31.09.15.07

.07 Nonforfeiture Values for Fixed Premium Universal Life Insurance Policies.

A. 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.

B. The requirements in this regulation pertain to a basic policy and to any benefits and riders for which premiums are not paid separately.

C. 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)-(B)-(C)-(D)], where:

(1) The quantity (A) is the present value of all future guaranteed benefits;

(2) The quantity (B) is the present value of future adjusted premiums;

(3) The quantity (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; and

(4) The quantity (D) is the sum of any quantities analogous to (B), as described in C(2) of this regulation, which arise because of structural changes in the policy.

D. The adjusted premiums described in C(2) of this regulation are calculated as described in Insurance Article, 16-309(b)(2), Annotated Code of Maryland.

E. The nonforfeiture net level premium is equal to the quantity PVFB/x where:

(1) PVFB is the present value of all benefits guaranteed at issue assuming future premiums are paid by the policyowner and all guarantees are contained in the policy or declared by the insurer; and

(2) The quantity 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.

F. The quantity x shall be replaced by an annuity beginning on the date as of which the declaration described in C(3) of this regulation became effective and payable until the end of the period covered by the declaration.

G. Future guaranteed benefits are determined by:

(1) Projecting the policy value, taking into account future premiums, if any, using all guarantees of interest, mortality, or expense deductions, 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.

H. All present values shall be determined using:

(1) An interest rate, or rates, specified by Insurance Article, 16-309(j), Annotated Code of Maryland, for policies issued in the same year; and

(2) The mortality rates specified by Insurance Article, 16-309(i)(3) and (5), Annotated Code of Maryland, for policies issued in the same year or contained in such other table as may be approved by the Commissioner for this purpose.