2023 New York Laws › ISC - Insurance › Article 42 - Life Insurance Companies and Accident and Health Insurance Companies and Legal Services Insurance Companies › 4221 - Standard Nonforfeiture Law.

§ 4221. Standard nonforfeiture law. (a) In the case of policies issued
on  or after the operative date of this section as defined in subsection
(p) hereof, no policy of life insurance, except as stated in  subsection
(o)  hereof,  shall  be  delivered  or issued for delivery in this state
unless it shall  contain  in  substance  the  following  provisions,  or
corresponding  provisions which in the opinion of the superintendent are
at least as favorable to the defaulting or surrendering policyholder  as
are  minimum  requirements  hereinafter specified and are essentially in
compliance with subsection (n) hereof:
(1) That, in the event of default in any premium payment, the  company
will  grant, upon proper request not later than sixty 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
value as may be  hereinafter  specified.  In  lieu  of  such  stipulated
paid-up  nonforfeiture  benefit, the company may substitute, upon proper
request not later than sixty days after the due date of the  premium  in
default,  a  more  favorable  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.
(2) That, upon surrender of the policy within sixty days after the due
date of any premium payment in default after premiums have been paid for
at least three full years, the company will pay, in lieu of any  paid-up
nonforfeiture  benefit,  a cash surrender value of such amount as may be
hereinafter specified.
(3) 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 sixty  days
after the due date of the premium in default.
(4) 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,
the company will pay, upon surrender of the policy  within  thirty  days
after  any  policy anniversary, a cash surrender value of such amount as
may be hereinafter specified.
(5) In the case  of  policies  which  provide  for  the  crediting  of
additional  amounts  pursuant to subsection (b) of section four thousand
two hundred thirty-two of  this  article,  under  which  cash  surrender
values  are  adjusted  in  accordance  with  a  market-value  adjustment
formula, 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 any 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  any  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 twenty 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.
(5-a)  In  the  case  of  policies  which provide for the crediting of
additional amounts pursuant to subsection (b) of section  four  thousand
two  hundred  thirty-two of this article and which provide for surrender

charges in accordance with subsection (n-1) of this section, a statement
as to any charges that will be imposed upon surrender of the policy.
(5-b)  In  the case of policies that provide for the adjustment of any
cash surrender values  in  accordance  with  a  market-value  adjustment
formula, a statement as to the times (which shall not be less frequently
than  once  every  ten years after issuance of the policy) on which cash
surrender values will be determined without the use of such a formula.
(6) 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 any  statute  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.
(7) That the company shall deliver at issue to each holder of a policy
under which additional amounts may be credited  pursuant  to  subsection
(b)  of section four thousand two hundred thirty-two of this article, or
under which cash surrender values and policy loan values are adjusted in
accordance  with  a  market-value  adjustment   formula,   a   statement
containing  such information as the superintendent prescribes, and shall
mail to each such holder at least once each policy year or within  sixty
days after the end of a policy year a statement as of a date during such
year  as to the death benefit, cash surrender value and loan value under
the policy (and any amount by which such cash surrender value  and  loan
value  were  adjusted  in  accordance  with  a  market-value  adjustment
formula) on such date  as  well  as  such  further  information  as  the
superintendent  requires.  The  statement shall be addressed to the last
post-office address of the policyholder known to the company.
(8) Any of the foregoing provisions or portions of this subsection 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 six months after  demand  therefor  with
surrender of the policy.
(b) (1) In the case of contracts issued on or after the operative date
of  this  section  as  defined in subsection (p) hereof and prior to the
operative date of section four thousand two hundred twenty-three of this
article, no contract of annuity or pure endowment, except as  stated  in
subsection (o) hereof, 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 superintendent  are
at least as favorable to the defaulting or surrendering contract holder:
(A) That in the event of default in any stipulated payment the company
will  grant  a paid-up nonforfeiture benefit on a plan stipulated in the
contract, effective as of such  due  date,  of  such  value  as  may  be
hereinafter specified.
(B) A statement of the mortality table, if any, and interest rate used
in  calculating  the  paid-up nonforfeiture benefits available under the
contract, together with a table showing either the cash surrender  value
or  the  paid-up  nonforfeiture  benefit,  if  any,  available  on  each

anniversary of the contract either  during  the  first  twenty  contract
years  or  during the term of stipulated payments, whichever is shorter,
such benefits to be calculated upon the assumption  that  there  are  no
dividends  or  paid-up additions credited to the contract and that there
is no indebtedness to the company on the contract.
(C) A statement that  the  paid-up  nonforfeiture  benefits  available
under  the  contract  are not less than the minimum benefits required by
any statute of  the  state  in  which  the  contract  is  delivered;  an
explanation  of  the  manner in which the paid-up nonforfeiture benefits
are altered by the existence of any paid-up additions  credited  to  the
contract  or  any  indebtedness  to  the  company  on the contract; if a
detailed statement of the method of computation of the benefits shown in
the contract 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 contract is delivered; and  a  statement  of  the
method  to  be  used  in  calculating  the paid-up nonforfeiture benefit
available under the contract on any contract anniversary beyond the last
anniversary for which such  benefits  are  consecutively  shown  in  the
contract.
If  a company shall provide for the payment of a cash surrender value,
it shall reserve the right to defer the payment  of  such  value  for  a
period  of  six  months  after  demand  therefor  with  surrender of the
contract.
(2) Notwithstanding the requirements of this subsection, any  deferred
annuity  contract  may  provide  that  if  the annuity allowed under any
paid-up nonforfeiture benefit would be less than sixty dollars annually,
the company may at its option grant a cash surrender value  in  lieu  of
such  paid-up nonforfeiture benefit of such amount as may be required by
subsection (f) hereof.
(c) (1) Any cash surrender value available under any  policy  referred
to  in  subsection  (a)  hereof,  in  the  event of default in a premium
payment due on any policy anniversary, whether or not required  by  such
subsection,  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
(g), (h), (i) and (k) hereof, 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, including interest due or
accrued.
(2) In the case of any policy issued on or after the operative date of
subsection (k) hereof, which provides  supplemental  life  insurance  or
annuity  benefits  at  the option of the insured and for an identifiable
additional premium by rider or supplemental policy provision,  the  cash
surrender value referred to in paragraph one of this subsection shall be
in  an  amount  not  less  than  the  sum of the cash surrender value as
defined in such paragraph for an otherwise similar policy issued at  the
same  age  without such rider or supplemental policy provision, the cash
surrender value as defined in such paragraph for a policy which provides
only the supplemental life insurance benefits otherwise provided by such
rider or supplemental policy provision, and the cash surrender value  as
defined  in  section  four  thousand  two  hundred  twenty-three of this
article for a contract which  provides  only  the  supplemental  annuity
benefits  otherwise  provided  by  such  rider  or  supplemental  policy
provision.
(3) In the case of any family policy issued on or after the  operative
date  of  subsection  (k)  hereof  as  defined  therein, which defines a

primary insured and provides term insurance on the life of the spouse of
the primary insured expiring before the spouse's  age  seventy-one,  the
cash  surrender  value  referred  to in paragraph one of this subsection
shall  be an amount not less than the sum of the cash surrender value as
defined in such paragraph 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 defined in such paragraph  for  a  policy  which
provides  only the benefits otherwise provided by such term insurance on
the life of the spouse.
(4) Any cash surrender value available within thirty  days  after  any
policy  anniversary  under  any such policy paid up by completion of all
premium  payments  or  any  such  policy  continued  under  any  paid-up
nonforfeiture benefit, whether or not required by subsection (a) hereof,
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, including interest due or accrued.
(5)  Every company must provide, to any policyowner who so requests in
writing, within twenty business days from the date the  written  request
is  received  by the company, a statement of the cash surrender value of
the policy.
(d) Any paid-up  nonforfeiture  benefit  available  under  any  policy
referred  to  in  subsection  (a)  hereof,  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.
(e) (1) Any paid-up nonforfeiture benefit available under any  annuity
or  pure endowment contract referred to in subsection (b) hereof, in the
event of default in a stipulated payment due on any contract anniversary
shall be such that its present value as of such anniversary shall be 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  contract,  including  any  existing paid-up additions, if there had
been no default, over the sum of (i)  the  then  present  value  of  the
adjusted   stipulated   payments   defined   in  subsection  (g)  hereof
corresponding to stipulated payments which would have fallen due on  and
after  such  anniversary, and (ii) the amount of any indebtedness to the
company on the contract, including interest due or accrued.
(2) In determining the benefits referred to in  paragraph  one  hereof
and  in  calculating  the  adjusted  stipulated  payments referred to in
subsection (g) hereof, in the case of annuity contracts under  which  an
election  may  be  made  to  have  annuity payments commence at optional
dates, the annuity payments shall be deemed to commence at a date  which
shall  be  the  latest permitted by the contract for the commencement of
such payments but not later than the contract  anniversary  nearest  the
annuitant's   seventieth  birthday  or  the  tenth  anniversary  of  the
contract, whichever is later;  and  the  stipulated  payments  shall  be
deemed  to  be payable for the longest period during which they would be
payable if election were made to have the annuity payments  commence  at
such date.
(f)  Any cash surrender value allowed by any annuity or pure endowment
contract referred to in subsection (b) hereof  and  the  present  value,
under  any  optional provision, of future benefits commencing on the due
date of the stipulated payment in default shall each be at  least  equal

to  the  then present value of the minimum paid-up nonforfeiture benefit
required by subsection (e) hereof.
(g) (1) This subsection shall not apply to policies issued on or after
the operative date of subsection (k) as defined herein.
(2) Except as provided in paragraph four hereof, the adjusted premiums
for  any policy referred to in subsection (a) hereof 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 stated in  the  policy  as  extra  premiums  to  cover
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) two percent 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) forty percent of the adjusted premium for
the first policy year; (iv) twenty-five percent 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 items (iii) and (iv) hereof, no
adjusted premium shall be deemed to exceed four percent 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.
(3) 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 uniform  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  date  of
issue  as  the benefits under the policy, provided, however, that in the
case of a policy providing a  varying  amount  of  insurance  (including
policies  in  which  the  death benefit prior to a date specified in the
policy does not exceed the premiums paid  with  interest,  or  the  cash
value  of the policy if greater) issued on the life of a child under age
ten, the equivalent uniform amount of insurance shall be  calculated  as
though  the  amount  of  insurance  provided  by the policy prior to the
attainment of age ten were the amount provided by  such  policy  at  age
ten.
(4)  The  adjusted  premiums  for  any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (i)
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 (ii)
the  adjusted  premiums for such term insurance, the foregoing items (i)
and (ii) being calculated separately and as specified in paragraphs  two
and  three hereof except that, for the purposes of items (ii), (iii) and
(iv) of paragraph two hereof, the  amount  of  insurance  or  equivalent
uniform  amount  of  insurance  used  in the calculation of the adjusted
premiums referred to in item (ii) of this paragraph 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 item
(i) of this paragraph.
(5) The adjusted stipulated payments for any annuity or pure endowment
contract referred to in subsection (b) hereof shall be calculated on  an

annual  basis  and  shall  be  such uniform percentage of the respective
stipulated payments specified in the contract  for  each  contract  year
that  the  present  value,  at the date of issue of the contract, of all
such  adjusted  stipulated payments shall be equal to the sum of (i) the
then present value of the future guaranteed benefits provided for by the
contract; (ii) twenty percent of the adjusted stipulated payment for the
first contract year; and (iii) two percent of  the  adjusted  stipulated
payment  for  the first contract year for each year not exceeding twenty
during which stipulated payments are payable.
(6) Except as otherwise provided  in  subsections  (h),  (i)  and  (j)
hereof, all adjusted premiums, adjusted stipulated payments, and present
values  referred  to in this section shall be calculated on the basis of
(i) the rate of interest, not exceeding three and one-half  percent  per
annum,  specified  in  the  policy  or  contract  for  calculating  cash
surrender values, if any, and paid-up nonforfeiture benefits; and (ii) a
mortality  table  which  shall   be:   for   ordinary   insurance,   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  three  years younger than the actual age of the insured; for
industrial insurance, the 1941 Standard Industrial Mortality Table;  for
annuity  and  pure endowment contracts, either the 1937 Standard Annuity
Mortality Table, the Annuity Mortality  Table  for  1949  Ultimate,  any
modification of either of these tables approved by the superintendent or
any  other table approved by the superintendent. 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 one hundred and
thirty percent 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 superintendent.
(h) (1) This subsection shall not apply to ordinary policies issued on
or after the operative date of subsection (k) hereof.
(2)  In the case of ordinary policies issued on or after the operative
date of this subsection, all adjusted premiums and present values  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 not
exceeding  three and one-half percent per annum except that four percent
per annum may be used for policies issued on or after  June  thirteenth,
nineteen  hundred  seventy-four  and  prior  to  January first, nineteen
hundred seventy-nine, and a rate of  interest  not  exceeding  five  and
one-half  percent  per annum may be used for policies issued on or after
January first, nineteen hundred  seventy-nine,  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
six 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, 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 superintendent.
(3) Any company may file with the superintendent a written  notice  of
its  election  to  comply with the provisions of this subsection after a
specified date before January first, nineteen hundred  sixty-six.  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
first, nineteen hundred sixty-six.
(i) (1) In the case of industrial policies  issued  on  or  after  the
operative  date  of  this  subsection, all adjusted premiums and present
values 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  not  exceeding  three  and one-half percent per
annum except that four percent per annum may be used for policies issued
on or after June thirteenth, nineteen hundred seventy-four and prior  to
January  first, nineteen hundred seventy-nine and a rate of interest not
exceeding five and one-half percent per annum may be used  for  policies
issued  on  or  after  January  first,  nineteen  hundred  seventy-nine;
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  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 superintendent.
(2)  Any  company may file with the superintendent a written notice of
its election to comply with the provisions of this  subsection  after  a
specified  date  before January first, nineteen hundred and sixty-eight.
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 first, nineteen hundred and sixty-eight.
(j)  In  the  case  of individual annuity and pure endowment contracts
issued on or after the operative date of paragraph three  of  subsection
(c)  of section four thousand two hundred seventeen of this article, and
prior to the  operative  date  of  section  four  thousand  two  hundred
twenty-three  of  this  article,  all  adjusted  stipulated payments and
present values referred to in this section shall be  calculated  on  the
basis  of  the  Annuity  Mortality  Table  for  1949,  Ultimate,  or any
modification of this table approved by the superintendent, and the  rate
of  interest  not  exceeding  four  percent  per annum, specified in the
contract for calculating cash surrender  values,  if  any,  and  paid-up
nonforfeiture  benefits,  except  that, if such rate of interest exceeds
three and one-half percent per annum, there  shall  be  substituted  for
such mortality table the 1971 Individual Annuity Mortality Table, or any
modification of this table approved by the superintendent.
(k) (1) This subsection shall apply to all policies issued on or after
the operative date as defined in this subsection.
(2)  Except  as  provided  in  paragraph eight 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  premiums
specified in the policy for each policy year, excluding amounts  payable
as  extra  premiums  to  cover  impairments  or special hazards and also

excluding 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  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) one percent
of either the amount of  insurance,  if  the  insurance  be  uniform  in
amount,  or  the average amount of insurance at the beginning of each of
the first ten policy years; and (iii) one hundred twenty-five percent of
the nonforfeiture net level premium as  hereinafter  defined.  Provided,
however,  that  in  applying  the percentage specified in (iii) above no
nonforfeiture net level premium shall be deemed to exceed  four  percent
of  either  the  amount  of  insurance,  if  the insurance be uniform in
amount, or the average amount of insurance at the beginning of  each  of
the  first  ten  policy  years.  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.
(3)  The nonforfeiture net level premium shall be equal to 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.
(4)  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, the 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 the 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 the policy immediately after the change.
(5)  Except  as  otherwise  provided  in  paragraph  eight   of   this
subsection,  the  recalculated  future  adjusted  premiums  for any such
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
also  excluding  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.
(6) The additional expense allowance, at the time of the change to the
newly defined benefits or premiums, shall be the sum of (i) one  percent
of  the  excess,  if positive, of the average amount of insurance at the
beginning of each of the first ten policy years subsequent to the change
over the average  amount  of  insurance  prior  to  the  change  at  the
beginning  of  each of the first ten 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)  one  hundred

twenty-five percent of the increase, if positive, in  the  nonforfeiture
net level premium.
(7) The recalculated nonforfeiture net level premium shall be equal to
the  result  obtained  by  dividing subparagraph (A) by subparagraph (B)
hereof where:
(A) equals the sum of
(i) 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
(ii) the present value of the increase in future  guaranteed  benefits
provided for by the policy, and
(B) 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.
(8)  Notwithstanding  any  other  provision  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.
(9) All adjusted premiums and  present  values  referred  to  in  this
section  shall  for  all policies of ordinary insurance be calculated on
the basis of
(A) the Commissioners 1980 Standard Ordinary Mortality Table, or
(B) 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; and shall for all policies
issued  in  a  particular  calendar year 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.
Provided, however, that:
(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 (a) hereof, 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  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.
(v) For insurance issued on a substandard basis,  the  calculation  of
any   such  adjusted  premiums  and  present  values  may  be  based  on
appropriate modifications of the aforementioned tables.
(vi) Any ordinary mortality tables,  adopted  after  nineteen  hundred
eighty  by  the  National Association of Insurance Commissioners (or any

modifications thereof for any specified class or classes of risks), that
are approved by the superintendent 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.
(10)  The  nonforfeiture interest rate per annum for any policy issued
in a particular  calendar  year  shall  be  equal  to  one  hundred  and
twenty-five  percent  of  the calendar year statutory valuation interest
rate for such policy as defined in section  four  thousand  two  hundred
seventeen  of  this  article  rounded  to  the nearer one quarter of one
percent, computed, with respect  to  a  single  premium  life  insurance
policy  of  the  kind  referred  to  in item (vi) of subparagraph (B) of
paragraph four of subsection (c) of such section, on  a  year  of  issue
basis  by  using  a  reference  interest rate defined for such policy in
subparagraph (F) of such paragraph for the  year  immediately  preceding
the  year  of  issue on the assumption that the company has submitted an
opinion and memorandum,  in  form  and  substance  satisfactory  to  the
superintendent,  of  a  qualified  actuary  with  respect to such single
premium  life  insurance  policies  in  accordance  with  item  (vi)  of
subparagraph (B) of such paragraph.
(11)  Notwithstanding  any  other  provision  in  this  chapter 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.
(12) After May twenty-fourth, nineteen hundred eighty-two, any company
may file with the superintendent a written notice  of  its  election  to
comply,  with  respect  to any plan of insurance, with the provisions of
this subsection after a specified date before  January  first,  nineteen
hundred   eighty-nine,  which  shall  be  the  operative  date  of  this
subsection for that plan of insurance for such  company;  the  operative
dates  of  this subsection for other plans of insurance for such company
shall be any dates not later than January first of the third  subsequent
calendar  year,  but  in  no  event  later  than January first, nineteen
hundred eighty-nine. If a company makes no such election with respect to
any plan of insurance, the operative date of this  subsection  for  such
company shall be January first, nineteen hundred eighty-nine.
(l)  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
subsection (a), (c), (d), (g), (h), (i) or (k) of this section, then:
(1) the superintendent must be satisfied that  the  benefits  provided
under  the  plan  are  substantially  as  favorable to policyholders and
insureds as the minimum benefits otherwise required by  subsection  (a),
(c), (d), (g), (h), (i) or (k) hereof;
(2)  the  superintendent  must  be satisfied that the benefits and the
pattern of premiums of that plan are not such as to mislead  prospective
policyholders or insureds;
(3)  the  cash  surrender  values  and  paid-up nonforfeiture benefits
provided by such plan must not be  less  than  the  minimum  values  and
benefits  required for the plan computed by a method consistent with the
principles of this section, as determined by the superintendent.
(m) (1)  Any  cash  surrender  value  and  any  paid-up  nonforfeiture
benefit,  available  under  any  such policy or contract in the event of

default in the payment of any premium or stipulated payment due  at  any
time  other  than  on  the  policy  or  contract  anniversary,  shall be
calculated with allowance for the lapse  of  time  and  the  payment  of
fractional  premiums  or stipulated payments beyond the beginning of the
policy or contract year in which the default occurs.
(2) All values referred to in subsections (c) through (k) hereof,  may
be  calculated  upon the assumption that any death benefit is payable at
the end of the policy or contract year of death.
(3) Notwithstanding the provisions of subsections (c) and (e)  hereof,
additional  benefits  payable (i) in the event of death or dismemberment
by accident, (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 twenty-six,  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, endowment, and
annuity 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.
(n)  (1)  This  subsection,  in  addition  to  all  other   applicable
provisions  of  this  section,  shall apply to all policies issued on or
after January first, nineteen hundred eighty-six.
(2) 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  two-tenths  of  one
percent  of  either the amount of insurance, if the insurance be uniform
in amount, or the average amount of insurance at the beginning  of  each
of  the  first ten policy years, from the sum of (i) the greater of zero
and the basic cash value hereinafter  specified  and  (ii)  the  present
value  of  any  existing  paid-up  additions  less  the  amount  of  any
indebtedness to the company under the policy.
(3) The basic cash value shall be equal to 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. Provided, however, that  the  effects
on  the  basic  cash  value  of  supplemental  life insurance or annuity
benefits or of family coverage, as described in subsection  (c)  or  (g)
hereof,  whichever  is  applicable, shall be the same as are the effects
specified in such subsection,  whichever  is  applicable,  on  the  cash
surrender values defined in that subsection.
(4)  The  nonforfeiture factor for each policy year shall be an amount
equal to a percentage of the adjusted premium for the  policy  year,  as
defined in subsection (g) or (k) hereof, whichever is applicable. Except
as  is  required by the next succeeding sentence of this paragraph, such
percentage:
(A) must 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 two-tenths of one percent of either the amount of insurance,
if  the  insurance  be  uniform  in  amount,  or  the  average amount of
insurance at the beginning of each of the first ten policy years; and
(B)  must be such that no percentage after the later of the two policy
anniversaries specified in subparagraph (A) hereof may  apply  to  fewer
than five consecutive policy years.
Provided,  that  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 (g) or (k) hereof, whichever is applicable, were  substituted
for  the  nonforfeiture  factors  in  the  calculation of the basic cash
value.
(5) 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 are used in demonstrating  the  policy's
compliance with the other subsections of this section.
(6) (A) The cash surrender values referred to in this subsection shall
include any endowment benefits provided for by the policy.
(B)  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 (a), (c), (d), (k) and (m) hereof.
(C)  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 paragraph three of
subsection  (m)  hereof  shall  conform  with  the  principles  of  this
subsection.
(n-1)  (1)  Notwithstanding  any  other provision in this section, any
policy that meets the requirements of this subsection shall be deemed to
provide the minimum nonforfeiture benefits  and  cash  surrender  values
required  by this section. Any policy which is issued by a company after
the operative date of this subsection for the company  and  under  which
additional amounts may be credited pursuant to subsection (b) of section
four  thousand  two  hundred  thirty-two  of  this article must meet the
requirements of this subsection.
(2) In this subsection,
(A) "Policy value" means an amount equal to gross premiums paid  under
a  policy  (excluding  separately  identified  premiums  for  riders  or
supplementary benefits that are not credited to the policy  value)  plus
interest  credited  less  the  amount of any partial withdrawals and the
following charges as specified in the policy: (i) expense charges,  (ii)
benefits  charges,  (iii)  service  charges,  and (iv) partial surrender
charges.
(B) "Benefit charges" means mortality charges made for life  insurance
on  the  insured  person  or  persons and any charges made for riders or
supplementary benefits.
(C) "Service charges" means  charges  for  the  cost  of  transactions
requested  by  the  policyowner  such as partial withdrawals and benefit
illustrations.  Transactional  charges  made  under   mandatory   policy
provisions shall not be assessed unless specifically permitted by law or
regulation for such transactions.
(D) "Expense  charges"  means  charges  (other  than  service charges)
deducted from gross premiums before premiums are credited to the  policy
value or otherwise deducted from the policy value.
(E) "Excess  first  year expense charges" means the greatest amount by
which (x) can exceed (y) based, for stipulated premium policies, on  the
premiums  set  forth  in  the  policy  and,  for  other policies, on the

assumption that any premium (other than a single premium) payable in the
first policy year is also  payable  during  the  entire  premium  paying
period, where
(x) is the amount of the expense charges made in the first policy year
and
(y)  is  the arithmetic average of the corresponding charges which the
policy states would be imposed in policy years two through twenty or the
premium paying period, if shorter.
(F) "Excess expense charges for a  face  amount  increase"  means  the
greatest  amount  by  which  (x)  can  exceed  (y) based, for stipulated
premium policies, on the premiums set forth in the policy and, for other
policies, on the assumption that the net level whole life annual premium
for the increase applies throughout the remaining premium paying period,
where
(x) is the amount of the expense charges attributable to  an  increase
in  face  amount  of insurance in the first policy year of the increase,
and
(y)  is  the  arithmetic  average   of   the   corresponding   charges
attributable to the increase which the policy states would be imposed in
the  nineteen  policy years following the increase or the premium paying
period, if shorter.
(G) "Interest credited" means the amount of interest credited  to  the
policy  value  but, with respect to policies meeting the requirements of
subparagraph (A) of paragraph three of this subsection,  not  less  than
three percent in any year.
(H) "Net  level  whole  life  annual premium at issue" means an annual
premium based on face amounts of insurance set forth in the  policy  and
on the assumption of level annual premiums for life, the mortality table
rate  used  to  calculate the maximum mortality charges (but not greater
than that permitted under item (iv) of  subparagraph  (A)  of  paragraph
three  of  this  subsection)  and  an  interest  rate  based on the rate
specified in the policy but not less than the lesser of four percent and
the nonforfeiture interest rate per annum pursuant to paragraph  ten  of
subsection (k) of this section.
(I) "Net  level  whole life annual premium for an increase in the face
amount of insurance" means an additional annual premium for an  increase
in  the  face  amount  of  insurance  determined  as  of the date of the
increase in accordance with subparagraph (H) of this paragraph as though
such increase were a separate policy.
(J) "Increase in face amount of insurance" means an  increase  in  the
schedule  of  face  amounts  of insurance provided for in the policy and
made at the request of the policyholder and shall not include  increases
in  face  amount  resulting from a change in the death benefit option or
changes in death benefit pursuant to policy terms that do not affect the
face amount.
(K) "Surrender charge" means a deferred  charge  made  to  the  policy
value  in  the  event  of  a  full  or  partial surrender of the policy,
reduction in the face amount of insurance or premium, or a default in  a
premium payment.
(L) "Cash  surrender  value" means an amount equal to the policy value
less any surrender charge, before reduction  for  outstanding  loans  or
other amounts due under the policy.
(M) "Deferred  first year expense charge", at issue or for an increase
in the face amount of insurance, means  any  portion  of  the  allowable
first  year expense charge that is not deducted from premiums or charged
to the policy value in the year of issue, or in the  policy  year  of  a
face  amount  increase,  but deferred and charged to the policy value in
subsequent years.
(N) "Consumer price ratio" means the ratio (not to exceed two) of  (x)
the  consumer  price  index (for all urban households) for the September
preceding the policy year in which the ratio is being applied to (y) the
consumer price index for September, nineteen hundred eighty-five.
(3)  A  policy  that  meets  the  requirements of this subsection must
provide for cash surrender values that meet the requirements  of  either
subparagraph  (A)  or subparagraph (B) and comply with the provisions of
subparagraphs (C) and (D) of this paragraph.
(A) Cash surrender values shall be deemed to meet the requirements  of
this subparagraph, if the following conditions are met:
(i)  Expense  charges  for  any  policy  year  shall  not  exceed  the
following:
(I) ninety percent of premiums received up to the net level whole life
annual premium at issue (regardless of when received),
(II) ten percent of all other premiums received,
(III) ninety percent of any net level whole life  annual  premium  for
increases   in   the  face  amount  of  insurance  (including  increases
offsetting previous decreases),
(IV) ten dollars per one thousand dollars of initial  face  amount  in
the first policy year,
(V)  one  dollar  per  one  thousand  dollars of the first one hundred
thousand dollars of face amount in subsequent policy years,
(VI) ten dollars per one thousand dollars of any increase in the  face
amount  of  insurance  in  the  year  of  increase  (including increases
offsetting previous decreases),
(VII) a charge per policy in  the  first  policy  year  equal  to  the
product of one hundred fifty dollars and the consumer price ratio, and
(VIII)  in policy years after the first, a charge per policy per month
equal to the product of five dollars and the consumer price ratio.
(ii) Any surrender charge provided in the policy shall  be  such  that
the  initial  surrender charge together with the expense charges made in
the first policy year (and on premiums up to the net  level  whole  life
annual  premium  if received after the first year) do not exceed the sum
of the amounts determined in accordance with clauses (I) and  (II)  (for
premiums  received in the first year) and clauses (IV) and (VII) of item
(i) of this subparagraph. The surrender charge at any time shall not  be
greater than the difference between the maximum initial surrender charge
permitted  under  this  subparagraph  and  the  sum  of all the deferred
expense charges made up to that time. Any additional  surrender  charges
that  are  imposed  in connection with an increase in face amount of the
policy shall be such that such  additional  charges  together  with  any
expense  charges made in connection with such increase do not exceed the
sum of the amounts determined in accordance with clauses (III) and  (VI)
of item (i) of this subparagraph.
(iii)  Deferred first year expense charges shall be such that: (I) the
charge for any one year shall not exceed the maximum allowable surrender
charge for that year, and (II) the total of all such charges at any time
plus the surrender charge at that time  shall  not  exceed  the  maximum
initial surrender charge. Any deferred first year expense charge imposed
with  respect  to  an  increase in the face amount of insurance shall be
subject to comparable limitations.
(iv) A policy meeting the requirements of this subparagraph if  issued
before  the  operative  date  of  subsection (k) of this section may not
impose mortality charges in excess of those based on  the  commissioners
1958  standard  ordinary  mortality  table  in  the  case  of a standard
medically underwritten insured or the commissioners 1958  extended  term
insurance table in the case of any other standard insured, and if issued
on  or  after  such  operative  date may not impose mortality charges in

excess of those  based  on  the  commissioners  1980  standard  ordinary
mortality table in the case of a standard medically underwritten insured
or  the  commissioners 1980 extended term insurance table in the case of
any  other  standard  insured.  At  the  option  of the company, maximum
charges based on the  commissioners  1980  standard  ordinary  mortality
table  may  be computed using ten-year select mortality factors. Maximum
charges may also be based on any other table  (or  modification  thereof
for the specified class of risk) approved by the superintendent pursuant
to  item (vi) of subparagraph (B) of paragraph nine of subsection (k) of
this section. For insurance issued on a substandard basis, such  charges
may be based on appropriate modifications of such tables.
(B)  Cash surrender values shall be deemed to meet the requirements of
this subparagraph, if the following conditions are met:
(i) Policy values shall not be less than a minimum policy value  which
reflects  the same transactions, the same interest credited and the same
benefit charges that are reflected in the actual  policy  value,  except
that the excess first year expense charges shall not be greater than the
initial  expense  allowance,  and  any excess expense charges for a face
amount increase after issue shall  not  be  greater  than  the  increase
expense  allowance.  For  purposes  of  this  item,  the initial expense
allowance shall be (I)  the  lesser  of  (aa)  one  hundred  twenty-five
percent  of  the  net  level whole life annual premium at issue and (bb)
four percent of the average face amount of insurance provided under  the
policy  during  the first ten policy years plus (II) one percent of such
average face amount, and the increase expense allowance shall be (I) the
lesser of (aa) one hundred twenty-five percent of the  net  level  whole
life  annual premium for an increase in the face amount of insurance and
(bb) four percent of the average increase in face  amount  of  insurance
over  a  period  of ten policy years (excluding any increases previously
taken into account in determining an expense allowance under this  item)
plus (II) one percent of any such average increase.
(ii)  Any  surrender  charge provided in the policy shall be such that
the initial surrender charge together with any excess first year expense
charges do not exceed the  initial  expense  allowance.  Any  additional
surrender  charges  that  are  imposed in connection with an increase in
face amount shall be such that any such additional charge together  with
any  excess expense charges made in connection with such increase do not
exceed the increase expense allowance.
(iii) The policy shall provide that at least once each policy year the
policyholder has the option to apply the portion of the  cash  surrender
value  necessary  to  provide  an  amount  of  guaranteed  paid-up  life
insurance at least as great as the lesser of (I) and (II), where (I)  is
the  amount  of  paid-up  life  insurance  provided by applying the cash
surrender value to provide such paid-up insurance, computed on the basis
of an interest rate (not less than the lesser of (aa) four  percent  and
(bb) the nonforfeiture interest rate per annum pursuant to paragraph ten
of  subsection  (k) of this section minus one percent) guaranteed in the
policy for this purpose, and a mortality basis (not  less  favorable  to
the  policyholder  than the mortality basis specified for an insured not
medically  underwritten  in  item  (iv)  of  subparagraph  (A)  of  this
paragraph)  guaranteed  in  the policy for this purpose, and (II) is the
amount of paid-up life insurance such that the amount  at  risk  on  the
paid-up insurance is the same as the amount at risk under the policy. If
the  option  is  elected,  the  portion  of the cash surrender value not
applied to provide the paid-up life  insurance  shall  be  paid  to  the
policyholder.  The  guaranteed  paid-up  life  insurance  benefit may be
provided under the policy or by means of a separate single premium  life
insurance  policy  issued  by  the company or an affiliate or subsidiary

thereof. For purposes of this item, the term "cash surrender  value"  is
after  reduction  for  outstanding  loans or other amounts due under the
policy.
(C)  The  surrender  charge  in policy years after the first shall not
exceed  the  maximum  initial  surrender  charge  permitted  under  this
subsection  multiplied  by  the ratio of (i) the value of a life annuity
due of one dollar per year for the balance of the amortization period to
(ii) the corresponding annuity value at issue, based  on  the  mortality
table  and  interest  rate  used in calculating the net level whole life
annual premiums. For all policies the  maximum  amortization  period  is
twenty years.
(D)  Any  surrender  charge  that is imposed on an increase in premium
payments under a policy meeting the requirements of this subsection that
does not result in any increase in face amount of the policy  shall  not
exceed  the  difference between (I) the maximum initial surrender charge
computed on the assumption that premiums were paid at the increased rate
from the date of issuance of the policy and  (II)  the  maximum  initial
surrender charge permitted under this subsection.
(4)  The  superintendent  may  issue  regulations  to  implement  this
subsection.
(5) The operative date of this  subsection  for  a  company  shall  be
January  first,  nineteen hundred eighty-eight, or the operative date of
this act for the company, whichever is earlier.
(n-2) Notwithstanding any other provision of this section, any  policy
that  provides  for  the  crediting  of  additional  amounts pursuant to
subsection (b) of section four thousand two hundred thirty-two  of  this
article may provide for cash surrender benefits determined in accordance
with  a  market-value  adjustment  formula, provided, however, that such
policy  provides  for  cash  surrender   benefits   determined   without
adjustment  in  accordance with such a formula at specified times (which
shall not be less frequent than once every ten years after  issuance  of
the  policy).  For  purposes  hereof,  "market-value adjustment formula"
means a formula which is described in  the  policy  for  increasing  and
decreasing  cash  surrender values that would otherwise meet the minimum
requirements of subsection (n-1) of this section and  which  takes  into
account  (1) changes in interest rates on publicly-traded obligations or
other investments or in interest rates provided in, or declared pursuant
to, policies of the same class as the policy being surrendered  and  (2)
the  length  of time between the date on which the policy is surrendered
and the next date on which the policy would have provided cash surrender
benefits determined without  the  use  of  any  market-value  adjustment
formula.  The  superintendent  may  promulgate reasonable regulations to
define permissible forms or market-value adjustment formulae.
(o) (1) This section shall not apply to any of the following:
(A) Reinsurance.
(B) Group insurance.
(C) Group annuity contract.
(D) A single premium pure endowment or annuity contract.
(E) A reversionary annuity contract.
(F) A term policy of uniform  amount,  which  provides  no  guaranteed
nonforfeiture or endowment benefits, or renewal thereof, of thirty years
or  less  expiring before age eighty-one, for which uniform premiums are
payable during the entire term of the policy.
(G) A term policy of decreasing amount, which provides  no  guaranteed
nonforfeiture  or  endowment  benefits,  on which each adjusted premium,
calculated as specified in subsections (g), (h), (i) and (k) hereof,  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 twenty years or less
expiring before age seventy-one, for which uniform premiums are  payable
during the entire term of the policy.
(H)  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 (c), (d), (g), (h), (i) and (k)
hereof, exceeds two and one-half percent of the amount of  insurance  at
the beginning of the same policy year.
(I) A policy or contract delivered outside this state through an agent
or  other  representative of the company issuing the policy or through a
broker.
(2) For purposes of determining the applicability of this section, the
age at expiry for a joint term life insurance policy shall be the age at
expiry of the oldest life.
(p) (1) Any company may file with the superintendent a written  notice
of  its  election  to comply with the provisions of this section after a
specified date before January first, nineteen hundred forty-eight.
(2) After the filing of such notice, then  upon  such  specified  date
(which shall be the operative date for such company), this section shall
become  operative  with respect to the policies and contracts thereafter
issued by such company.  If  a  company  makes  no  such  election,  the
operative  date of this section for such company shall be January first,
nineteen hundred forty-eight.
(q) The provisions of this section  shall  not  apply  to  any  policy
qualified for special tax treatment under subsection (b) of section four
hundred  three  of the Internal Revenue Code of 1986, as amended, to the
extent such application would prevent such qualification.