N.M. Admin. Code § 13.9.7.11 - MINIMUM CASH SURRENDER VALUES FOR FIXED PREMIUM POLICIES
For fixed premium universal life insurance policies, the minimum cash surrender values shall be determined separately for the basic policy and any benefits and riders for which premiums are paid separately. The following requirements pertain to a basic policy and any benefits and riders for which premiums are not paid separately.
A. The minimum cash surrender value (before
adjustment for indebtedness and dividend credits) available on a date as of
which interest is credited to the policy shall be equal to A
minus B minus C minus
D, where:
(1)
A is the present value of all future guaranteed
benefits.
(2)
B is
the present value of future adjusted premiums. The adjusted premiums are
calculated as described in Section 59A-2-31D and 59A-20-31F NMSA 1978, as
applicable. If Section 59A-20-31F NMSA 1978 is applicable, the nonforfeiture
net level premium is equal to the quantity PVFB divided by
ax, where PVFB is the present value of all benefits
guaranteed at issue assuming future premiums are paid by the policyowner and
all guarantees contained in the policy or declared by the insurer and
ax is the present value of an annuity of one per year
payable on policy anniversaries beginning at age x and continuing until the
highest attained age at which a premium may be paid under the policy.
(3)
C is the present value
of any quantities analogous to the nonforfeiture net level premium which arise
because of guarantees declared by the insurer after the issue date of the
policy. ax shall be replaced by an annuity beginning on
the date as of which the declaration became effective and payable until the end
of the period covered by the declaration.
(4)
D is the sum of any
quantities analogous to B which arise because of structural
changes in the policy.
B. Future guaranteed benefits are determined
by:
(1) projecting the policy value, taking
into account future premiums, if any, and using all guarantees of interest
mortality, expense deductions etc., contained in the policy or declared by the
insurer; and
(2) taking into
account any benefits guaranteed in the policy or by declaration which do not
depend on the policy value.
C. All present values shall be determined
using:
(1) an interest rate (or rates)
specified by Section
59A-20-31 NMSA 1978 for policies
issued in the same year; and
(2)
the mortality rates specified by Section
59A-20-31 NMSA 1978 for policies
issued in the same year or contained in such other table as may be approved by
the superintendent for this purpose.
Notes
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