New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 9 - LIFE INSURANCE AND ANNUITIES › Part 8 - VARIABLE LIFE INSURANCE › Section 13.9.8.22 - RESERVE LIABILITIES FOR THE GUARANTEED MINIMUM DEATH BENEFIT

Current through Register Vol. 35, No. 13, July 16, 2024
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:
A. the aggregate total of the term cost, 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
B. 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 13 NMAC 9.8.21
				[now 13.9.8.21 NMAC] 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 13 NMAC 9.8.22.2.2 [now Paragraph (2)
				of Subsection B of 13.9.8.22 NMAC].
(1) 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 year's 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.
(2) The payment referred to in 13 NMAC
				9.8.22.2 of this rule [now Subsection B of 13.9.8.22 NMAC] 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 13 NMAC 9.8.22.2 [now Subsection B of 13.9.8.22 NMAC], 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.