N.D. Admin. Code 45-04-05-04
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 the accumulations to that date of the premiums paid minus the accumulations to that date of (1) the benefit charges, (2) the averaged administrative expense charges for the first policy year and any insurance-increase years, (3) actual administrative expense charges for other years, (4) initial and additional acquisition expense charges not exceeding the initial or additional expense allowances, respectively, (5) any service charges actually made (excluding charges for cash surrender or election of a paid-up nonforfeiture benefit) and (6) any deductions made for partial withdrawals; all accumulations being at the actual rate or rates of interest at which interest credits have been made unconditionally to the policy (or have been made conditionally, but for which the conditions have since been met), and minus any unamortized unused initial and additional expense allowances.
Interest on the premiums and on all charges referred to in items (1) through (6) above must be accumulated from and to such dates as are consistent with the manner in which interest is credited in determining the policy value.
The benefit charges must include the charges made for mortality and any charges made for riders or supplementary benefits for which premiums are not paid separately. If benefit charges are substantially level by duration and develop low or no cash values, then the commissioner may require higher cash values unless the insurer provides adequate justification that the cash values are appropriate in relation to the policy's other characteristics.
The administrative expense charges must include charges per premium payment, charges per dollar of premium paid, periodic charges per thousand dollars of insurance, periodic per policy charges, and any other charges permitted by the policy to be imposed without regard to the policyowner's request for services.
The averaged administrative expense charges for any year must be those which would have been imposed in that year if the charge rate or rates for each transaction or period within the year had been equal to the arithmetic average of the corresponding charge rates which the policy states will be imposed in policy years two through twenty in determining the policy value.
The initial acquisition expense charges must be the excess of the expense charges, other than service charges, actually made in the first policy year over the averaged administrative expense charges for that year. Additional acquisition expense charges must be the excess of the expense charges, other than service charges, actually made in an insurance-increase year over the averaged administrative expense charges for that year. An insurance-increase year must be the year beginning on the date of increase in the amount of insurance by policyowner request (or by the terms of the policy).
Service charges include charges permitted by the policy to be imposed as the result of a policyowner's request for a service by the insurer (such as the furnishing of future benefit illustrations) or of special transactions.
The initial expense allowance must be the allowance provided by subdivisions b, c, and d of subsection 1 of North Dakota Century Code section 26.1-33-21 or by subdivisions b and c of subsection 1 of North Dakota Century Code section 26.1-33-24 as applicable for a fixed premium, fixed benefit endowment policy with a face amount equal to the initial face amount of the flexible premium universal life insurance policy, with level premiums paid annually until the highest attained age at which a premium may be paid under the flexible premium universal life insurance policy, and maturing on the latest maturity date permitted under the policy, if any, otherwise at the highest age in the valuation mortality table. The unused initial expense allowance must be the excess, if any, of the initial expense allowance over the initial acquisition expense charges as defined above.
If the amount of insurance is subsequently increased upon request of the policyowner (or by the terms of the policy), an additional expense allowance and an unused additional expense allowance must be determined on a basis consistent with the above and with subsection 5 of North Dakota Century Code section 26.1-33-24 using the face amount and the latest maturity date permitted at that time under the policy.
The unamortized unused initial expense allowance during the policy year beginning on the policy anniversary at age x+t (where x is the issue age) must be the unused initial expense allowance multiplied by
and ax are present values of an annuity of one per year payable on policy anniversaries beginning at ages x+t and x, respectively, and continuing until the highest attained age at which a premium may be paid under the policy, both on the mortality and interest bases guaranteed in the policy. An unamortized unused additional expense allowance must be the unused additional expense allowance multiplied by a similar ratio of annuities, with ax replaced by an annuity beginning on the date as of which the additional expense allowance was determined.
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 must be equal to ((A)-(B)-(C)-(D)), where:
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.
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.
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.
All present values shall be determined using (1) an interest rate (or rates) specified by North Dakota Century Code chapter 26.1-33 for policies issued in the same year and (2) the mortality rates specified by North Dakota Century Code chapter 26.1-33 for policies issued in the same year or contained in such other table as may be approved by the commissioner for this purpose.
N.D. Admin Code 45-04-05-04
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-30, 26.1-33