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

Current through Supplement No. 393, July, 2024
1.
Minimum cash surrender values for
				flexible premium universal life insurance policies.
a. Minimum cash surrender values for flexible
				premium universal life insurance policies must 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 accumulations to that date of the
				  premiums paid minus the accumulations to that date of (1) the benefit charges,
				  (2) the averaged administrative expense charges for the first policy year and
				  any insurance-increase years, (3) actual administrative expense charges for
				  other years, (4) initial and additional acquisition expense charges not
				  exceeding the initial or additional expense allowances, respectively, (5) any
				  service charges actually made (excluding charges for cash surrender or election
				  of a paid-up nonforfeiture benefit) and (6) 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 (1) through (6) above must 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 must 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 commissioner may 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 must 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
				  must 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 must 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 must 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 must 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 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 must be the allowance provided
				  by subdivisions b, c, and d of subsection 1 of North Dakota Century Code
				  section 26.1-33-21 or by subdivisions b and c of subsection 1 of North Dakota
				  Century Code section 26.1-33-24 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 must 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 must be determined
				  on a basis consistent with the above and with subsection 5 of North Dakota
				  Century Code section 26.1-33-24 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) must be the unused initial expense allowance multiplied by
Click
				  here to view Image
and ax 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
				  must be the unused additional expense allowance multiplied by a similar ratio
				  of annuities, with ax replaced by an annuity beginning on the date as of which
				  the additional expense allowance was determined.