North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-04 - Life Insurance › Chapter 45-04-01.1 - Life Insurance Illustrations Model Regulation › Section 45-04-01.1-02 - Definitions

Current through Supplement No. 393, July, 2024
For the purposes of this chapter:
1. "Actuarial standards board" means the board established by
				  the American academy of actuaries to develop and promulgate standards of
				  actuarial practice.
2. "Contract premium" means the gross premium that is
				  required to be paid under a fixed premium policy, including the premium for a
				  rider for which benefits are shown in the illustration.
3. "Currently payable scale" means a scale of nonguaranteed
				  elements in effect for a policy form as of the preparation date of the
				  illustration or declared to become effective within the next ninety-five days.
4. "Disciplined current scale" means a scale of nonguaranteed
				  elements constituting a limit on illustrations currently being illustrated by
				  an insurer which is reasonably based on actual recent historical experience, as
				  certified annually by an illustration actuary designated by the insurer.
				  Further guidance in determining the disciplined current scale as contained in
				  standards established by the actuarial standards board may be relied upon if
				  the standards:
a. Are consistent with all provisions of this chapter;
b. Limit a disciplined current scale to reflect only actions
				  that have already been taken or events that have already occurred;
c. Do not permit a disciplined current scale to include any
				  projected trends of improvements in experience or any assumed improvements in
				  experience beyond the illustration date; and
d. Do not permit assumed expenses to be less than minimum
				  assumed expenses.
5. "Generic name" means a short title descriptive of the
				  policy being illustrated such as "whole life", "term life", or "flexible
				  premium adjustable life".
6. "Guaranteed elements" and "nonguaranteed elements" mean:
a. "Guaranteed elements" means the premiums, benefits,
				  values, credits, or charges under a policy of life insurance that are
				  guaranteed and determined at issue.
b. "Nonguaranteed elements" means the premiums, benefits,
				  values, credits, or charges under a policy of life insurance that are not
				  guaranteed or not determined at issue.
7. "Illustrated scale" means a scale of nonguaranteed
				  elements currently being illustrated that is not more favorable to the policy
				  owner than the lesser of:
a. The disciplined current scale; or
b. The currently payable scale.
8. "Illustration" means a presentation or depiction that
				  includes nonguaranteed elements of a policy of life insurance over a period of
				  years and that is one of the three types defined below:
a. "Basic illustration" means a ledger or proposal used in
				  the sale of a life insurance policy that shows both guaranteed and
				  nonguaranteed elements.
b. "In force illustration" means an illustration furnished at
				  any time after the policy that it depicts has been in force for one year or
				  more.
c. "Supplemental illustration" means an illustration
				  furnished in addition to a basic illustration that meets the applicable
				  requirements of this chapter, and that may be presented in a format differing
				  from the basic illustration, but may only depict a scale of nonguaranteed
				  elements that is permitted in a basic illustration.
9. "Illustration actuary" means an actuary meeting the
				  requirements of section
				  45-04-01.1-09 who certifies to
				  illustrations based on the standard of practice promulgated by the actuarial
				  standards board.
10. "Lapse-supported illustration" means an illustration of a
				  policy form failing the test of self-supporting as defined in this chapter,
				  under a modified persistency rate assumption using persistency rates underlying
				  the disciplined current scale for the first five years and one hundred percent
				  policy persistency thereafter.
11.
a."Minimum assumed expenses" means the minimum expenses that
				  may be used in the calculation of the disciplined current scale for a policy
				  form. The insurer may choose to designate each year the method of determining
				  assumed expenses for all policy forms from the following:
(1) Fully allocated expenses;
(2) Marginal expenses; and
(3) A generally recognized expense table based on fully
				  allocated expenses representing a significant portion of insurance companies
				  and approved by the commissioner.
b. Marginal expenses may be used only if greater than a
				  generally recognized expense table. If no generally recognized expense table is
				  approved, fully allocated expenses must be used.
12. "Nonterm group life" means a group policy or individual
				  policies of life insurance issued to members of an employer group or other
				  permitted group where:
a. Every plan of coverage was selected by the employer or
				  other group representative;
b. Some portion of the premium is paid by the group or
				  through payroll deduction; and
c. Group underwriting or simplified underwriting is used.
13. "Policy owner" means the owner named in the policy or the
				  certificate holder in the case of a group policy.
14. "Premium outlay" means the amount of premium assumed to
				  be paid by the policy owner or other premium payer out of pocket.
15. "Self-supporting illustration" means an illustration of a
				  policy form for which it can be demonstrated that, when using experience
				  assumptions underlying the disciplined current scale, for all illustrated
				  points in time on or after the fifteenth policy anniversary or the twentieth
				  policy anniversary for second-or-later-to-die policies, or upon policy
				  expiration if sooner, the accumulated value of all policy cash flows equals or
				  exceeds the total policy owner value available. For this purpose, policy owner
				  value will include cash surrender values and any other illustrated benefit
				  amounts available at the policy owner's election.
General Authority: NDCC 28-32-02
Law Implemented: NDCC
					 26.1-33-02