Administrative Rules of Montana › Department 6 - STATE AUDITOR › Chapter 6.6 - INSURANCE DEPARTMENT › Subchapter 6.6.67 - Valuation of Life Insurance Policies › Rule 6.6.6705 - DEFINITIONS

Current through Register Vol. 13, July 5, 2024
For purposes of ARM
				  6.6.6701 through
				  6.6.6713:
(1) "Basic reserves" means reserves
				calculated in accordance with
				33-2-411,
				MCA.
(2) "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 (6) of this rule, (or any other valuation mortality table
				adopted by the National Association of Insurance Commissioners (NAIC) after
				January 1, 2000, and promulgated by rule by the commissioner for this purpose)
				and, if elected, the optional minimum mortality standard for deficiency
				reserves stipulated in ARM
				6.6.6707(2).
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(3) "Deficiency reserves" means the excess,
				if greater than 0, of minimum reserves calculated in accordance with
				33-2-412,
				MCA, over basic reserves.
(4)
				"Guaranteed gross premiums" means the premiums under a policy of life insurance
				that are guaranteed and determined at issue.
(5) "Maximum valuation interest rates" means
				the interest rates defined in
				33-2-413,
				MCA, that are to be used in determining the minimum standard for the valuation
				of life insurance policies.
(6)
				"1980 CSO valuation tables" means the Commissioners' 1980 Standard Ordinary
				Mortality Table (1980 CSO Table) without 10-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.
(7) "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 ARM
				6.6.6711(3),
				if any, or else the minimum premium described in ARM
				6.6.6711(4).
(8) "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 (ARM
				6.6.6709(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
				(8)(a) over (8)(b), 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 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;
(ii) a net 1-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 this rule;
(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.