Oklahoma Administrative Code › Title 365 - Insurance Department › Chapter 10 - Life, Accident and Health › Subchapter 17 - Valuation of Life Insurance Policies Regulation (Including the Introduction and Use of New Select Mortality Factors) › Section 365:10-17-3 - Definitions

Current through Vol. 41, No. 20, July 1, 2024
The following words or terms, when used in this Subchapter,
				  shall have the following meaning, unless the context indicates
				  otherwise:
"Basic reserves"
means reserves calculated in
				  accordance with Section
				  1510(J)
				  of Title 36 of the Oklahoma Statutes.
"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
				  Section 365:10-17-3(a)(6), (or any other valuation mortality table adopted by
				  the National Association of Insurance Commissioners (NAIC) after the effective
				  date of this regulation and promulgated by regulation by the Insurance
				  Commissioner for this purpose), and, if elected, the optional minimum mortality
				  standard for deficiency reserves stipulated in Section
				  365:10-17-5(b)
				  of this regulation. 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:
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.
, However, Rt may be increased or decreased
							 by one percent in any policy year, at the company'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 Section
							 365:10-17-4(b)(2)
							 if Section
							 365:10-17-4(b)(3)
							 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 Section
				  1510(H)
				  of Title 36 of the Oklahoma Statutes 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 Section
				  1510(B), (C), (D)
				  and (E) of Title 36 of the Oklahoma Statutes.
				  (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.
"1980 CSO valuation tables"
means the Insurance
				  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 Section
				  365:10-17-6(a)(3),
				  if any, or else the minimum premium described in Section
				  365:10-17-6(a)(4).
"Segmented reserves"
means:
(A) 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:
(i) The present value of the death benefits within the
				  segment, plus
(ii) The present value of any unusual guaranteed cash value
				  (see Section
				  365:10-17-5(d)
				  ) occurring at the end of the segment, less
(iii) Any unusual guaranteed cash value occurring at the
				  start of the segment, plus
(iv) For the first segment only, the excess of the Subunit
				  (i) overSubunit (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 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 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.
(B) The length of each segment is determined by the "contract
				  segmentation method," as defined in this section.
(C) 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.
(D) 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 unit (i) over
				  unit (ii), as follows:
(i) 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 nineteen-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 one year term premium for the benefits provided
				  for in the first policy year.
(C) 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 (otherthan in connection with dividend
				  accumulations, premium deposit funds, or other supplementary accounts) and
				  mortality or expense charges are made to the policy.
Added at 17 Ok Reg 726,
				  eff 1-3-00 (emergency); Added at 17 Ok Reg 1659, eff
				  7-14-00