N.M. Admin. Code § 13.9.7.8 - RESERVE VALUATION
The minimum valuation standard for universal life insurance policies shall be the commissioners reserve valuation methods and the tables and interest rates specified in this section.
A.
Terminal reserve: The
terminal reserve for the basic policy and any benefits and/or riders for which
premiums are not paid separately as of any policy anniversary shall be equal to
the net level premium reserves less C and less D, where:
(1) net level premium reserves shall be equal
to r(A-B) where:
(a) r is equal to one, unless
the policy is a flexible premium policy and the policy value is less than the
guaranteed maturity fund, in which case r is the ratio of the policy value to
the guaranteed maturity fund.
(b)
A is the present value of all future guaranteed benefits at
the date of valuation.
(c)
B is the quantity PVFB. ax+t divided by
ax where:
(i) PVFB is
the present value of all benefits guaranteed at issue assuming future
guaranteed maturity premiums are paid by the policyowner and taking into
account all guarantees contained in the policy or declared by the
insurer;
(ii)
ax and ax+t are present values of
an annuity of one per year payable on policy anniversaries beginning at ages x
and x+t, respectively, and continuing until the highest attained age at which a
premium may be paid under the policy;
(iii) x is the issue age; and
(iv) t is the duration of the
policy.
(2)
C is the quantity (a-b). ax+t r divided
by ax where:
(a) (a-b)
is as described in Section 59A-8-5E(1) NMSA 1978 for the plan of insurance
defined at issue by the guaranteed maturity premiums and all guarantees
contained in the policy or declared by the insurer.
(b) ax+t and
ax are defined in 13 NMAC 9.7.8.1.1.3.2 [now Item (ii)
of Subparagraph (c) of Paragraph (1) of Subsection A of
13.9.7.8 NMAC].
(3)
D is the sum
of any additional quantities analogous to C which arise
because of structural changes in the policy, with each such quantity being
determined on a basis consistent with that of C using the
maturity date in effect at the time of the change.
B.
Guaranteed maturity premium:
The guaranteed maturity premium for flexible premium universal life insurance
policies shall be that level gross premium, paid at issue and periodically
thereafter over the period during which premiums are allowed to be paid, which
will mature the policy on the latest maturity date, if any, permitted under the
policy (otherwise at the highest age in the valuation mortality table), for an
amount which is in accordance with the policy structure. The guaranteed
maturity premium is calculated at issue based on all policy guarantees at issue
(excluding guarantees linked to an external referent). The guaranteed maturity
premium for fixed premium universal life insurance policies shall be the
premium defined in the policy which at issue provides the minimum policy
guarantees.
C.
Guaranteed
maturity fund: The guaranteed maturity fund at any duration is that
amount which, together with future guaranteed maturity premiums, will mature
the policy based on all policy guarantees at issue.
D.
Recalculation for structural
changes: The guaranteed maturity premium, the guaranteed maturity fund
and the quantity B in 13 NMAC 9.7.8.1.1.3 [now Subparagraph
(c) of Paragraph (1) of Subsection A of
13.9.7.8 NMAC] shall be
recalculated to reflect any structural changes in the policy. This
recalculation shall be done in a manner consistent with the descriptions
above.
E.
Futured guaranteed
benefits: Future guaranteed benefits are determined by:
(1) projecting the greater of the guaranteed
maturity fund and the policy value, taking into account future guaranteed
maturity 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.
F.
Present value: All present values shall be determined using:
(1) an interest rate (or rates) specified by
Section 59A-8-5 NMSA 1978 for policies
issued in the same year;
(2) the
mortality rates specified by Section
59A-8-5 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; and
(3) any other tables needed to value
supplementary benefits provided by a rider which is being valued together with
the policy.
Notes
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