Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 830 - VALUATION OF LIFE INSURANCE POLICIES › Section 031-830-4 - Definitions

Current through 2024-29, July 17, 2024
For purposes of this rule:
A. "Basic reserves" means reserves calculated
				in accordance with Title 24-A M.R.S.A. Section 954.
B. "Contract segmentation method" means the
				method of dividing the period from issue to mandatory expiration of a policy
				into successive segments, with the length of each segment being defined as the
				period from the end of the prior segment (from policy inception, for the first
				segment) to the end of the latest policy year as determined below. All
				calculations are made using the 1980 CSO valuation tables, as defined in
				Subsection F of this section, (or any other valuation mortality table adopted
				by the National Association of Insurance Commissioners (NAIC) after the
				effective date of this rule and promulgated by rule by the Superintendent for
				this purpose), and, if elected, the optional minimum mortality standard for
				deficiency reserves stipulated in Section 5(B) of this rule.
The length of a particular contract segment shall be set
				  equal to the minimum of the value
t
for which
				  Gt is greater than Rt (if
				  Gt never exceeds Rt the segment
				  length is deemed to be the number of years from the beginning of the segment to
				  the mandatory expiration date of the policy), where Gt
				  and Rt are defined as follows:
Click
				  here to view Image
where:
x = original issue age;
k = the number of years from the date of issue to the
				  beginning of the segment;
t = 1, 2, ...;
t
is reset to 1 at the
				  beginning of each segment;
GPx+k+t-1 = Guaranteed gross premium
				  per thousand of face amount for year
t
of the segment,
				  ignoring policy fees only if level for the premium paying period of the
				  policy.
Click
				  here to view Image
However, Rt may be increased or
				  decreased by one percent in any policy year, at the company's option, but
				  Rt shall not be less than one;
where:
x, k and t are as defined above, and
qx+k+t-1 = valuation mortality rate
				  for deficiency reserves in policy year k+t but using the mortality of Section
				  5(B)(2) if Section 5(B)(3) is elected for deficiency reserves.
However, if GPx+k+t is greater than 0
				  and GPx+k+t-1 is equal to 0, Gt
				  shall be deemed to be 1000. If GPx+k+t and
				  GPx+k+t-1 are both equal to 0, Gt
				  shall be deemed to be 0.
Drafting Note: The purpose of the one percent
				  tolerance in the R factor is to prevent irrational segment lengths due to such
				  things as premium rounding. For example, consider a plan in which gross
				  premiums are designed at some point to be a ratio times the underlying ultimate
				  mortality rates, where the ratio varies by issue age. The resulting segments
				  may be greater than one year, because the guaranteed gross premiums are not
				  expressed in fractional cents. The tolerance factor allows the creation of one
				  year segments for a plan in which premiums parallel the underlying valuation
				  mortality table.
C. "Deficiency reserves" means the excess, if
				greater than zero, of
(1) Minimum reserves
				calculated in accordance with Title 24-A M.R.S.A. Section 957 over
(2) Basic reserves.