Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-32 - VARIABLE LIFE INSURANCE › Rule 120-2-32-.06 - Reserve Liabilities for Variable Life Insurance

Current through Rules and Regulations filed through June 27, 2024
(1) Reserve
				liabilities for variable life insurance policies shall be established under
				Section 33-10-13 of the Georgia Insurance
				Code in accordance with actuarial procedures that recognize the variable nature
				of the benefits provided and any mortality guarantees.
(2) For scheduled premium policies, reserve
				liabilities for the guaranteed minimum death benefit shall be the reserve
				needed to provide for the contingency of death occurring when the guaranteed
				minimum death benefit exceeds the death benefit that would be paid in the
				absence of the guarantee, and shall be maintained in the general account of the
				insurer and shall be not less than the greater of the following minimum
				reserves:
(a) The aggregate total of the term
				costs, if any, covering a period of one full year from the valuation date, of
				the guarantee on each variable life insurance contract, assuming an immediate
				one-third depreciation in the current value of the assets of the separate
				account followed by a net investment return equal to the assumed investment
				rate; or
(b) The aggregate total of
				the "attained age level" reserves on each variable life insurance contract. The
				"attained age level" reserve on each variable life insurance contract shall not
				be less than zero and shall equal the "residue," as described in paragraph 1.,
				of the prior year's "attained age level" reserve on the contract, with any such
				"residue," increased or decreased by a payment computed on an attained age
				basis as described in paragraph 2. below.
1.
				the "residue" of the prior year's "attained age level" reserve on each variable
				life insurance contract shall not be less than zero and shall be determined by
				adding interest at the valuation interest rate to such prior year's reserve,
				deducting the tabular claims based on the "excess," if any, of the guaranteed
				minimum death benefit over the death benefit that would be payable in the
				absence of such guarantee, and dividing the net result by the tabular
				probability of survival. The "excess" referred to in the preceding sentence
				shall be based on the actual level of death benefits that would have been in
				effect during the preceding year in the absence of the guarantee, taking
				appropriate account of the reserve assumptions regarding the distribution of
				death claim payments over the year.
2. the payment referred to in subsection
				(2)(b) of this Rule shall be computed so that the present value of a level
				payment of that amount each year over the future premium paying period the
				contract is equal to (A) minus (B) minus (C), where (A) is the present value of
				the future guaranteed minimum death benefits, (B) is the present value of the
				future death benefits that would be payable in the absence of such guarantee,
				and (C) is any "residue," as described in paragraph 1., of the prior year's
				"attained age level" reserve on such variable life insurance contract. If the
				contract is paid-up, the payment shall equal (A) minus (B) minus (C). The
				amounts of future death benefits referred to in (B) shall be computed assuming
				a net investment return of the separate account which may differ from the
				assumed investment rate and/or the valuation interest rate but in no event may
				exceed the maximum interest rate permitted for the valuation of life
				contracts.
3. For flexible premium
				policies, reserve liabilities for any guaranteed minimum death benefit shall be
				maintained in the general account of the insurer and shall be not less than the
				aggregate total of the term costs, if any, covering the period provided for in
				the guarantee not otherwise provided for by the reserves held in the separate
				account assuming an immediate one-third depreciation in the current value of
				the assets of the separate account followed by a net investment return equal to
				the valuation interest rate. The valuation interest rate and mortality table
				used in computing this additional reserve, if any, shall conform to permissible
				standards for the valuation of life insurance contracts. In determining such
				minimum reserve, the company may employ suitable approximations and estimates,
				including but not limited to groupings and averages.
4. Reserve liabilities for all fixed
				incidental insurance benefits and any guarantees associated with variable
				incidental insurance benefits shall be maintained in the general account and
				reserve liabilities for all variable aspects of the variable incidental
				insurance benefits shall be maintained in a separate account, in amounts
				determined in accordance with the actuarial procedures appropriate to such
				benefit.
(c) The
				valuation interest rate and mortality table used in computing the two minimum
				reserves described in Section (2)(a) and (b) of this Rule shall conform to
				permissible standards for the valuation of life insurance contracts. In
				determining such minimum reserve, the company may employ suitable
				approximations and estimates, including but not limited to groupings and
				averages.