31A-17-507 - Reserve valuation method -- Life insurance and endowment benefits.
31A-17-507. Reserve valuation method -- Life insurance and endowment benefits.
(1) Except as otherwise provided in Sections 31A-17-508, 31A-17-511, and 31A-17-513,reserves according to the commissioner's reserve valuation method, for the life insurance andendowment benefits of policies providing for a uniform amount of insurance and requiring thepayment of uniform premiums shall be the excess, if any, of the present value, at the date ofvaluation, of such future guaranteed benefits provided for by such policies, over the then presentvalue of any future modified net premiums therefor. The modified net premiums for any suchpolicy shall be such uniform percentage of the respective contract premiums for such benefits thatthe present value, at the date of issue of the policy, of all such modified net premiums shall beequal to the sum of the then present value of such benefits provided for by the policy and theexcess of Subsection (1)(a) over Subsection (1)(b), as follows:
(a) A net level annual premium equal to the present value, at the date of issue, of suchbenefits provided for after the first policy year, divided by the present value, at the date of issue,of an annuity of one per annum payable on the first and each subsequent anniversary of suchpolicy on which a premium falls due; provided, however, that such net level annual premiumshall not exceed the net level annual premium on the 19 year premium whole life plan forinsurance of the same amount at an age one year higher than the age at issue of such policy.
(b) A net one year term premium for such benefits provided for in the first policy year.
(2) Provided that for any life insurance policy issued on or after January 1, 1997, forwhich the contract premium in the first policy year exceeds that of the second year and for whichno comparable additional benefit is provided in the first year for such excess and which providesan endowment benefit or a cash surrender value or a combination thereof in an amount greaterthan such excess premium, the reserve according to the commissioner's reserve valuation methodas of any policy anniversary occurring on or before the assumed ending date defined herein as thefirst policy anniversary on which the sum of any endowment benefit and any cash surrender valuethen available is greater than such excess premium shall, except as otherwise provided in Section31A-17-511, be the greater of the reserve as of such policy anniversary calculated as described inSubsection (1) and the reserve as of such policy anniversary calculated as described in thatsubsection, but with:
(a) the value defined in Subsection (1)(a) being reduced by 15% of the amount of suchexcess first year premium;
(b) all present values of benefits and premiums being determined without reference topremiums or benefits provided for by the policy after the assumed ending date;
(c) the policy being assumed to mature on such date as an endowment; and
(d) the cash surrender value provided on such date being considered as an endowmentbenefit. In making the above comparison the mortality and interest bases stated in Sections31A-17-504 and 31A-17-506 shall be used.
(3) Reserves according to the commissioner's reserve valuation method for:
(a) life insurance policies providing for a varying amount of insurance or requiring thepayment of varying premiums;
(b) group annuity and pure endowment contracts purchased under a retirement plan orplan of deferred compensation, established or maintained by an employer, including a partnershipor sole proprietorship, or by an employee organization, or by both, other than a plan providingindividual retirement accounts or individual retirement annuities under Section 408, InternalRevenue Code;
(c) accident and health and accidental death benefits in all policies and contracts; and
(d) all other benefits, except life insurance and endowment benefits in life insurancepolicies and benefits provided by all other annuity and pure endowment contracts, shall becalculated by a method consistent with the principles of Subsections (1) and (2).
Amended by Chapter 116, 2001 General Session