North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-04 - Life Insurance › Chapter 45-04-05 - Universal Life Insurance › Section 45-04-05-03 - Valuation

Current through Supplement No. 393, July, 2024
1
Requirements.
a. The minimum valuation standard for
				universal life insurance policies shall be the commissioners reserve valuation
				method, as described below for such policies, and the tables and interest rates
				specified below The terminal reserve for the basic policy and any benefits or
				riders, or both, for which premiums are not paid separately as of any policy
				anniversary must be equal to the net level premium reserves less (C) and less
				(D), where:
Reserves by the net level premium method must be equal to
				  ((A) -(B))r where (A), (B) and
r
are as defined below:
(A) is the present value of all
				future guaranteed benefits at the date of valuation.
(B) is the quantity
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, where PVFB is the present value of all benefits guaranteed
				  at issue assuming future guaranteed maturity premiums are paid by the
				  policyowner and taking into account all guarantees contained in the policy or
				  declared by the insurer.
ax and ax+t are present values of an annuity of one per year
				  payable on policy anniversaries beginning at ages x and x+t, respectively, and
				  continuing until the highest attained age at which a premium may be paid under
				  the policy. (x) is defined as the issue age and (t) is defined as the issue age
				  and (t) is defined as the duration of the policy.
The guaranteed maturity premium for flexible premium
				  universal life insurance policies must be that level gross premium, paid at
				  issue and periodically thereafter over the period during which premiums are
				  allowed to be paid, which will mature the policy on the latest maturity date,
				  if any, permitted under the policy (otherwise at the highest age in the
				  valuation mortality table), for an amount which is in accordance with the
				  policy structure. The guaranteed maturity premium is calculated at issue based
				  on all policy guarantees at issue (excluding guarantees linked to an external
				  referent). The guaranteed maturity premium for fixed premium universal life
				  insurance policies must be the premium defined in the policy which at issue
				  provides the minimum policy guarantees.
r
is equal to one, unless the
				  policy is a flexible premium policy and the policy value is less than the
				  guaranteed maturity fund, in which case
r
is the ratio
				  of the policy value to the guaranteed maturity fund.
The guaranteed maturity fund at any duration is that amount
				  which, together with future guaranteed maturity premiums, will mature the
				  policy based on all policy guarantees at issue.
(C) is the quantity ((a)-(b))
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where (a)-(b) is as described in [Section Four of the NAIC
				  Standard Valuation Law, as amended in 1980] for the plan of insurance defined
				  at issue by the guaranteed maturity premiums and all guarantees contained in
				  the policy or declared by the insurer.
ax+t and ax
				  are defined in (B) above.
(D) is the sum of any additional quantities
				analogous to (C) which arise because of structural changes in the policy, with
				each such quantity being determined on a basis consistent with that of (C)
				using the maturity date in effect at the time of the change.
The guaranteed maturity premium, the guaranteed maturity
				  fund and (B) above must be recalculated to reflect any structural changes in
				  the policy. This recalculation must be done in a manner consistent with the
				  descriptions above. Future guaranteed benefits are determined by (a) projecting
				  the greater of the guaranteed maturity fund and the policy value, taking into
				  account future guaranteed maturity premiums, if any, and using all guarantees
				  of interest, mortality, expense deductions, etc., contained in the policy or
				  declared by the insurer; and (b) 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 (a) an interest
				  rate (or rates) specified by [the NAIC Standard Valuation Law, as amended in
				  1980] for policies issued in the same year; (b) the mortality rates specified
				  by [the NAIC Standard Valuation Law, as amended in 1980] for policies issued in
				  the same year or contained in such other table as may be approved by the
				  commissioner for this purpose; and (c) any other tables needed to value
				  supplementary benefits provided by a rider which is being valued together with
				  the policy.
2.
Alternative
				minimum reserves.