North Carolina Administrative Code › Title 11 - INSURANCE › Chapter 04 - CONSUMER SERVICES DIVISION › Section .0500 - LIFE INSURANCE ILLUSTRATIONS › Section 04 .0501 - SCOPE AND DEFINITIONS

Current through Register Vol. 39, No. 2, July 15, 2024
(a) These Rules
				apply to all policies sold on and after the effective dates of these Rules and
				to all certificates issued under those policies.
(b) As used in this Section, the following
				terms have the following meanings:
(1)
				"Actuarial Standards Board" means the board established by the American Academy
				of Actuaries to develop and promulgate standards of actuarial
				practice.
(2) "Basic illustration"
				means a ledger or proposal used in the sale of a policy that shows both
				guaranteed and non-guaranteed elements.
(3) "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.
(4) "Currently payable scale" means a scale
				of non-guaranteed elements in effect for a policy as of the preparation date of
				the illustration or declared to become effective within the next 95
				days.
(5) "Disciplined current
				scale" means a scale of non-guaranteed elements constituting a limit on
				illustrations currently being illustrated by an insurer that is based on actual
				recent historical experience, as certified annually by an illustration actuary
				designated by the insurer.
(6)
				"Guaranteed elements" means the premiums, benefits, values, credits, or charges
				under a policy that are guaranteed and determined at issue.
(7) "Illustrated scale" means a scale of
				non-guaranteed 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 non-guaranteed elements of a policy
				over a period of years and that is either a basic illustration, in-force
				illustration, or a supplemental illustration.
(9) "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.
(10)
				"Illustration actuary" means an actuary meeting the requirements of
				11 NCAC
				04 .0509 who certifies to illustrations based
				on the standard of practice promulgated by the Actuarial Standards
				Board.
(11) "Lapse-supported
				illustration" means an illustration of a policy failing the test of
				self-supporting as defined in this Subparagraph (b)(16) of this Rule, under a
				modified persistency rate assumption using persistency rates underlying the
				disciplined current scale for the first five years and 100 percent policy
				persistency thereafter.
(12)
				"Non-guaranteed elements" means the premiums, benefits, values, credits, or
				charges under a policy that are not guaranteed or not determined at
				issue.
(13) "Policy" means a group
				or individual life insurance policy or certificate. "Policy" does not include:
(A) A variable life insurance policy or
				certificate.
(B) An annuity
				contract.
(C) A credit life
				insurance policy or certificate.
(D) A life insurance policy with no
				illustrated death benefit on any individual exceeding ten thousand dollars
				($10,000).
(14) "Policy
				owner" means the owner named in a policy or the certificate holder in the case
				of a group policy.
(15) "Premium
				outlay" means the amount of premium assumed to be paid by the policy owner or
				other premium payer out-of-pocket.
(16) "Self-supporting illustration" means an
				illustration of a policy 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.
(17) "Supplemental illustration" means an
				illustration furnished in addition to a basic illustration that meets the
				applicable requirements of this Section, and that may be presented in a format
				differing from the basic illustration, but may only depict a scale of
				non-guaranteed elements that is permitted in a basic illustration.