2023 Texas Statutes › Insurance Code › Title 4 - Regulation of Solvency › Subtitle B - Reserves and Investments › Chapter 425 - Reserves and Investments for Life Insurance Companies and Related Entities › Subchapter B. Standard Valuation Law › Section 425.058. Computation of Minimum Standard: General Rule

Sec. 425.058.  COMPUTATION OF MINIMUM STANDARD: GENERAL RULE.  (a)  Except as otherwise provided by Section 425.059, 425.060, 425.061, 425.062, or 425.063, the minimum standard for the valuation of an outstanding life insurance policy or annuity or pure endowment contract issued by a life insurance company on or after the date on which Chapter 1105 applies to policies issued by the company, as determined under Section 1105.002(a) or (b), is the commissioners reserve valuation method described by Sections 425.064, 425.065, and 425.068, computed using the table prescribed by this section and with interest at 3-1/2 percent or at the following rate, if applicable:
(1)  in the case of a policy or contract issued on or after June 14, 1973, and before August 29, 1977, other than an annuity or pure endowment contract, four percent;
(2)  in the case of a single premium life insurance policy issued on or after August 29, 1977, 5-1/2 percent; or
(3)  in the case of a life insurance policy issued on or after August 29, 1977, other than a single premium life insurance policy, 4-1/2 percent.
(b)  Except as provided by Subsection (c), for an ordinary life insurance policy issued on the standard basis, excluding any disability or accidental death benefits in the policy, the applicable table is the Commissioners 1941 Standard Ordinary Mortality Table, if the policy was issued before the date on which Section 1105.152 would apply to the policy, as determined under Section 1105.152(a) or (b), or the Commissioners 1958 Standard Ordinary Mortality Table, if Section 1105.152 applies to the policy.  For a policy that is issued to insure a female risk:
(1)  a modified net premium or present value for a policy issued before August 29, 1977, may be computed according to an age not more than three years younger than the insured's actual age; and
(2)  a modified net premium or present value for a policy issued on or after August 29, 1977, may be computed according to an age not more than six years younger than the insured's actual age.
(c)  For an ordinary life insurance policy issued on the standard basis, excluding any disability or accidental death benefits in the policy, and to which Subchapter B, Chapter 1105, applies, the applicable table is:
(1)  the Commissioners 1980 Standard Ordinary Mortality Table;
(2)  at the insurer's option for one or more specified life insurance plans, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors; or
(3)  any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard valuation for a policy to which this subdivision applies.
(d)  For an industrial life insurance policy issued on the standard basis, excluding any disability or accidental death benefits in the policy, the applicable table is:
(1)  the 1941 Standard Industrial Mortality Table, if the policy was issued before the date on which Section 1105.153 would apply to the policy as determined under Section 1105.153(a) or (b); or
(2)  if Section 1105.153 applies to the policy:
(A)  the Commissioners 1961 Standard Industrial Mortality Table; or
(B)  any industrial mortality table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard of valuation for a policy to which this subdivision applies.
(e)  For an individual annuity or pure endowment contract, excluding any disability or accidental death benefits in the policy, the applicable table is the 1937 Standard Annuity Mortality Table, or at the insurer's option, the Annuity Mortality Table for 1949, Ultimate, or a modification of either table that is approved by the commissioner.
(f)  For a group annuity or pure endowment contract, excluding any disability or accidental death benefits in the policy, the applicable table is:
(1)  the Group Annuity Mortality Table for 1951;
(2)  a modification of that table approved by the commissioner; or
(3)  at the insurance company's option, a table or a modification of a table prescribed for an individual annuity or pure endowment contract by Subsection (e).
(g)  For total and permanent disability benefits in or supplementary to an ordinary policy or contract, the applicable tables are:
(1)  for a policy or contract issued on or after January 1, 1966:
(A)  the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit; or
(B)  any table of disablement rates and termination rates adopted after 1980 by the National Association of Insurance Commissioners that are approved by commissioner rule for use in determining the minimum standard of valuation for a policy to which this subdivision applies;
(2)  for a policy or contract issued on or after January 1, 1961, and before January 1, 1966:
(A)  a table described by Subdivision (1); or
(B)  at the insurance company's option, the Class (3) Disability Table (1926); or
(3)  for a policy issued before January 1, 1961, the Class (3) Disability Table (1926).
(h)  A table described by Subsection (g) must, for an active life, be combined with a mortality table permitted for computing the reserves for a life insurance policy.
(i)  For accidental death benefits in or supplementary to a policy, the applicable table is:
(1)  for a policy issued on or after January 1, 1966:
(A)  the 1959 Accidental Death Benefits Table; or
(B)  any accidental death benefits table adopted after 1980 by the National Association of Insurance Commissioners that is approved by commissioner rule for use in determining the minimum standard of valuation for a policy to which this subdivision applies;
(2)  for a policy issued on or after January 1, 1961, and before January 1, 1966:
(A)  a table described by Subdivision (1); or
(B)  at the insurance company's option, the Inter-Company Double Indemnity Mortality Table; or
(3)  for a policy issued before January 1, 1961, the Inter-Company Double Indemnity Mortality Table.
(j)  A table described by Subsection (i) must be combined with a mortality table permitted for computing the reserves for a life insurance policy.
(k)  For group life insurance, life insurance issued on the substandard basis and other special benefits, the applicable table is a table approved by the commissioner.
(l)(1)  Notwithstanding any other law, the minimum reserve requirements applicable to a credit life policy issued under Chapter 1153 before January 1, 2009, are met if, in the aggregate, the reserves are maintained at 100 percent of the 1980 Commissioner's Standard Ordinary Mortality Table, with interest that does not exceed 5.5 percent.
(2)  For credit life policy reserves on contracts issued to be effective on or after January 1, 2009, the reserve requirements shall be based on minimum reserve standards established by the commissioner by rule.  The commissioner shall adopt the rules based on either:
(A)  the 2001 CSO Male Composite Ultimate Mortality Table for male and female insureds; or
(B)  another CSO Mortality Table approved by the National Association of Insurance Commissioners on or after January 1, 2009, for use on credit life policy reserves.
(3)  For a single premium credit accident and health contract issued on or after January 1, 2009, the reserve requirements shall be based on minimum reserve standards established by the commissioner by rule.  The commissioner shall adopt the rules based on either:
(A)  the 1985 Commissioners Individual Disability Table A (85CIDA); or
(B)  another Commissioner's Disability Table approved by the National Association of Insurance Commissioners on or after January 1, 2009, for use on credit accident and health policy reserves.
(4)  For all credit insurance contracts, if the net premium refund liability exceeds the aggregate recorded contract reserve, the insurer shall establish an additional reserve liability that is equal to the excess of the net refund liability over the contract reserve recorded. The net refund liability may include consideration of commission, premium tax, and other expenses recoverable.
(5)  In addition to the rules required to be adopted under this subsection, the commissioner may adopt other rules to implement this subsection.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch. 399 (H.B. 1761), Sec. 1, eff. June 19, 2009.
Acts 2015, 84th Leg., R.S., Ch. 313 (S.B. 1654), Sec. 11, eff. September 1, 2015.