Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 29.00 - Valuation Of Life Insurance Policies › Section 29.04 - Definitions

Current through Register 1525, July 5, 2024
For purposes of
				211 CMR 29.00:
Appointed Actuary
means any individual
				who is appointed or retained in accordance with the requirements set forth in
				211 CMR 132.05(3)
				 to provide the actuarial opinion and
				supporting memorandum as required by M.G.L.c. 175, § 9B.
Basic Reserves
means reserves
				calculated in accordance with M.G.L. c. 175, § 9, subdivision 3.
Carrier
means an insurance company
				licensed under M.G.L. c. 175 to issue policies of life insurance.
Commissioner
means the commissioner of
				insurance, or his or her designee.
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 211
				CMR 29.04, (or any other valuation mortality table adopted by the NAIC after
				the effective date of
				211 CMR 29.00 and promulgated
				by regulation by the commissioner for this purpose), and, if elected, the
				optional minimum mortality standard for deficiency reserves stipulated in
				211
				CMR 29.05(2).
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:
Gt = GPx + k + t/
				GPx + k + t - 1
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.
Rt = qx + k + t/
				qx + k + t - 1,
However, Rt may be increased or
				decreased by one percent in any policy year, at the carrier'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
				211
				CMR 29.05(2)(b)  if
				211
				CMR 29.05(2)(c)  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.
Deficiency Reserves
means the excess,
				if greater than zero, of:
(a) Minimum reserves calculated in accordance with M.G.L. c.
				175, § 9, subdivision 6, over
(b) Basic reserves.
Guaranteed Gross Premiums
means the
				premiums under a policy of life insurance that are guaranteed and determined at
				issue.
Maximum Valuation Interest Rates
means
				the interest rates defined in M.G.L. c. 175, § 9, subdivision 2A, that are
				to be used in determining the minimum standard for the valuation of life
				insurance policies.
NAIC
means the National Association of
				Insurance Commissioners.
1980 CSO Valuation Tables
means the
				Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without
				ten-year selection factors, incorporated into the 1980 amendments to the NAIC
				Standard Valuation Law, and variations of the 1980 CSO Table approved by the
				NAIC, such as the smoker and nonsmoker versions approved in December
				1983.
Scheduled Gross Premium
means the
				smallest illustrated gross premium at issue for other than universal life
				insurance policies. For universal life insurance policies, scheduled gross
				premium means the smallest specified premium described in
				211
				CMR 29.07(1)(c), if any, or
				else the minimum premium described in
				211
				CMR 29.07(1)(d).
Segmented Reserves
means reserves,
				calculated using segments produced by the contract segmentation method, equal
				to the present value of all future guaranteed benefits less the present value
				of all future net premiums to the mandatory expiration of a policy, where the
				net premiums within each segment are a uniform percentage of the respective
				guaranteed gross premiums within the segment. The uniform percentage for each
				segment is such that, at the beginning of the segment, the present value of the
				net premiums within the segment equals:
(a) The present value of the death benefits within the segment,
				plus
(b) The present value of any unusual guaranteed cash value (see
				211
				CMR 29.06(4)) occurring at
				the end of the segment, less
(c) Any unusual guaranteed cash value occurring at the start of
				the segment, plus
(d) For the first segment only, the excess of 1. over 2., as
				follows:
1. A net level annual premium equal to the present value, at
				the date of issue, of the benefits provided for in the first segment after the
				first policy year, divided by the present value, at the date of issue, of an
				annuity of one per year payable on the first and each subsequent anniversary
				within the first segment on which a premium falls due. However, the net level
				annual premium shall not exceed the net level annual premium on the 19-year
				premium whole life plan of insurance of the same renewal year equivalent level
				amount at an age one year higher than the age at issue of the policy.
2. A net one-year term premium for the benefits provided for in
				the first policy year.
(e) The length of each segment is determined by the "contract
				segmentation method," as defined in 211 CMR 29.04.
(f) The interest rates used in the present value calculations
				for any policy may not exceed the maximum valuation interest rate, determined
				with a guarantee duration equal to the sum of the lengths of all segments of
				the policy.
(g) For both basic reserves and deficiency reserves computed by
				the segmented method, present values shall include future benefits and net
				premiums in the current segment and in all subsequent segments.
Tabular Cost of Insurance
means the
				net single premium at the beginning of a policy year for one-year term
				insurance in the amount of the guaranteed death benefit in that policy
				year.
Ten-Year Select Factors
means the
				select factors adopted with the 1980 amendments to the NAIC Standard Valuation
				Law.
Unitary Reserves
means the present
				value of all future guaranteed benefits less the present value of all future
				modified net premiums, where:
(a) Guaranteed benefits and modified net premiums are
				considered to the mandatory expiration of the policy; and
(b) Modified net premiums are a uniform percentage of the
				respective guaranteed gross premiums, where the uniform percentage is such
				that, at issue, the present value of the net premiums equals the present value
				of all death benefits and pure endowments, plus the excess of 1. over 2., as
				follows:
1. A net level annual premium equal to the present value, at
				the date of issue, of the benefits provided for after the first policy year,
				divided by the present value, at the date of issue, of an annuity of one per
				year payable on the first and each subsequent anniversary of the policy on
				which a premium falls due. However, the net level annual premium shall not
				exceed the net level annual premium on the 19-year premium whole life plan of
				insurance of the same renewal year equivalent level amount at an age one year
				higher than the age at issue of the policy.
2. A net one-year term premium for the benefits provided for in
				the first policy year.
The interest rates used in the present value calculations for
				any policy may not exceed the maximum valuation interest rate, determined with
				a guarantee duration equal to the length from issue to the mandatory expiration
				of the policy.
Universal Life Insurance Policy
means
				any individual life insurance policy under the provisions of which separately
				identified interest credits (other than in connection with dividend
				accumulations, premium deposit funds, or other supplementary accounts) and
				mortality or expense charges are made to the policy.