief, on the basis  of  the  projected experience  over  the  next three years based on reasonable assumptions, including  changes  currently being contemplated, the company's expenses will not exceed the limit imposed thereon  by  New  York  Insurance  Law Section  4228." If the officer cannot attest to the final clause of this statement, the officer must disclose the year or years in which expenses are expected to exceed the limit and the amount by which  the  limit  is expected to be exceeded.  (3)  Any  company  that  exceeds  the  limit in subsection (c) of this section in any year shall:  (A) File a plan of action with the superintendent by June thirtieth of the following year, which shall:  (i) describe actions the company will take promptly to bring  expenses into compliance; and  (ii)  demonstrate  how  the  company will meet the limit in the second year following the year the company first exceeded the  limit  and  will remain under the limit in the next subsequent year;  (B)  Monitor  the  company's  progress  under  such plan of action and immediately notify the superintendent if at any  time  it  appears  that compliance will not be accomplished as planned; and  (C)  Report the company's interim progress during the period described in item (ii) of subparagraph (A) of this paragraph as frequently as  the superintendent may request.  (4)  (A)  If  the  superintendent  finds that any plan of action filed pursuant to paragraph three  of  this  subsection  will  not  cause  the company  to  comply with the limit in subsection (c) of this section, or that the company is not itself complying with the provisions of  such  a plan  of action, the superintendent may impose controls on the company's activities, such as limitations on recruiting or production  incentives, or   a  requirement  that  projections  of  experience  anticipated  for compensation arrangements be submitted to the  superintendent  prior  to the   introduction   of   new,  or  changes  to  existing,  compensation arrangements, until such company meets that limit.  (B) In addition to the actions set forth in subparagraph (A)  of  this paragraph,  and  upon  finding  that  a  company's  actions constitute a willful violation of the provisions of subsection (c) of  this  section, the  superintendent  is authorized to impose a fine on the company in an amount not to exceed the lesser of one million dollars  or  one-half  of one  percent  of  the company's total selling expense limit for the most recent calendar year, and the  superintendent  may  impose  controls  as described  in subparagraph (A) of this paragraph until the completion of a year in which the company meets the limit in subsection  (c)  of  this section.  For  purposes of determining the amount of the fine in any one proceeding, each day or each act of a continuing willful violation shall not be deemed a separate and distinct violation.  (C) Any action under subparagraph (A) of this paragraph or any fine or penalty under subparagraph (B) of this paragraph shall be ordered by the superintendent only after notice and hearing.  (5) Any company making one or more payments that exceed any  limit  in subsection  (d)  of  this  section that is unable to recover such excess payments shall notify the superintendent within thirty days of the  date that  it  learns or realizes that it exceeded the limit; however, if the company recovers such excess payments prior to the required notification date, it need not make such notification.  At  that  time,  the  company shall  report  the  reason the company exceeded the limit, the number of agents and brokers to whom payments in excess of the  limit  were  made, and  the amount of money paid in excess of the limit, and shall describe  the actions the company  will  take  promptly  to  prevent  any  further instances of it exceeding this limit.  (A)  If  the  superintendent  finds that the company is not taking the actions it described to prevent any further  instances  of  exceeding  a limit  in subsection (d) of this section, the superintendent may require that the company file for prior approval future changes to  compensation arrangements and plans, for a period not to exceed one year.  (B)   In   addition   to  the  actions  set  forth  in  the  preceding subparagraph, and upon finding that a  company's  actions  constitute  a willful  violation  of the provisions of subsection (d) of this section, the superintendent is authorized to impose a fine on the company  in  an amount not to exceed the lesser of one thousand dollars per violation or three  times the amount of any overpayments that are found to constitute a willful violation.  (C) Any action under subparagraph (A) of this paragraph or any fine or penalty under subparagraph (B) of this paragraph shall be ordered by the superintendent only after notice and hearing.  (g) The following rules shall apply, beginning on the  effective  date of this section, for the periods of time indicated in this subsection:  (1)  With  respect  to  commissions  paid  by  the company to an agent subsequent to the fourth policy or contract year on business in force on the effective date of this subsection, any increase in  such  commission within four years of the effective date of this subsection, provided the increase  is  contingent upon the volume of new business written by such agent, in excess of one percent of periodic premiums and  considerations incurred in each such year with respect to such business in force on the effective date of this subsection, shall be treated as expense allowance payments in determining the maximum amount of expense allowance that can be paid to such an agent in that year.  (2)  With respect to fund-based compensation paid by the company to an agent subsequent to the fourth policy or contract year  on  business  in force  on  the  effective  date of this subsection, any increase in such fund-based compensation within four years of the effective date of  this subsection,  provided  the increase is contingent upon the volume of new business written by such agent, in excess of three-tenths of one percent annually of the funds of such policies or contracts, shall be treated as expense allowance payments in determining the maximum amount of  expense allowance that can be paid to such agent in that year.  (3)  Any company that, as of any part of the year before the effective date of this subsection, was using a plan approved by the superintendent for any plan of renewal commissions, including such plan that, in  whole or  in  part,  conditions  the  payment  of  such  commissions  upon the efficiency of service of the agent receiving the commissions or upon the amount and quality of the business renewed under his  supervision,  may, notwithstanding  the limits of paragraph three of subsection (d) of this section, continue to employ such plan, consistent with the terms of  its approval,  for  a  period of four years after the effective date of this subsection.  (4) A company may, for a period of one year after the  effective  date of  this  subsection,  continue  to  employ  any  plan  of compensation, including any expense allowance plan,  that  it  was  using  as  of  the effective date, unless the superintendent shall determine that such plan was not approvable at the time it was placed in effect.  (5)  For  the  first  year after the effective date, the total selling expense limit described in subsection  (c)  of  this  section  shall  be increased  by five percent of the sum of the amounts determined pursuant to subparagraphs (A), (B), (C), (D), (E), (F),  (G),  (H),  and  (I)  of paragraph four of subsection (c) of this section.  (h)  No company shall offer for sale any life insurance policy form or annuity contract  form  covered  by  this  section  or  any  debit  life insurance  policy  form  which shall not appear to be self-supporting on reasonable assumptions as to interest,  mortality,  persistency,  taxes, agents'  and  brokers'  survival and expenses resulting from the sale of the policy or contract form. For all such forms offered for sale in this state, and for all forms filed for use outside this  state  by  domestic life  insurance  companies,  a  statement  that the requirements of this subsection have been met, signed by an actuary who is a member  in  good standing of the American Academy of Actuaries and meets the requirements prescribed  by  the superintendent by regulation shall be submitted with each such life insurance policy or annuity contract form filed  pursuant to  paragraph one or six of subsection (b) of section three thousand two hundred one of  this  chapter.  A  demonstration  supporting  each  such statement,  signed  by  an actuary meeting such qualifications, shall be retained in the company's home office, while such form is being  offered in  this state and for a period of six years thereafter and be available for  inspection.  The  superintendent  shall  promulgate  a   regulation establishing the guidelines applicable to such demonstration.