N.M. Admin. Code § 13.9.7.11

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

Section 13.9.7.11 - MINIMUM CASH SURRENDER VALUES FOR FIXED PREMIUM POLICIES

For fixed premium universal life insurance policies, the minimum cash surrender values shall be determined separately for the basic policy and any benefits and riders for which premiums are paid separately. The following requirements pertain to a basic policy and any benefits and riders for which premiums are not paid separately.

A. 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 A minus B minus C minus D, where:

(1)A is the present value of all future guaranteed benefits.

(2)B is the present value of future adjusted premiums. The adjusted premiums are calculated as described in Section 59A-2-31D and 59A-20-31F NMSA 1978, as applicable. If Section 59A-20-31F NMSA 1978 is applicable, the nonforfeiture net level premium is equal to the quantity PVFB divided by a_x, 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 and a_x 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.

(3)C is the present value of any quantities analogous to the nonforfeiture net level premium which arise because of guarantees declared by the insurer after the issue date of the policy. a_x shall be replaced by an annuity beginning on the date as of which the declaration became effective and payable until the end of the period covered by the declaration.

(4)D is the sum of any quantities analogous to B which arise because of structural changes in the policy.

B. 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.

C. All present values shall be determined using:

(1) an interest rate (or rates) specified by Section 59A-20-31 NMSA 1978 for policies issued in the same year; and

(2) the mortality rates specified by Section 59A-20-31 NMSA 1978 for policies issued in the same year or contained in such other table as may be approved by the superintendent for this purpose.

N.M. Admin. Code § 13.9.7.11

12-1-85; Recompiled 11/30/01