Louisiana Administrative Code › Title 37 - INSURANCE › Part XIII - Regulations › Chapter 83 - Regulation 35-Variable Life Insurance Model Regulation › Section XIII-8307 - Reserve Liabilities for Variable Life Insurance

Current through Register Vol. 50, No. 6, June 20, 2024
A. Reserve liabilities for variable life
				insurance policies shall be established under the Standard Valuation Law in
				accordance with actuarial procedures that recognize the variable nature of the
				benefits provided and any mortality guarantees.
B. For scheduled premium policies, reserve
				liabilities for the 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:
1. the aggregate total of the term
				costs, if any, covering a period of one full year from the valuation date, of
				the guarantee 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
2. 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 §8307. B.2 a,
				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 §8307. B.2 b:
a. 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 years' 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;
b. the
				payment referred to in §8307. B.2 shall be computed so that the present value
				of a level payment of that amount each year over the future premium paying
				period of 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 §8307. B.2 a, of
				the prior year's attained age level reserve on such variable life insurance
				contract. If the contract is paid-up, 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 contracts;
3. the
				valuation interest rate and mortality table used in computing the two minimum
				reserves described in (a) and (b) above 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.