31.09.15.05

.05 Alternative Minimum Reserves.

A. If, in any policy year, the guaranteed maturity premium on a universal life insurance policy is less than the valuation net premium for the same universal life insurance policy, calculated by the valuation method actually used in calculating the reserve on the universal life insurance policy, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the universal life insurance policy shall be the greater of:

(1) The reserve calculated according to the method, the mortality table, and the rate of interest actually used; and

(2) The reserve calculated according to the method actually used but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the Guaranteed Maturity Premium in each policy year for which the valuation net premium exceeds the Guaranteed Maturity Premium.

B. Reserves.

(1) For universal life insurance reserves on a net level premium basis, the valuation net premium is PVFB/äx where PVFB is as described in Regulation .04B(1)(a)(iii) of this chapter andäx and äx+t are as describedin Regulation .04B(1)(a)(iv) of this chapter.

(2) For reserves on the Commissioners Reserve Valuation Method, the valuation net premium is PVFB/äx + ((a) - (b))/äx where (a) - (b) is the amount, if any, that the present value, at the date of valuation, of the guaranteed benefits under the policy exceeds the present value, at the date of valuation, of any future modified net premiums for the policy, as described in Insurance Article, §5-307(a)(2), Annotated Code of Maryland.