N.M. Admin. Code § 13.9.13.20

Current through Register Vol. 35, No. 24, December 23, 2024

Section 13.9.13.20 - OPTIONAL EXEMPTION FOR ATTAINED-AGE-BASED YEARLY RENEWABLE TERM LIFE INSURANCE POLICIES

At the option of the company, the following approach for reserves for attained-age-based YRT life insurance policies may be used:

A. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

B. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in 13 nmac 9.13.17 [now 13.9.13.17 NMAC].

C. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

D. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with 13 NMAC 9.13.20.3.1 [now Paragraph (1) Subsection C of 13.9.13.20 NMAC].

E. For purposes of this section, calculations shall be based on the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, (or any other table adopted after the effective date of this rule by the NAIC and promulgated by rule by the superintendent for this purpose).

F. A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this section if:

(1) the premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and

(2) the premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.

G. For policies that become attained-age-based YRT policies after an initial period of coverage, the approach provided in this section may be used after the initial period if:

(1) the initial period is constant for all insureds of the same sex, risk class and plan of insurance; or

(2) the initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and

(3) after the initial period of coverage, the policy meets the conditions of 13 NMAC 9.13.20.5 [now Subsection E of 13.9.13.20 NMAC].

H. If this approach is elected, it must be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this rule.

N.M. Admin. Code § 13.9.13.20

1/1/00; Recompiled 11/30/01