Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 64 - Valuation of Life Insurance Policies › Section 64-2 - Definitions

Current through July 10, 2024
Authority: IC
				  27-1-12-10.5
Affected: IC
				  27-1-12-10; IC
				  27-1-12.8-21
Sec. 2.
(a) In
				addition to the definitions in IC
				27-1-12-10
[IC
				27-1-12-10 was repealed by
				P.L.
				276-2013,
				SECTION
				5, effective July 1, 2013.]
, the
				definitions in this section apply throughout this rule.
(b) "1980 CSO valuation tables" means the
				commissioners' 1980 standard ordinary mortality table without ten-year
				selection factors, incorporated into the 1980 amendments to the NAIC Standard
				Valuation Law, and variations of the 1980 commissioners' standard ordinary
				mortality table approved by the NAIC, such as the smoker and nonsmoker versions
				approved in December 1983.
(c)
				"Basic reserves" means reserves calculated in accordance with IC
				27-1-12-10(3)
[IC
				27-1-12-10 was repealed by
				P.L.
				276-2013,
				SECTION
				5, effective July 1,
				2013.]
.
(d) "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 in this subsection. All calculations are made using the 1980
				CSO valuation tables, as defined in subsection (b), (or any other valuation
				mortality table adopted by the NAIC after the effective date of this rule and
				promulgated by rule by the commissioner for this purpose), and, if elected, the
				optional minimum mortality standard for deficiency reserves stipulated in
				section 3(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:
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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.
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				  here to view Image
However, Rt may be increased or
				  decreased by one percent (1%) in any policy year, at the company's option, but
				  Rt shall not be less than one (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.
qx+k+t-1 = Valuation mortality rate
				  for deficiency reserves in policy year k+t, but using the mortality of section
				  3(b)(2) of this rule if section 3(b)(3) of this rule is elected for deficiency
				  reserves.
However, if GPx+k+t is greater than
				  zero (0) and GPx+k+t-1 is equal to zero (0),
				  Gt shall be deemed to be one thousand (1,000). If
				  GPx+k+t and GPx+k+t-1 are both
				  equal to zero (0), Gt shall be deemed to be zero
				  (0).
(e) "Deficiency
				reserves" means the excess, if greater than zero (0), of minimum reserves
				calculated in accordance with IC
				27-1-12-10(6)
[IC
				27-1-12-10 was repealed by
				P.L.
				276-2013,
				SECTION
				5, effective July 1, 2013.]
over
				basic reserves.
(f) "Guaranteed
				gross premiums" means the premiums under a policy of life insurance that are
				guaranteed and determined at issue.
(g) "Maximum valuation interest rates" means
				the interest rates defined in IC
				27-1-12-10(2)(j)(A)
[IC
				27-1-12-10 was repealed by
				P.L.
				276-2013,
				SECTION
				5, effective July 1, 2013.]
(computation of minimum standard by calendar year of issue) that are
				to be used in determining the minimum standard for the valuation of life
				insurance policies.
(h) "NAIC"
				means National Association of Insurance Commissioners.
(i) "Scheduled gross premium" means the
				smallest illustrated gross premium at issue for other than universal life
				insurance policies. For universal life insurance policies, the term means the
				smallest specified premium described in section 5(a)(3) of this rule if any, or
				else the minimum premium described in section 5(a)(4) of this rule.
(j) "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 following requirements apply
				to each segment:
(1) The uniform percentage
				for each segment of segmented reserves 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 as described in section 4(d)
				of this rule, 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
				item (i) over item (ii) as follows:
(i) 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 (1) 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 nineteen-year premium whole life
				plan of insurance of the same renewal year equivalent level amount at an age
				one (1) year higher than the age at issue of the policy.
(ii) A net one-year term premium for the
				benefits provided for in the first policy year.