For purposes of this regulation:
004.01 Basic reserves
"Basic reserves" means reserves calculated in accordance
with Neb.Rev.Stat. §
44-404(d).
004.02 Contract segmentation method
"Contract segmentation method" means the method of dividing
the period from issue to mandatory expiration of a policy into successive
segments, with the length of each segment being defined as the period from the
end of the prior segment (from policy inception, for the first segment) to the
end of the latest policy year as determined below. All calculations are made
using the 1980 CSO valuation tables, as defined in Subsection 004.06 of this
section, (or any other valuation mortality table adopted by the National
Association of Insurance Commissioners (NAIC) after the operative date of this
regulation and promulgated by regulation by the director for this purpose),
and, if elected, the optional minimum mortality standard for deficiency
reserves stipulated in Section 005.02 of this regulation.
The length of a particular contract segment shall be set
equal to the minimum of the value t for which Gt is
greater than Rt (if Gt never
exceeds Rt the segment length is deemed to be the number
of years from the beginning of the segment to the mandatory expiration date of
the policy), where Gt and Rt are
defined as follows:
Gt=(GPx+k+t)/(GPx+k+t-1)
where:
x = original issue age;
k = the number of years from the date of issue to the
beginning of the segment;
t = 1, 2, ...; t is reset to 1 at the beginning of each
segment;
GPx+k+t-1 = Guaranteed gross premium
per thousand of face amount for year t of the segment, ignoring policy fees
only if level for the premium paying period of the policy.
Rt
=(qx+k+t)/(qx+k+t-1), However,
Rt may be increased or decreased by one percent in any
policy year, at the company's option, but Rt shall not
be less than one;
where:
x, k and t are as defined above, and
qx+k+t-1 = valuation mortality rate
for deficiency reserves in policy year k+t but using the mortality of Section
005.02(2)if
Section
005.02(3)is
elected for deficiency reserves.
However, if GPx+k+t is greater than 0
and GPx+k+t-1 is equal to 0, Gt
shall be deemed to be 1000. If GPx+k+t and
GPx+k+t-1 are both equal to 0, Gt
shall be deemed to be 0.
004.03 Deficiency reserves
"Deficiency reserves" means the excess, if greater than zero,
of
004.03(1) Minimum reserves
calculated in accordance with Neb.Rev.Stat.
§
44-404(h)
over
004.03(2) Basic reserves.
004.04 Guaranteed gross premiums
"Guaranteed gross premiums" means the premiums under a policy
of life insurance that are guaranteed and determined at issue.
004.05 Maximum valuation interest rates
"Maximum valuation interest rates" means the interest rates
defined in Neb.Rev.Stat. §
44-404(c)
(Computation of Minimum Standard by Calendar
Year of Issue) that are to be used in determining the minimum standard for the
valuation of life insurance policies.
004.06 1980 CSO valuation tables
"1980 CSO valuation tables" means the Commissioner's 1980
Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection
factors, incorporated into the 1980 amendments to the NAIC Standard Valuation
Law, and variations of the 1980 CSO Table approved by the NAIC, such as the
smoker and nonsmoker versions approved in December 1983.
004.07
"Scheduled gross premium" means the smallest illustrated
gross premium at issue for other than universal life insurance policies. For
universal life insurance policies, scheduled gross premium means the smallest
specified premium described in
007.01(3), if
any, or else the minimum premium described in Section
007.01(4).
004.08(1) "
Segmented reserves" means
reserves, calculated using segments produced by the
contract segmentation
method, equal to the present value of all future guaranteed benefits less the
present value of all future net premiums to the mandatory expiration of a
policy, where the net premiums within each segment are a uniform percentage of
the respective
guaranteed gross premiums within the segment. The uniform
percentage for each segment is such that, at the beginning of the segment, the
present value of the net premiums within the segment equals:
004.08(1)(a) The present value of the death
benefits within the segment, plus
004.08(1)(b) The present value of any unusual
guaranteed cash value (see section 006.04) occurring at the end of the segment,
less
004.08(1)(c) Any unusual
guaranteed cash value occurring at the start of the segment, plus
004.08(1)(d) For the first segment only, the
excess of
004.08(1)(d)(i)over
004.08(1)(d)(ii),
as follows:
004.08(1)(d)(i) A net level
annual premium equal to the present value, at the date of issue, of the
benefits provided for in the first segment after the first policy year, divided
by the present value, at the date of issue, of an annuity of one per year
payable on the first and each subsequent anniversary within the first segment
on which a premium falls due. However, the net level annual premium shall not
exceed the net level annual premium on the nineteen-year premium whole life
plan of insurance of the same renewal year equivalent level amount at an age
one year higher than the age at issue of the policy.
004.08(1)(d)(ii) A net one year term premium
for the benefits provided for in the first policy year.
004.08(2) The length of
each segment is determined by the "contract segmentation method," as defined in
this section.
004.08(3) The
interest rates used in the present value calculations for any policy may not
exceed the maximum valuation interest rate, determined with a guarantee
duration equal to the sum of the lengths of all segments of the
policy.
004.08(4) For both basic
reserves and deficiency reserves computed by the segmented method, present
values shall include future benefits and net premiums in the current segment
and in all subsequent segments.
004.09 Tabular cost of insurance
"Tabular cost of insurance" means the net single premium at
the beginning of a policy year for one-year term insurance in the amount of the
guaranteed death benefit in that policy year.
004.10
"Ten-year select factors" means the select factors adopted
with the 1980 amendments to the NAIC Standard Valuation Law.
004.11(1) "
Unitary reserves" means the
present value of all future guaranteed benefits less the present value of all
future
modified net premiums, where:
004.011(1)(a) Guaranteed benefits and
modified net premiums are considered to the mandatory expiration of the policy;
and
004.011(1)(b) Modified net
premiums are a uniform percentage of the respective
guaranteed gross premiums,
where the uniform percentage is such that, at issue, the present value of the
net premiums equals the present value of all death benefits and pure
endowments, plus the excess of
004.11(1)(b)(i)over
004.11(1)(b)(ii),
as follows:
004.011(1)(b)(i) A net level
annual premium equal to the present value, at the date of issue, of the
benefits provided for after the first policy year, divided by the present
value, at the date of issue, of an annuity of one per year payable on the first
and each subsequent anniversary of the policy on which a premium falls due.
However, the net level annual premium shall not exceed the net level annual
premium on the nineteen-year premium whole life plan of insurance of the same
renewal year equivalent level amount at an age one year higher than the age at
issue of the policy.
004.11(1)(b)(ii) A net one year term premium
for the benefits provided for in the first policy year.
004.11(2) The interest rates used
in the present value calculations for any policy may not exceed the maximum
valuation interest rate, determined with a guarantee duration equal to the
length from issue to the mandatory expiration of the policy.
004.12
"Universal life insurance policy" means any individual life
insurance policy under the provisions of which separately identified interest
credits (other than in connection with dividend accumulations, premium deposit
funds, or other supplementary accounts) and mortality or expense charges are
made to the policy.
