Connecticut Administrative Code › Title 38a - Insurance Department › 433 - Variable Life Insurance › Section 38a-433-5 - Reserve liabilities for variable life insurance

Current through July 10, 2024
(a) Reserve liabilities for variable life
			 insurance policies shall be established under the Standard Valuation Law in
			 accordance with actuarial procedures that recognize the variable nature of the
			 benefits provided and any mortality guarantees.
(b) 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:
(1) 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
(2) 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 paragragh (A),
			 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 (B) below.
(A) 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.
(B) The payment referred to in Subsection (b)
			 of this Section shall be computed so that the present value of a level payment
			 of that amount each year over the future premium paying period of 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 (A), 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 rate permitted for the violation of life insurance
			 contracts.
(3) The
			 valuation interest rate and mortality table used in computing the two minimum
			 reserves described in (1) and (2) above shall conform to premissible 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.