Md. Code Regs. 31.05.03.03

Current through Register Vol. 51, No. 24, December 2, 2024

Section 31.05.03.03 - Definitions

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) "Basic reserves" means reserves calculated in accordance with the principles of Insurance Article, § 5-307, Annotated Code of Maryland.

(2) "Commissioner" means the Maryland Insurance Commissioner.

(3) "Composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

(4) "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 under Regulation .07 of this chapter.

(5) "Deficiency reserves" means the excess, if greater than zero, of:

(a) Minimum reserves calculated in accordance with the principles of Insurance Article, § 5-311, Annotated Code of Maryland; over

(b) Basic reserves.

(6) "Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.

(7) "Maximum valuation interest rates" means the interest rates defined in Insurance Article, § 5-306(d)(2), Annotated Code of Maryland, that are to be used in determining the minimum standard for the valuation of life insurance policies.

(8) "NAIC" means the National Association of Insurance Commissioners.

(9) "1980 CSO valuation tables" means the Commissioner's 1980 Standard Ordinary Mortality Table (1980 CSO Table) without 10-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.

(10) "Preneed insurance contract" means any life insurance policy or certificate, annuity contract, or other insurance contract which, by assignment or otherwise, has for a purpose the funding of an agreement relating to the purchase or provision of specific funeral or cemetery merchandise or services to be provided at the time of the individual's death.

(11) "Scheduled gross premium" means:

(a) The smallest illustrated gross premium at issue for other than universal life insurance policies; or

(b) The smallest specified premium described in Regulation .12A(3) of this chapter, if any, for universal life insurance policies, or else the minimum premium described in Regulation .12A(4) of this chapter.

(12) "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 as described in Regulation .08 of this chapter.

(13) "Smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers.

(14) "Statistical agent" means an entity with:

(a) Proven systems for protecting the confidentiality of individual insurance and insurer information;

(b) Demonstrated resources for, and history of, ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and

(c) A history of, and means for, aggregation of data and accurate promulgation of the experience modifications in a timely manner.

(15) "Tabular cost of insurance" means the net single premium at the beginning of a policy year for 1-year term insurance in the amount of the guaranteed death benefit in that policy year.

(16) "10-year select factors" means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.

(17) 2001 CSO Mortality Table.

(a) "2001 CSO Mortality Table" means that mortality table:

(i) Consisting of separate rates of mortality for male and female lives;

(ii) Developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force;

(iii) Adopted by the NAIC in December 2002 and included in the Proceedings of the NAIC (2nd Quarter 2002); and

(iv) Supplemented by the 2001 CSO Preferred Class Structure Mortality Table.

(b) Unless the context indicates otherwise, "2001 CSO Mortality Table" includes:

(i) The ultimate form of that table;

(ii) The select and ultimate form of that table;

(iii) Both the smoker and nonsmoker mortality tables;

(iv) The composite mortality tables; and

(v) Both the age-nearest-birthday and age-last-birthday bases of the mortality tables.

(18) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

(19) "2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

(20) 2001 CSO Preferred Class Structure Mortality Table.

(a) "2001 CSO Preferred Class Structure Mortality Table" means those mortality tables adopted by the NAIC in September 2006, and included in the Proceedings of the NAIC (3rd Quarter 2006) which have separate rates of mortality for:

(i) Super preferred nonsmokers;

(ii) Preferred nonsmokers;

(iii) Residual standard nonsmokers:

(iv) Preferred smokers; and

(v) Residual standard smokers.

(b) Unless the context indicates otherwise, "2001 CSO Preferred Class Structure Mortality Table" includes:

(i) The ultimate form of that table;

(ii) The select and ultimate form of that table;

(iii) Both the smoker and nonsmoker mortality tables;

(iv) Both the male and female mortality tables;

(v) The gender composite mortality tables; and

(vi) Both the age-nearest-birthday and age-last-birthday bases of the mortality table.

(21) "Unitary reserves" means the present value of all future guaranteed benefits less the present value of all future modified net premiums as described in Regulation .09 of this chapter.

(22) "Universal life insurance policy" means an 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.

Md. Code Regs. 31.05.03.03

Regulation .03B amended effective March 26, 2007 (34:6 Md. R. 630); December 15, 2008 (35:25 Md. R. 2151)