S.D. Admin. R. 20:06:38:01

Current through Register Vol. 51, page 67, December 16, 2024

Section 20:06:38:01 - Definitions

Terms used in this chapter mean:

(1) Actuarial Standards Board," the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice;

(2) "Assumed expenses," expenses as calculated in § 20:06:38:34 that may be used in the calculation of the disciplined current scale for a policy form;

(3) "Basic Illustration," a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements;

(4) "Contract premium," the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration;

(5) "Currently payable scale," a scale of nonguaranteed 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;

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

(7) "Guaranteed elements," the premiums, benefits, values, credits, or charges under a policy of life insurance that are guaranteed and determined at issue;

(8) "Illustrated scale," a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of the disciplined current scale or the currently payable scale;

(9) "Illustration," a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is either a "basic illustration," a "supplemental illustration," or an "in-force illustration";

(10) "Illustration actuary," an actuary meeting the requirements of § 20:06:38:25 who certifies to illustrations based on the standard of practice contained in the Actuarial Standard of Practice No. 24 - Compliance With The NAIC Life Insurance Illustrations Model Regulation, effective March 31, 1996;

(11) "In-force illustration," an illustration furnished at any time after the policy that it depicts has been in force for one year or more;

(12) "Lapse-supported illustration," an illustration of a policy form failing the test of self-supporting as defined in this section, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first 5 years and 100 percent policy persistency thereafter;

(13) "Minimum assumed expenses," the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form;

(14) "Nonterm group life," a group policy or individual policies of life insurance which are issued to members of an employer group or another permitted group and which meet the following requirements:

(a) Every plan of coverage was selected by the employer or another 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;

(15) "Nonguaranteed elements," the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed and determined at issue;

(16) "Policy owner," the owner named in the policy or the certificate holder in the case of a group policy;

(17) "Premium outlay," the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket;

(18) "Second-or-later-to-die policies," life insurance policies which insure two or more lives and pay the death proceeds upon the death of the second or last insured to die;

(19) "Self-supporting illustration," 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 fifteenth policy anniversary or the twentieth 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, including cash surrender values and any other illustrated benefit amounts available at the policy owners election.

S.D. Admin. R. 20:06:38:01

23 SDR 228, effective 7/1/1997; 26 SDR 26, effective 9/1/1999; 27 SDR 54, effective 12/4/2000; 30 SDR 39, effective 9/28/2003.

General Authority: SDCL 58-33-5.1.

Law Implemented: SDCL 58-33-5.1.

Actuarial Standards of Practice, American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.