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Vermont Administrative Code
Agency 21 - DEPARTMENT OF FINANCIAL REGULATIONSubagency 020 - INSURANCE DIVISION
Chapter 044 - REGULATION 99-3 - VALUATION OF LIFE INSURANCE POLICIES
Section 21 020 044 - REGULATION 99-3 - VALUATION OF LIFE INSURANCE POLICIES

21-044 Code Vt. R. 21-020-044-X

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Current through August, 2024
Section 21 020 044 - REGULATION 99-3 - VALUATION OF LIFE INSURANCE POLICIES
Section 1 Purpose
A. The purpose of this regulation is to provide:
(1) Tables of select mortality factors and rules for their use;
(2) Rules concerning a minimum standard for the valuation of plans with non-level premiums or benefits; and
(3) Rules concerning a minimum standard for the valuation of plans with secondary guarantees.
B. The method for calculating basic reserves defined in this regulation will constitute the Commissioners' Reserve Valuation Method for policies to which this regulation is applicable.
Section 2 Authority

This regulation is issued under the authority vested in the Commissioner of Banking, Insurance, Securities, and Health Care Administration by 8 V.S.A. § 75 and subchapter 4 of chapter 103 of title 8.

Section 3 Applicability

This regulation shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this regulation, subject to the following exceptions and conditions.

A. Exceptions
(1) This regulation shall not apply to any individual life insurance policy issued on or after the effective date of this regulation if the policy is issued in accordance with and as a result of the exercise of a re-entry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this regulation, that guarantees the premium rates of the new policy. This regulation also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.
(2) This regulation shall not apply to any universal life policy that meets all the following requirements:
(a) Secondary guarantee period, if any, is five (5) years or less;
(b) Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in Section 4F and the applicable valuation interest rate; and
(c) The initial surrender charge is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period.
(3) This regulation shall not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
(4) This regulation shall not apply to any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
(5) This regulation shall not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.
B. Conditions
(1) Calculation of the minimum valuation standard for policies with guaranteed non-level gross premiums or guaranteed non-level benefits (other than universal life policies), or both, shall be in accordance with the provisions of Section 6.
(2) Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of Section 7.
Section 4 Definitions

F or purposes of this regulation:

A. "Basic reserves" means reserves calculated in accordance with 8 V.S.A. § 3785.
B. "Contract segmentation method" means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in Subsection F of this section, (or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC) after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose), and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in Section 5B of this regulation.

The length of a particular contract segment shall be set equal to the minimum of the value t for which G[t] is greater than R[t] (if G[t] never exceeds R[t] the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where G[t] and R[t] are defined as follows:

G[t] = GP[x+k+t]/GP[x+k+t-1]

where:

x = original issue age;

k = the number of years from the date of issue to the beginning of the segment;

t = 1, 2, ...; t is reset to 1 at the beginning of each segment;

GP[x+k+t-1] = Guaranteed gross premium per thousand of face amount for year t of the segment, ignoring policy fees only if level for the premium paying period of the policy.

R[t] = q[x+k+t]/q[x+k+t-1], However, R[t] may be increased or decreased by one percent in any policy year, at the company's option, but R[t] shall not be less than one;

where:

x, k and t are as defined above, and

q[x+k+t-1] = valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of Section 5B(2) if Section 5B(3) is elected for deficiency reserves.

However, if GP[x+k+t] is greater than 0 and GP[x+k+t-1] is equal to 0, G[t] shall be deemed to be 1000. If GP[x+k+t] and GP[x+k+t-1] are both equal to 0, G[t] shall be deemed to be 0.

C. "Deficiency reserves" means the excess, if greater than zero, of
(1) Minimum reserves calculated in accordance with 8 V.S.A. section 3788

over

(2) Basic reserves.
D. "Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.
E. "Maximum valuation interest rates" means the interest rates defined in 8 V.S.A. section 3784a that are to be used in determining the minimum standard for the valuation of life insurance policies.
F. "1980 CSO valuation tables" means the Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.
G. "Scheduled gross premium" means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in Section 7A(3), if any, or else the minimum premium described in Section 7A(4).
H.
(1) "Segmented reserves" means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:
(a) The present value of the death benefits within the segment, plus
(b) The present value of any unusual guaranteed cash value (see Section 6D) occurring at the end of the segment, less
(c) Any unusual guaranteed cash value occurring at the start of the segment, plus
(d) For the first segment only, the excess of the Item (i) over Item (ii), as follows:
(i) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
(ii) A net one year term premium for the benefits provided for in the first policy year.
(2) The length of each segment is determined by the "contract segmentation method," as defined in this section.
(3) The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.
(4) For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.
I. "Tabular cost of insurance" means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.
J. "Ten-year select factors" means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.
K.
(1) "Unitary reserves" means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:
(a) Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and
(b) Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of Item (i) over Item (ii), as follows:
(i) A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
(ii) A net one year term premium for the benefits provided for in the first policy year.
(2) The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.
L. "Universal life insurance policy" means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.
Section 5 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves
A. At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose). If select mortality factors are elected, they may be:
(1) The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;
(2) The select mortality factors in the Appendix; or
(3) Any other table of select mortality factors adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for the purpose of calculating basic reserves.
B. Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner). If select mortality factors are elected, they may be:
(1) The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;
(2) The select mortality factors in the Appendix of this regulation;
(3) For durations in the first segment, X percent of the select mortality factors in the Appendix, subject to the following:
(a) X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;
(b) X shall not be less than twenty percent (20%);
(c) X shall not decrease in any successive policy years;
(d) X is such that, when using the valuation interest rate used for basic reserves, Item (i) is greater than or equal to Item (ii);
(i) The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;
(ii) The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;
(e) X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date;
(f) The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of Subsection B(3);
(g) The appointed actuary may decrease X at any valuation date as long as X does not decrease in any successive policy years and as long as it continues to meet all the requirements of Subsection B(3); and
(h) The appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums.
(i) If X is less than 100 percent at any duration for any policy, the following requirements shall be met:
(i) The appointed actuary shall annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of 8 V.S.A. section 3577 and Regulation I-97-4; and
(ii) The appointed actuary shall annually opine for all policies subject to this regulation as to whether the mortality rates resulting from the application of X meet the requirements of Subsection B(3). This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience.
(4) Any other table of select mortality factors adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for the purpose of calculating deficiency reserves.
C. This subsection applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than ten (10) years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.
D. In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.
E. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:
(1) reserves calculated ignoring the guarantee,
(2) reserves assuming the guarantee was made at issue, and
(3) reserves assuming that the policy was issued on the date of the guarantee.
F. The commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including but not limited to policies issued prior to the effective date of this regulation. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of 8 V.S.A. section 3577 and Regulation I-97-4.
Section 6 Calculation of Minimum Valuation Standard for Policies with Guaranteed Non-level Gross Premiums or Guaranteed Non-level Benefits (Other than Universal Life Policies)
A. Basic Reserves

Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. A t the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in Paragraph (1) or (2) below may be made:

(1) Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.
(2) Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.
B. Deficiency Reserves
(1) The deficiency reserve at any duration shall be calculated:
(a) On a unitary basis if the corresponding basic reserve determined by Subsection A is unitary;
(b) On a segmented basis if the corresponding basic reserve determined by Subsection A is segmented; or
(c) On the segmented basis if the corresponding basic reserve determined by Subsection A is equal to both the segmented reserve and the unitary reserve.
(2) This subsection shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in Section 5B) and rate of interest.
(3) Deficiency reserves, if any, shall be calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in Section 5B.
(4) For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.
C. Minimum Value

Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the NAIC Standard Valuation Law. In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.

D. Unusual Pattern of Guaranteed Cash Surrender Values
(1) For any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.
(2) The reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where
(a) n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:
(i) The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or
(ii) The mandatory expiration date of the policy; and
(b) The net premium for a given year during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and
(c) The net to gross ratio is equal to Item (i) divided by Item (ii) as follows:
(i) The present value, at the beginning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period.
(ii) The present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.
(3) For purposes of this subsection, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of:
(a) One hundred ten percent (110%) of the scheduled gross premium for that year;
(b) One hundred ten percent (110%) of one year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and
(c) Five percent (5%) of the first policy year surrender charge, if any.
E. Optional Exemption for Yearly Renewable Term Reinsurance (YRT). At the option of the company, the following approach for reserves on YRT reinsurance may be used:
(1) Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.
(2) Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in Subsection C.
(3) Deficiency reserves.
(a) For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
(b) 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 Subdivision (a) of this subsection.
(4) For purposes of this subsection, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the NAIC and promulgated by regulation by the commissioner for this purpose.
(5) A reinsurance agreement shall be considered YRT reinsurance for purposes of this subsection if only the mortality risk is reinsured.
(6) If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.
F. 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:
(1) Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.
(2) Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in Subsection 6C.
(3) Deficiency reserves.
(a) For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
(b) 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 Subparagraph (a) above.
(4) For purposes of this subsection, the calculations use 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 regulation by the NAIC and promulgated by regulation by the commissioner for this purpose.
(5) A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this subsection if:
(a) 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
(b) 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.
(6) For policies that become attained-age-based YRT policies after an initial period of coverage, the approach of this subsection may be used after the initial period if:
(a) The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or
(b) The initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and
(c) After the initial period of coverage, the policy meets the conditions of Paragraph (5) above.
(7) If this election is made, this approach shall be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this regulation.
G. Exemption from Unitary Reserves for Certain n-Year Renewable Term Life Insurance Polices. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:
(1) The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;
(2) The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and
(3) There are no cash surrender values in any policy year.
H. Exemption from Unitary Reserves for Certain Juvenile Policies

Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:

(1) At issue, the insured is age twenty-four (24) or younger;
(2) Until the insured reaches the end of the juvenile period, which shall occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and
(3) After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.
Section 7 Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period
A. General
(1) Policies with a secondary guarantee include:
(a) A policy with a guarantee that the policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;
(b) A policy in which the minimum premium at any duration is less than the corresponding one year valuation premium, calculated using 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 regulation by the NAIC and promulgated by regulation by the commissioner for this purpose; or
(c) A policy with any combination of Subparagraph (a) and (b).
(2) A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in Subsections B and C below shall be recalculated from issue to reflect these changes.
(3) Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.
(4) For purposes of this section, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate, which are all guaranteed at issue.
(5) The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in Section 5B(2), (3), and (4) may not be used to calculate the one-year valuation premiums.
(6) The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.
B. Basic Reserves for the Secondary Guarantees

Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in Section 4B.

C. Deficiency Reserves for the Secondary Guarantees

Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in Section 6B with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.

D. Minimum Reserves

The minimum reserves during the secondary guarantee period are the greater of:

(1) The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or
(2) The minimum reserves required by other rules or regulations governing universal life plans.
Section 8 Effective Date

This regulation shall take effect January 1, 2000.

Appendix. SELECT MORTALITY FACTORS

This appendix contains tables of select mortality factors that are the bases to which the respective percentage of Section 5A(2), 5B(2) and 5B(3) are applied.

The six tables of select mortality factors contained herein include:

(1) male aggregate,
(2) male nonsmoker,
(3) male smoker,
(4) female aggregate,
(5) female nonsmoker, and
(6) female smoker.

These tables apply to both age last birthday and age nearest birthday mortality tables.

For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix.

Appendix

SELECT MORTALITY FACTORS
Male, Aggregate
Issue AgeDuration
12345678910
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
189698989999100100909292
1983848487878779797981
2069717174746969676970
2166686971666667666770
2265666663636464646568
2362635960626263636465
2460565659596061616164
2552535556585860606063
2651525556585857616162
2751525557586061616063
2849515658606061626263
2949515658606162626264
3049505658606062636364
3147505658606263646462
3246495659606263666263
3343495659626364626566
3442475660626361636667
3540475660636162656768
3638425660596163656768
3738455657616263656768
3837445358616265666769
3937415358626365656668
4034405358626365656668
4134415358626365646466
4234435358616263636364
4334435459606163626264
4434445458596061606162
4534455358596060605960
4631435256575859595960
4732425053555657585960
4832414752545657575761
4930404649525455565761
5030384447515354565761
5128374246495354565761
5228354145495154565761
5327353944485153555761
5427333844485053555761
5525323743475053555761
5625323743474951545661
5724313843474951545659
5824313843484850535659
5923303943484851535558
6023303943484750525357
6123303943494950525375
6223303944494951527575
6322303945505052757575
6422303945505175757575
6522303945506570707070
6622303945606570707070
6722303960606570707070
6823325560606570707070
6923525560606570707070
7048525560606570707070
7148525560606570707070
7248525560606570707070
7348525560606570707070
7448525560606570707070
7548525560606570707070
76485255606065707070100
774852556060657070100100
7848525560606570100100100
79485255606065100100100100
804852556060100100100100100
8148525560100100100100100100
82485255100100100100100100100
834852100100100100100100100100
8448100100100100100100100100100
85+100100100100100100100100100100
SELECT MORTALITY FACTORS
Male, Aggregate
Issue AgeDuration
11121314151617181920+
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
18929293939697989899100
19818282828588919497100
20717171717479849095100
21707070717177838894100
22686868697177838894100
23656767697076828894100
24646466677076828894100
25626364676975818894100
26636466696673808693100
27636467666774808793100
28646665666874818794100
29646266677076828894100
30626367687177838894100
31636668707278838994100
32666770727378848995100
33677072737580859095100
34707173757681869095100
35717374767681869095100
36707274767782869195100
37707274767681869095100
38697375767782869195100
39697274767681869095100
40687175767782869195100
41687074767782869195100
42666972757782869195100
43666772747782869195100
44646771747782869195100
45636671747782869195100
46636771747580859095100
47656871747580859095100
48656872737479849095100
49666972737479849095100
50667172737580859095100
51667172737580859095100
526671727475808590100100
5367717475768186100100100
54677274757681100100100100
556872747578100100100100100
5667707374100100100100100100
57666972100100100100100100100
586467100100100100100100100100
5963100100100100100100100100100
60100100100100100100100100100100
61100100100100100100100100100100
62100100100100100100100100100100
63100100100100100100100100100100
64100100100100100100100100100100
65100100100100100100100100100100
66100100100100100100100100100100
67100100100100100100100100100100
68100100100100100100100100100100
69100100100100100100100100100100
70100100100100100100100100100100
71100100100100100100100100100100
72100100100100100100100100100100
73100100100100100100100100100100
74100100100100100100100100100100
75100100100100100100100100100100
76100100100100100100100100100100
77100100100100100100100100100100
78100100100100100100100100100100
79100100100100100100100100100100
80100100100100100100100100100100
81100100100100100100100100100100
82100100100100100100100100100100
83100100100100100100100100100100
84100100100100100100100100100100
85+100100100100100100100100100100
Male, Non-Smoker
Issue AgeDuration
12345678910
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
189395969899100100909292
1980818386878779797981
2065686972746969676970
2163666871666667666770
2262656662636464646768
2360625860626263636467
2459555658596061616365
2552535556585860606164
2651535556586061616163
2751525558606061616263
2849525758606163626264
2949515760616162626364
3049515760616263636364
3147505760606263646462
3246505760626364646263
3345495660626364626365
3443485662636462626566
3541475662636162636667
3640475662596162636667
3738455658596162636667
3838455358616263656567
3937415358616263646567
4034415358616263646466
4134415358616162626365
4234435358606162616163
4332435358606160606060
4432445257596060595958
4532445257596059575757
4632425054565757565556
4730404852545555545455
4830404649515253535455
4929394348505150515354
5029374245474849505154
5127354043454748505153
5227343942444548495053
5325313741444547495051
5425303639434447484951
5524293538424345484950
5623293538424244474850
5723283538424243454749
5822283337414143454547
5922263337414142444446
6020263337414041424245
6120263337414041424275
6219253238404041427575
6319253336404041757575
6418243236394075757575
6518243236396570707070
6618243236606570707070
6718243260606570707070
6818245560606570707070
6918525560606570707070
7048525560606570707070
7148525560606570707070
7248525560606570707070
7348525560606570707070
7448525560606570707070
7548525560606570707070
76485255606065707070100
774852556060657070100100
7848525560606570100100100
79485255606065100100100100
804852556060100100100100100
8148525560100100100100100100
82485255100100100100100100100
834852100100100100100100100100
8448100100100100100100100100100
85+100100100100100100100100100100
Male, Non-Smoker
Issue AgeDuration
11121314151617181920+
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
18929295959697989899100
19818283838689929497100
20717172727580859095100
21707071717378848995100
22686870707378848995100
23686867697177838894100
24676666697177838894100
25646464677076828894100
26646466696774808793100
27646667666774808793100
28666663666874818794100
29666365676874818794100
30626366687076828894100
31636567707177838894100
32656668717278838994100
33666871737479849095100
34677072747479849095100
35687072747580859095100
36687072747580859095100
37676971737479849095100
38687072747378848995100
39687071737378848995100
40676971737278838994100
41656769717177838894100
42646667697177838894100
43626466686975818894100
44606265676975818894100
45596163666874818794100
46596163656774808793100
47596162636673808693100
48576162636370788593100
49576161626270778592100
50576161616169778492100
51576061616270778592100
525660606262707785100100
5356596161627077100100100
54555959616270100100100100
555658596162100100100100100
5655575859100100100100100100
57535556100100100100100100100
585153100100100100100100100100
5950100100100100100100100100100
60100100100100100100100100100100
61100100100100100100100100100100
62100100100100100100100100100100
63100100100100100100100100100100
64100100100100100100100100100100
65100100100100100100100100100100
66100100100100100100100100100100
67100100100100100100100100100100
68100100100100100100100100100100
69100100100100100100100100100100
70100100100100100100100100100100
71100100100100100100100100100100
72100100100100100100100100100100
73100100100100100100100100100100
74100100100100100100100100100100
75100100100100100100100100100100
76100100100100100100100100100100
77100100100100100100100100100100
78100100100100100100100100100100
79100100100100100100100100100100
80100100100100100100100100100100
81100100100100100100100100100100
82100100100100100100100100100100
83100100100100100100100100100100
84100100100100100100100100100100
85+100100100100100100100100100100
Male, Smoker
Issue AgeDuration
12345678910
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
18100100100100100100100100100100
19100100100100100100100100100100
2098100100100100100100999999
21959899100959696959697
2292959690909393929395
2390928588888989899090
2487818285848688868688
2577787982818383828385
2675777982828383828384
2773757882828383828282
2871737982818283818182
2969727881818282818181
3068717881818182818181
3165707781798182818176
3263677778798181817677
3360657478797981767777
3457627477797975767779
3553607377797575767779
3652597175747575767779
3749587071747475767778
3848556670727474757678
3945506570727274747577
4041496368717273747476
4140496368717272727375
4240496268707171717173
4339506267696970707071
4439506066686968696969
4537506066686868676767
4637485863656766666667
4736475561636464646567
4835465358606263636567
4934455156585961626367
5034434953555760616367
5132424752555760616367
5232404650545660616367
5330374449545659616567
5430364348535559616567
5529354247535559616567
5628354247535557606368
5728354247535457606467
5826334348545456596367
5926334348545357596366
6025334348545356586266
6125334349555557596375
6225334350565658617575
6324334551565659757575
6424344551575775757575
6524344552576570707070
6624354553606570707070
6725354560606570707070
6825365560606570707070
6927525560606570707070
7048525560606570707070
7148525560606570707070
7248525560606570707070
7348525560606570707070
7448525560606570707070
7548525560606570707070
76485255606065707070100
774852556060657070100100
7848525560606570100100100
79485255606065100100100100
804852556060100100100100100
8148525560100100100100100100
82485255100100100100100100100
834852100100100100100100100100
8448100100100100100100100100100
85+100100100100100100100100100100
Male, Smoker
Issue AgeDuration
11121314151617181920+
0-15100100100100100100100100100100
16100100100100100100100100100100
17100100100100100100100100100100
18100100100100100100100100100100
19100100100100100100100100100100
20100999999100100100100100100
21979696969697989899100
22959393929394969799100
23909089909294959798100
24888686888991939698100
25848484858689929497100
26848484858185899296100
27828484808185899296100
28828280808185899296100
29817780808185899296100
30767780808185899296100
31777981818386909397100
32778083838588919497100
33798083858588919497100
34798183858790929597100
35808284868890939598100
36798183858790929597100
37798184868689929497100
38798183858790929597100
39798184868689929497100
40788083858689929497100
41767881848588919497100
42757681838588919497100
43737679838588919497100
44717479818588919497100
45697378818588919497100
46717478818487909497100
47717579818487909497100
48727579818386909397100
49727780818386909397100
50737880818185899296100
51737880838487909497100
527378818485889194100100
5374798385879092100100100
54748084858991100100100100
557580848690100100100100100
5674798385100100100100100100
57747881100100100100100100100
587378100100100100100100100100
5973100100100100100100100100100
60100100100100100100100100100100
61100100100100100100100100100100
62100100100100100100100100100100
63100100100100100100100100100100
64100100100100100100100100100100
65100100100100100100100100100100
66100100100100100100100100100100
67100100100100100100100100100100
68100100100100100100100100100100
69100100100100100100100100100100
70100100100100100100100100100100
71100100100100100100100100100100
72100100100100100100100100100100
73100100100100100100100100100100
74100100100100100100100100100100
75100100100100100100100100100100
76100100100100100100100100100100
77100100100100100100100100100100
78100100100100100100100100100100
79100100100100100100100100100100
80100100100100100100100100100100
81100100100100100100100100100100
82100100100100100100100100100100
83100100100100100100100100100100
84100100100100100100100100100100
85+100100100100100100100100100100
Female, Aggregate
Issue AgeDuration
12345678910
0-15100100100100100100100100100100
16100100100100100100100100100100
17991001001001001001001009395
1883838484848486787879
1965666868686863636466
2048505151514748484951
2147485051474748495153
2244474845474748495354
2342454445474749515354
2439404244474750515456
2534384144474750535657
2634384145494951565859
2734384147505154575960
2834374347535356596263
2934384349545658606364
3035384350565659636667
3135384351565860646765
3235394551565963666566
3336394452586264656667
3436404552586363666768
3536404553596165676870
3636404553556265676870
3736414752576265676869
3834414452576366686970
3934404553586366686969
4032404553586565676869
4132404553576364676868
4232404552566163656668
4331394551555961656566
4431394550545861636466
4531384449535659626365
4629374348515459626365
4728354146495457616266
4828354144495257616366
4926343943475255616367
5025323841465055616367
5125323841455055616366
5223303641455156616265
5323303641475156616263
5422293541475357616162
5522293541475357616161
5622293541455156596061
5722293541455054565859
5822303641444953565757
5922303641444851535556
6022303641434750515355
6122293539424649505280
6220283339414547498080
6320283338414446808080
6419273236404280808080
6519253035397275758080
6619253035727275758080
6719253072727275758080
6819256872727275758080
6919646872727275758080
7060606468687275758080
7160606468687275758080
7260606468687275758080
7360606468687275758080
7460606468687275758080
7560606468687275758080
76606064686872757580100
776060646868727575100100
7860606468687275100100100
79606064686872100100100100
806060646868100100100100100
8160606468100100100100100100
82606064100100100100100100100
836060100100100100100100100100
8460100100100100100100100100100
85+100100100100100100100100100100
Female, Aggregate
Issue AgeDuration
11121314151617181920+
0-15100100100100100100100100100100
16100100100100100100100100100100
17969797100100100100100100100
18828485888890939598100
19697172747580859095100
20565758616370788593100
21576061646471788693100
22606163646673808693100
23616464676975818894100
24646466697076828894100
25646769717378848995100
26666970737076828894100
27697073707177838894100
28707370727479849095100
29737072747580859095100
30707174757681869095100
31717274757681869095100
32727275767681869095100
33727475767681869095100
34747476767681869095100
35757475767580859095100
36747474757580859095100
37727273757479849095100
38727172747580859095100
39707070737479849095100
40706970737378848995100
41696969737479849095100
42696870747580859095100
43686969747782869195100
44676871757882879196100
45676871777983879296100
46676971777882879196100
47686971777782869195100
48687172757782869195100
49697172757580859095100
50697272757479849095100
51686971747479849095100
526668687373788489100100
5365666872727883100100100
54626666697076100100100100
556263646869100100100100100
5662636467100100100100100100
57616263100100100100100100100
586162100100100100100100100100
5959100100100100100100100100100
60100100100100100100100100100100
61100100100100100100100100100100
62100100100100100100100100100100
63100100100100100100100100100100
64100100100100100100100100100100
65100100100100100100100100100100
66100100100100100100100100100100
67100100100100100100100100100100
68100100100100100100100100100100
69100100100100100100100100100100
70100100100100100100100100100100
71100100100100100100100100100100
72100100100100100100100100100100
73100100100100100100100100100100
74100100100100100100100100100100
75100100100100100100100100100100
76100100100100100100100100100100
77100100100100100100100100100100
78100100100100100100100100100100
79100100100100100100100100100100
80100100100100100100100100100100
81100100100100100100100100100100
82100100100100100100100100100100
83100100100100100100100100100100
84100100100100100100100100100100
85+100100100100100100100100100100

21-044 Code Vt. R. 21-020-044-X

Effective Date: January 1, 2000 (Secretary of State Rule Log #99-78)
Statutory Authority: 8 V.S.A. § 75 and Chapter 103, Subchapter 4