Nebraska Administrative Code › Topic - INSURANCE, DEPARTMENT OF › Title 210 - NEBRASKA DEPARTMENT OF INSURANCE › Chapter 40 - UNIVERSAL LIFE INSURANCE › Section 210-40-006 - Nonforfeiture

Current through June 17, 2024
006.01 Minimum Cash
				Surrender Values for Flexible Premium Universal Life Insurance Policies
Minimum cash surrender values for flexible premium universal
				  life insurance policies shall be determined separately for the basic policy and
				  any benefits and riders for which premiums are paid separately. The following
				  requirements pertain to a basic policy and any benefits and riders for which
				  premiums are not paid separately.
The minimum cash surrender value (before adjustment for
				  indebtedness and dividend credits) available on a date as of which interest is
				  credited to the policy shall be equal to the accumulation to that date of the
				  premiums paid minus the accumulations to that date of (i) the benefit charges,
				  (ii) the averaged administrative expense charges for the first policy year and
				  any insurance-increase years, (iii) actual administrative expense charges for
				  other years, (iv) initial and additional acquisition expense charges not
				  exceeding the initial or additional expense allowances, respectively, (v) any
				  service charges actually made (excluding charges for cash surrender or election
				  of a paid-up nonforfeiture benefit) and (vi) any deductions made for partial
				  withdrawals; all accumulations being at the actual rate or rates of interest at
				  which interest credits have been made unconditionally to the policy (or have
				  been made conditionally, but for which the conditions have since been met), and
				  minus any unamortized unused initial and additional expense allowances.
Interest on the premiums and on all charges referred to in
				  items (i) - (vi) above shall be accumulated from and to such dates as are
				  consistent with the manner in which interest is credited in determining the
				  policy value.
The benefit charges shall include the charges made for
				  mortality and any charges made for riders or supplementary benefits for which
				  premiums are not paid separately. If benefit charges are substantially level by
				  duration and develop low or no cash values, then the Director shall have the
				  right to require higher cash values unless the insurer provides adequate
				  justification that the cash values are appropriate in relation to the policy's
				  other characteristics.
The administrative expense charges shall include charges per
				  premium payment, charges per dollar of premium paid, periodic charges per
				  thousand dollars of insurance, periodic per policy charges, and any other
				  charges permitted by the policy to be imposed without regard to the
				  policyowner's request for services.
The averaged administrative expense charges for any year
				  shall be those which would have been imposed in that year if the charge rate or
				  rates for each transaction or period within the year had been equal to the
				  arithmetic average of the corresponding charge rates which the policy states
				  will be imposed in policy years two through twenty in determining the policy
				  value.
The initial acquisition expense charges shall be the excess
				  of the expense charges, other than service charges, actually made in the first
				  policy year over the averaged administrative expense charges for that year.
				  Additional acquisition expense charges shall be the excess of the expense
				  charges, other than service charges, actually made in an insurance-increase
				  year over the averaged administrative expense charges for that year. An
				  insurance-increase year shall be the year beginning on the date of increase in
				  the amount of insurance by policyowner request (or by the terms of the
				  policy).
Service charges shall include charges permitted by the policy
				  to be imposed as the result of a policyowner's request for a service by the
				  insurer (such as the furnishing of future benefit illustrations) or of special
				  transactions.
The initial expense allowance shall be the allowance provided
				  by Neb. Rev. Stat. §
										44-407.04(a),(ii),(iii)
				  and (iv) or by §
										44-407.24(l)(b)
				  and (c), as applicable, for a fixed premium,
				  fixed benefit endowment policy with a face amount equal to the initial face
				  amount of the flexible premium universal life insurance policy, with level
				  premiums paid annually until the highest attained age at which a premium may be
				  paid under the flexible premium universal life insurance policy, and maturing
				  on the latest maturity date permitted under the policy, if any, otherwise at
				  the highest age in the valuation mortality table. The unused initial expense
				  allowance shall be the excess, if any, of the initial expense allowance over
				  the initial acquisition expense charges as defined above.
If the amount of insurance is subsequently increased upon
				  request of the policyowner (or by the terms of the policy), an additional
				  expense allowance and an unused additional expense allowance shall be
				  determined on a basis consistent with the above and with §
										44-407.24(5),
				  using the face amount and the latest maturity date permitted at that time under
				  the policy.
The unamortized unused initial expense allowance during the
				  policy year beginning on the policy anniversary at age x + t (where "x" is the
				  issue age) shall be the unused initial expense allowance multiplied by
				  äx+t/äx
where äx+t and
				  äx are are present values of an annuity of one per
				  year payable on policy anniversaries beginning at ages x + t and x,
				  respectively, and continuing until the highest attained age at which a premium
				  may be paid under the policy, both on the mortality and interest bases
				  guaranteed in the policy. An unamortized unused additional expense allowance
				  shall be the unused additional expense allowance multiplied by a similar ratio
				  of annuities, with äx replaced by an annuity
				  beginning on the date as of which the additional expense allowance was
				  determined.
006.02 Minimum
				Cash Surrender Values For Fixed Premium Universal Life Insurance Policies
For fixed premium universal life insurance policies, the
				  minimum cash surrender values shall be determined separately for the basic
				  policy and any benefits and riders for which premiums are paid separately. The
				  following requirements pertain to a basic policy and any benefits and riders
				  for which premiums are not paid separately.
The minimum cash surrender value (before adjustment for
				  indebtedness and dividend credits) available on a date as of which interest is
				  credited to the policy shall be equal to ((A)-(B)-(C)-(D)), where:
(A) is the present value of all future
				guaranteed benefits.
(B) is the
				present value of future adjusted premiums. The adjusted premiums are calculated
				as described in Neb. Rev. Stat. §§
										44-407.04
				and
				44-407.08,
				or in Neb. Rev. Stat. §
										44-407.24(1),
				as applicable. If
				44-407.24(1)is
				applicable, the nonforfeiture net level premium is equal to the quantity
				PVFB/äx,
where PVFB is the present value of all benefits guaranteed at
				  issue assuming future premiums are paid by the insurer.
äx is the present value of an
				  annuity of one per year payable on policy anniversaries beginning at age x and
				  continuing until the highest attained age at which a premium may be paid under
				  the policy.
(C) is the
				present value of any quantifies analogous to the nonforfeiture net level
				premium which arise because of guarantees declared by the insurer after the
				issue date of the policy. "äx" shall be replaced by
				an annuity beginning on the date as of which the declaration became effective
				and payable until the end of the period covered by the declaration.
(D) is the sum of any quantities analogous to
				(B) which arise because of structural changes in the policy.
Future guaranteed benefits are determined by (1) projecting
				  the policy value, taking into account future premiums, if any, and using all
				  guarantees of interest, mortality, expense deductions, etc., contained in the
				  policy or declared by the insurer; and (2) taking into account any benefits
				  guaranteed in the policy or by declaration which do not depend on the policy
				  value.
All present values shall be determined using (i) an interest
				  rate (or rates) specified by the Standard Nonforfeiture Law for Life Insurance
				  for policies issued in the same year and (ii) the mortality rates specified by
				  the Standard Nonforfeiture Law for Life Insurance for policies issued in the
				  same year or contained in such other table as may be approved by the Director
				  for this purpose.