Louisiana Administrative Code › Title 37 - INSURANCE › Part XIII - Regulations › Chapter 85 - Regulation 36-Universal Life Insurance Model Regulation › Section XIII-8507 - Valuation

Current through Register Vol. 50, No. 6, June 20, 2024
A. Requirements
1. The minimum valuation standard for
				universal life insurance policies shall be the Commissioners Reserve Valuation
				Method, as described below for such policies, and the tables and interest rates
				specified below. The terminal reserve for the basic policy and any benefits
				and/or riders for which premiums are not paid separately as of any policy
				anniversary shall be equal to the net level premium reserves less (C) and (D),
				where:
a. reserves by the net level premium
				method shall be equal to:
((A)-(B))r
where:
(A), (B), and "r" are as defined below:
(A) is the present value of all future
				guaranteed benefits at the date of valuation.
Click Here To View
				  Image
where:
PVFB is the present value of all benefits guaranteed at issue
				  assuming future Guaranteed Maturity Premiums are paid by the policyowner and
				  taking into account all guarantees contained in the policy or declared by the
				  insurer.
a x and
				  a x+t are present values of an annuity of one per
				  year payable on policy anniversaries beginning at ages x and x+t, respectively,
				  and continuing until the highest attained age at which a premium may be paid
				  under the policy. The letter "x" is defined as the issue age and the letter "t"
				  is defined as the duration of the policy.
The Guaranteed Maturity Premium for flexible premium
				  universal life insurance policies shall be that level gross premium, paid at
				  issue and periodically thereafter over the period during which premiums are
				  allowed to be paid, which will mature the policy on the latest maturity date,
				  if any, permitted under the policy (otherwise at the highest age in the
				  valuation mortality table), for an amount which is in accordance with the
				  policy structure.1 The Guaranteed Maturity Premium
				  for fixed premium universal life insurance policies shall be the premium
				  defined in the policy which at issue provides the minimum policy
				  guarantees.2
The letter "r"
is equal to one, unless the policy is a flexible premium
				  policy and the policy value is less than the Guaranteed Maturity Fund, in which
				  case "r" is the ratio of the policy value to the Guaranteed Maturity
				  Fund.
The Guaranteed Maturity Fund at any duration is the amount
				  which, together with future Guaranteed Maturity Premiums, will mature the
				  policy based on all policy guarantees at issue.
(C) is the quantity ((a)-(b)
				a x+tr where (a)-(b) is as described in Section Four
				of the Standard Valuation Law, as amended in 1980 for the plan of insurance
				defined at issue by the Guaranteed Maturity Premiums and all guarantees
				contained in the policy or declared by the insurer.
a x+t and
				  a x are defined in (B) above.
(D) is the sum of any additional quantities
				analogous to (C) which arise because of structural
				changes3 in the policy, with each such quantity
				being determined on a basis consistent with that of (C) using the maturity date
				in effect at the time of the change.
The Guaranteed Maturity Premium, the Guaranteed Maturity Fund
				  and (B) above shall be recalculated to reflect any structural changes in the
				  policy. This recalculation shall be done in a manner consistent with the
				  descriptions above.