Florida Regulations 69O-164.020: Valuation of Life Insurance Policies
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(1) Purpose.
(a) The purpose of this rule is to provide:
1. Tables of select mortality factors, identified as Appendix to Fl. Admin. Code R. 69O-164.020, which is hereby adopted and incorporated by reference, and rules for their use;
2. Rules concerning a minimum standard for the valuation of plans with nonlevel 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 rule will constitute the Commissioners’ Reserve Valuation Method for policies to which this rule is applicable.
(2)(a) This rule is consistent with Appendix A-830 of the NAIC Accounting Practices and Procedures Manual as adopted in Fl. Admin. Code R. 69O-137.001
(b) This rule applies to policies issued during calendar year 2000 in addition to those issued on or after January 1, 2001.
(3) Applicability. This rule shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the following exceptions and conditions:
(a) Exceptions.
1. This rule shall not apply to any individual life insurance policy issued on or after the effective date of this rule if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before January 1, 2000, that guarantees the premium rates of the new policy. This rule 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 rule shall not apply to any universal life policy that meets all the following requirements:
a. Secondary guarantee period, if any, is 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 paragraph (4)(f), or the ultimate mortality tables specified in subsection 69O-162.201(6), F.A.C., 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 rule 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 rule 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 rule 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 nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of subsection (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 subsection (7).
(4) Definitions. For purposes of this rule:
(a) “”Basic reserves”” means reserves calculated in accordance with Florida Statutes § 625.121(7)
(b)1. “”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 paragraph (f), or the mortality tables specified in subsection 69O-162.201(6), F.A.C., and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in paragraph (5)(b) of this rule.
2. The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than Rt (if Gt never exceeds Rt 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 Gt and Rt are defined as follows:
Terms Used In Florida Regulations 69O-164.020
- Contract: A legal written agreement that becomes binding when signed.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
1. Tables of select mortality factors, identified as Appendix to Fl. Admin. Code R. 69O-164.020, which is hereby adopted and incorporated by reference, and rules for their use;
2. Rules concerning a minimum standard for the valuation of plans with nonlevel 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 rule will constitute the Commissioners’ Reserve Valuation Method for policies to which this rule is applicable.
(2)(a) This rule is consistent with Appendix A-830 of the NAIC Accounting Practices and Procedures Manual as adopted in Fl. Admin. Code R. 69O-137.001
(b) This rule applies to policies issued during calendar year 2000 in addition to those issued on or after January 1, 2001.
(3) Applicability. This rule shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the following exceptions and conditions:
(a) Exceptions.
1. This rule shall not apply to any individual life insurance policy issued on or after the effective date of this rule if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before January 1, 2000, that guarantees the premium rates of the new policy. This rule 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 rule shall not apply to any universal life policy that meets all the following requirements:
a. Secondary guarantee period, if any, is 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 paragraph (4)(f), or the ultimate mortality tables specified in subsection 69O-162.201(6), F.A.C., 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 rule 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 rule 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 rule 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 nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of subsection (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 subsection (7).
(4) Definitions. For purposes of this rule:
(a) “”Basic reserves”” means reserves calculated in accordance with Florida Statutes § 625.121(7)
(b)1. “”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 paragraph (f), or the mortality tables specified in subsection 69O-162.201(6), F.A.C., and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in paragraph (5)(b) of this rule.
2. The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than Rt (if Gt never exceeds Rt 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 Gt and Rt are defined as follows: