West Virginia Code of State Rules › Agency 114 - Insurance Commission › Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER › Series 114-11D - Variable Life Insurance › Section 114-11D-5 - Reserve Liabilities For Variable Life Insurance

Current through Register Vol. XLI, No. 28, July 12, 2024
5.1. Reserve Liabilities Under Standard Valuation
				Law. Reserve liabilities for variable life insurance policies shall be established
				under W. Va. Code §
									33-7-9 in
				accordance with actuarial procedures that recognize the variable nature of the
				benefits provided and any mortality guarantees.
5.2. Reserve Liabilities for the Guaranteed
				Minimum Death Benefit. 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 may not be less than the greater of the following minimum reserves:
5.2.a. The aggregate total of the term costs, if
				any, covering a period of one full year from the valuation date or, if less,
				covering the period provided for in the guarantee not otherwise provided for by the
				reserves held in the separate account, on each variable life insurance contract,
				assuming an immediate one-third depreciation in the current value of the assets in
				the separate account followed by a net investment return equal to the assumed
				investment rate; or
5.2.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 may not be
				less than zero and shall equal the "residue," as described in paragraph 1of this
				subdivision, 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 paragraph 2 of this subdivision.
5.2.b.1. The "residue" of the prior year's
				"attained age level" reserve on each variable life insurance contract may not be
				less than zero and shall be determined by adding interest at the valuation interest
				rate to the 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 a 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.
5.2.b.2.
				The payment referred to in this paragraph shall be computed so that the present
				value of a level payment of that amount each year over the future period for which
				charges for this risk will be collected under 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
				paragraph 1 of this subdivision, of the prior year's "attained age level" reserve on
				such variable life insurance contract. If no future charges for this risk will be
				collected under the contract, the payment shall equal (A) minus (B) minus (C). The
				amounts of the 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 or the valuation interest but in no event may exceed the maximum
				interest rate permitted for the valuation of life contracts.
5.2.c. The valuation interest rate and mortality
				table used in computing the two minimum reserves described in subdivision a and b of
				this subsection shall conform to permissible standards for the valuation of life
				insurance contracts. In determining such minimum reserves, the company may employ
				suitable approximations and estimates, including but not limited to groupings and
				averages.