31 Pa. Code § 82.23 - Mandatory policy benefit and design requirements

Variable life insurance policies delivered or issued for delivery in this Commonwealth shall comply with the following minimum requirements:

(1) The mortality and expense risk shall be borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the contract. For a flexible premium policy, the guaranteed maximum mortality charges may not exceed charges based on a mortality table permitted for calculation of nonforfeiture benefits. Guaranteed charges of up to 130% of an approved version of 1958 CSO or up to 135% of an approved version of 1980 CSO will be considered for policies issued on a simplified underwriting basis. Guaranteed charges of up to 145% of an approved version of 1958 CSO or up to 150% of an approved version of 1980 CSO will be considered for policies issued on a guaranteed basis. The guaranteed maximum mortality charges for a flexible premium policy issued to an insured in a rated premium class may reflect that the insured is rated. A premium class composed of smokers is considered to be a smoker class and not a rated premium class.

(2) For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy so long as premiums are paid, subject to § 82.25 (relating to policy loan provisions).

(3) The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer shall demonstrate that the reflection of investment experience in the variable life insurance policy is actuarially sound.

(4) Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.

(5) Changes in variable death benefits of each variable life insurance policy shall be determined at least annually.

(6) The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the Commissioner of the state in which the policy is delivered or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy. The method of computation shall be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other nonforfeiture benefits shall be at least equal to the minimum values required by section 410A of the act (40 P. S. § 510.1) for a general account policy with those premiums and benefits. The assumed investment rate may not exceed the maximum interest rate permitted under section 410A of the act. If the policy does not contain an assumed investment rate this demonstration shall be based on the maximum interest rate permitted under section 410A of the act. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include but are not limited to a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.

(7) The computation of values required for each variable life insurance policy may be based upon such reasonable and necessary approximations as are acceptable to the Commissioner.

Notes

31 Pa. Code § 82.23