Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Life Insurance Contracts On Variable Basis › Section R. 500.849 - Variable life insurance policy; benefit and design requirements

Current through Vol. 24-12, July 15, 2024
Rule 9. Variable life insurance policies delivered or issued
				  for delivery in this state shall comply with all of the following minimum
				  requirements:
(a) The mortality and
				expense risk shall be borne by the insurer. The mortality and expense charges
				shall be subject to the maximums stated in the contract. If mortality and
				expense charges are lower than the guaranteed maximums, the difference shall be
				credited to the policy account at least annually.
(b) For scheduled premium policies, a minimum
				death benefit shall be provided in an amount at least equal to the initial face
				amount of the policy if premiums are paid when due, subject to the provisions
				of
				R
				500.851(b).
(c) The policy shall reflect the investment
				experience of the 1 or more variable life insurance separate accounts
				established and maintained by the insurer. The insurer shall demonstrate that
				the reflection of investment experience in the variable life insurance policy
				is actuarially sound.
(d) Each
				variable life insurance policy shall be credited with the full amount of the
				net investment return applied to the benefit base.
(e) Changes in variable death benefits of
				each variable life insurance policy shall be determined at least
				annually.
(f) The policy value and
				the cash surrender value of each variable life insurance policy shall be
				determined at least monthly. The method of computation of cash values and other
				nonforfeiture benefits, as described either in the policy or in a statement
				filed with the commissioner, shall be in accordance with actuarial procedures
				that recognize the variable nature of the policy. The method of computation
				shall be such that, if the net investment return credited to the policy at all
				times from the date of issue is equal to the assumed investment rate with
				premiums and benefits determined accordingly under the terms of the policy,
				then the resulting cash values and other nonforfeiture benefits shall be at
				least equal to the minimum values required by section 4060 of Act No. 218 of
				the Public Acts of 1956, as amended, being S500.4060 of the Michigan Compiled
				Laws, for a general account policy with such premiums and benefits. The assumed
				investment rate shall not exceed the maximum interest rate permitted under the
				standard nonforfeiture law of this state. The method of computation may
				disregard incidental minimum guarantees as to the dollar amounts payable.
				Incidental minimum guarantees include, for example, but are not to be limited
				to, a guarantee that the amount payable at death or maturity shall be at least
				equal to the amount that otherwise would have been payable if the net
				investment return credited to the policy at all times from the date of issue
				had been equal to the assumed investment rate.
(g) The policy value, cash value, and other
				nonforfeiture benefits of each variable life insurance policy shall be
				determined in accordance with the provisions of
				R
				500.849a.
(h) The computation of values required for
				each variable life insurance policy may be based upon such reasonable and
				necessary approximations as are approved by the commissioner.