Illinois Administrative Code › Title 50 - INSURANCE › Part 1415 - MINIMUM STANDARDS FOR DETERMINING NONFORFEITURE BENEFITS FOR CERTAIN LIFE INSURANCE POLICIES HAVING INTERMEDIATE CASH BENEFITS › Section 1415.30 - Methodology

Current through Register Vol. 48, No. 28, July 12, 2024
a) The following
			 methodology shall be used in the determination of minimum cash surrender values
			 for policies subject to this Part in accordance with the requirements of
			 Section 229.2 of the Insurance Code (Standard Nonforfeiture Law for Life
			 Insurance) [215 ILCS
			 5/229.2 ].
1) The
			 endowment period shall be that period of time measured from the issue date of
			 the policy to the date when the endowment benefit becomes payable (the
			 endowment date) under the terms of the policy.
2) If the endowment benefit is added by rider
			 to a policy, then, for minimum cash value determination purposes, the base
			 policy and the endowment benefit are to be treated as integrated.
3) Premiums under the policy may be provided
			 through a scale of guaranteed rates for the term of the policy or through a
			 scale of current rates that are subject to a scale of guaranteed maximum
			 premiums; if rates are subject to a scale of guaranteed maximum premiums, the
			 minimum cash values shall be the greater of those produced under this Part
			 using the guaranteed maximum rates and current rate scale applicable at issue
			 of the policy.
4) Any cash
			 surrender value available under the policy in the event of default in a premium
			 payment due on any policy anniversary during the endowment period shall be an
			 amount not less than the excess, if any, of the present value, on the
			 anniversary, of the endowment benefit and any future incremental death benefits
			 during the endowment period that would have been provided for by the policy if
			 there had been no default, over the sum of:
A)
			 The then present value of the adjusted premiums as defined in subsection (a)(6)
			 corresponding to premiums that would have fallen due on and after the
			 anniversary during the endowment period; and
B) The amount of any indebtedness to the
			 company on the policy.
5) Incremental death benefits are death
			 benefits during the endowment period in excess of the lowest death benefit
			 provided under the policy during the endowment period.
6) The adjusted premiums for the policy shall
			 be calculated on an annual basis and shall be the uniform percentage of the
			 respective premiums specified in the policy for each policy year during the
			 endowment period. Amounts payable as extra premiums to cover impairments or
			 special hazards shall be excluded, as shall 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 value and paid-up nonforfeiture benefits. The
			 present value, at the date of issue of the policy, of all adjusted premiums
			 shall be equal to the sum of:
A) The present
			 value of the endowment benefit and any incremental death benefits provided for
			 by the policy during the endowment period;
B) 1% of the average amount of insurance
			 (total death benefit under the policy, including any incremental death
			 benefits) at the beginning of each of the first 10 policy years; and
C) 125% of the nonforfeiture net level
			 premium, as defined in subsection (a)(7); provided, however, that no
			 nonforfeiture net level premium shall be considered to exceed 4% of the average
			 amount of insurance (total death benefit under the policy, including any
			 incremental death benefits) at the beginning of each of the first 10 policy
			 years.
7) The
			 nonforfeiture net level premium for the policy shall be equal to the present
			 value, at the date of issue of the policy, of the endowment benefit and any
			 incremental death benefits provided for by the policy during the endowment
			 period, divided by the present value, at the date of issue of the policy, of an
			 annual annuity of one payable on the date of issue of the policy and on each
			 anniversary of the policy on which a premium falls due prior to the endowment
			 date.
8) The mortality rates and
			 interest rate used in the determination of the minimum cash values for the
			 policy shall be those applicable under Section 229.2 of the Insurance Code,
			 taking into account guaranteed benefits and premiums (whether guaranteed or
			 indeterminate) during the entire period death benefits are guaranteed available
			 under the policy, provided required premiums are paid.