Mississippi Administrative Code › Title 19 - Department of Insurance › Part 2 - Life Insurance › Chapter 9 - (84-106) Universal Life Regulation › Rule 19-2-9.05 - Valuation

Current through June 25, 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 less
				(D), where:
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.
(B) is the quantity,
Click Here To View
				Image
, where PVBF is the present value of all benefits atissue
				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.
ax and ax + 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. (x)
				  is defined as the issue age and (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. The Guaranteed Maturity Premium is calculated at issue based
				  on all policy guarantees at issue (excluding guarantees linked to an external
				  referent). 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.
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
e
is the ration of the
				  policy value to the Guaranteed Maturity Fund.
The Guaranteed Maturity Fund at any duration is that amount
				  which, together with future Guaranteed Maturity Premiums, will mature the
				  policy based on all policy guarantees at issue.
(C) is the quantity
Click Here To View
				Image
is as described in (Section Four ofthe 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.
ax + t and ax
				  are defined in (B) above.
(D) is the sum of any additional quantities
				analogous to (C) which arise because of structural changes 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.
Future guaranteed benefits are determined by (1) projecting
				  the greater of the Guaranteed Maturity Fund and the policy value, taking into
				  account future guaranteed Maturity Premiums, if any, and using all guarantees
				  of interest, mortality, expense deductions, etc., contained in the policy or
				  declared by the insurer; and (2) taking into account any benefits guaranteed in
				  the policy or by declaration which do not depend on the policy value.
All present values shall be determined using (1) and interest
				  rate (or rates) specified by (the Standard Valuation Law, as amended in 1980)
				  for policies issued in the same year; (ii) the mortality rates specified by
				  (the Standard Valuation Law, as amended in 1980) for policies issued in the
				  same year or contained in such other table as may be approved by the
				  Commissioner for this purpose; and (iii) any other tables needed to value
				  supplementary benefits provided by a rider which is being valued together with
				  the policy.