Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 95.00 - Variable Life Insurance › Section 95.10 - Reserve Liabilities

Current through Register 1525, July 5, 2024
(1) Reserve
			 liabilities for variable life insurance policies shall be established in
			 accordance with the provisions of M.G.L. c. 175, §§ 9, 132F and 132G
			 and in accordance with actuarial procedures that recognize the variable nature
			 of the benefits provided and any mortality guarantees, including the cost of
			 insurance charges guaranteed under the contract.
(2) Reserve liabilities for any 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:
(a) the aggregate total of the term costs, if
			 any, covering a period of one full year from the valuation date, or, if less,
			 covering the period provided for in the guarantee not otherwise provided for by
			 the reserves held in the separate account, 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
(b)
			 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 211 CMR 95.10(2)(b)1., 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 211 CMR
			 95.10(2)(b)2.:
1. 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;
2. the payment referred to in
			 211 CMR 95.10(2)(b) shall be computed so that the present value of a level
			 payment of that amount each year over the future period for which charges for
			 this risk will be collected under 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 211 CMR 95.10(2)(b)1., of the prior year's "attained age level"
			 reserve on such variable life insurance contract. If no future charges for this
			 risk will be collected under the contract, 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 interest rate permitted for the valuation of
			 life insurance contracts;
(c) the valuation interest rate and mortality
			 table used in computing the minimum reserves described in 211 CMR 95.10(2)(a)
			 and 95.10(2)(b) shall conform to permissible 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.