Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Administrative Rules
2747.0050 MINIMUM VALUATION STANDARD FOR CERTAIN FLEXIBLE PREMIUM AND FIXED PREMIUM UNIVERSAL LIFE INSURANCE POLICIES; SECONDARY GUARANTEE PERIOD POLICIES.
Subpart 1.
General.
A.
Policies with a secondary guarantee include:
(1)
a policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;
(2)
a policy in which the minimum premium at any duration is less than the corresponding one-year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after January 1, 2000, by the National Association of Insurance Commissioners and adopted by rule by the commissioner for this purpose; or
B.
A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue must be considered to have been made at issue. Reserves described in subparts 2 and 3 shall be recalculated from issue to reflect these changes.
C.
Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.
D.
For purposes of this part, the minimum premium for a policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors, including mortality charges, loads and expense charges, and the interest crediting rate, which are all guaranteed at issue.
E.
The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in part 2747.0030, subpart 2, items B to D, may not be used to calculate the one-year valuation premiums.
F.
The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.
Subp. 2.
Basic reserves for secondary guarantees.
Basic reserves for the secondary guarantees must be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in part 2747.0020, subpart 3.
Subp. 3.
Deficiency reserves for secondary guarantees.
Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in part 2747.0040, subpart 2, with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.
History:
24 SR 800
Published Electronically:
September 14, 2007
Official Publication of the State of Minnesota
Revisor of Statutes