Utah Admin. Code R590-177-3 - Definitions

Terms used in this rule are defined in Section 31A-1-301. Additional terms are defined as follows:

(1) "Actuarial Standards Board" means the board established by the American Academy of Actuaries to promulgate standards of actuarial practice.

(2) "Contract premium" means the gross premium required to be paid under a policy, including the premium for a rider if the rider benefits are shown in the illustration.

(3) "Currently payable scale" means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days.

(4)

(a) "Disciplined current scale" means a scale of non-guaranteed elements, certified annually by an illustration actuary, constituting a limit on illustrations currently being illustrated by an insurer and reasonably based on recent historical experience.

(b) Further guidance in determining the disciplined current scale, as contained in standards established by the Actuarial Standards Board, may be relied upon if the standards:

(i) are consistent with this rule;

(ii) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(iii) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(iv) do not permit assumed expenses to be less than minimum assumed expenses.

(5) "Generic name" means a short title descriptive of the policy being illustrated such as "whole life," "term life," or "flexible premium adjustable life."

(6) "Guaranteed element" means a premium, benefit, value, credit, or charge under a life insurance policy that is guaranteed and determined at issue.

(7) "Non-guaranteed element" means a premium, benefit, value, credit, or charge under a life insurance policy that is not guaranteed or not determined at issue.

(8) "Illustrated scale" means a scale of non-guaranteed elements that is not more favorable to the policy owner than the lesser of:

(a) the disciplined current scale; or

(b) the currently payable scale.

(9) "Illustration" means a presentation or depiction that includes a non-guaranteed element of a life insurance policy over a period of years as defined below:

(a) "Basic illustration" means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.

(b) "Supplemental illustration" means an illustration furnished in addition to a basic illustration that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements permitted in a basic illustration.

(c) "In force illustration" means an illustration furnished after a policy has been in force for one year or more.

(10) "Illustration actuary" means an actuary who meets the requirements of Section R590-177-10 and certifies an illustration based on the standard of practice promulgated by the Actuarial Standards Board.

(11) "Lapse-supported illustration" means an illustration of a policy form failing the test of self-supporting as defined in this rule, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100% policy persistency thereafter.

(12)

(a) "Minimum assumed expense" means the minimum expense that may be used in the calculation of the disciplined current scale for a policy form.

(b) An insurer may choose to designate the method of determining assumed expenses each year for all policy forms from the following:

(i) fully allocated expenses;

(ii) marginal expenses; and

(iii) a generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the NAIC or the commissioner.

(c) Marginal expenses may be used only if greater than a generally recognized expense table.

(d) If no generally recognized expense table is approved, fully allocated expenses must be used.

(13) "Non-term group life" means a group life insurance policy or an individual life insurance policy issued to a member of an eligible group where:

(a) each plan of coverage was selected by the group representative;

(b) some portion of the premium is paid by the group or through payroll deduction; and

(c) group underwriting or simplified underwriting is used.

(14) "Policy owner" means the owner named in a policy or the certificate holder in the case of a group policy.

(15) "Premium outlay" means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.

(16)

(a) "Self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies, or upon policy expiration if sooner, the accumulated value of all policy cash flows equals or exceeds the total policy owner value available.

(b) The policy owner value in a self-supporting illustration includes cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

Notes

Utah Admin. Code R590-177-3

Amended by Utah State Bulletin Number 2023-03, effective 1/24/2023