Indiana Code 27-1-12.8-18. Net reserve value of contracts issued before transition date or January 1, 1948; mortality tables
(1) As soon as practicable after the filing with the department under IC 27-1-20-21 of the annual statement of a company organized under this article or under another law of this state and doing business in Indiana, the department shall ascertain the net reserve value of each contract in force on the immediately preceding December 31, on the basis of:
Terms Used In Indiana Code 27-1-12.8-18
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Contract: A legal written agreement that becomes binding when signed.
- contract: means a contract or a policy. See Indiana Code 27-1-12.8-6
- Department: means "the department of insurance" of this state. See Indiana Code 27-1-2-3
- Insurance: means a contract of insurance or an agreement by which one (1) party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration. See Indiana Code 27-1-2-3
- life insurance: means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts. See Indiana Code 27-1-12.8-10
- premium: means money or any other thing of value paid or given in consideration to an insurer, insurance producer, or solicitor on account of or in connection with a contract of insurance and shall include as a part but not in limitation of the above, policy fees, admission fees, membership fees and regular or special assessments and payments made on account of annuities. See Indiana Code 27-1-2-3
- reserves: means reserve liabilities. See Indiana Code 27-1-12.8-15
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(B) the Actuaries’ Combined Experience Table of Mortality and four percent (4%) interest;
as adopted by the company. However, if the company issues a contract based on a higher standard than the standards described in clauses (A) and (B), the contract must be valued according to the higher standard. The department may hire, at the company’s expense, an actuary to make the valuation or the department may accept a valuation made by the company, as determined by the department.
(2) In making a valuation under subdivision (1), the department or a representative of the department shall compute the net reserve value according to the terms of the contract. If a contract provides term insurance, or for a valuation as term insurance for any time covered by the contract, the valuation of the contract must be in accordance with the provision in the contract. However, a contract issued after March 5, 1909:
(A) may provide for not more than one (1) year of preliminary term insurance; and
(B) if the premium charged for term insurance under:
(i) a limited payment life preliminary term contract providing for the payment of less than twenty (20) annual premiums; or
(ii) an endowment preliminary term contract;
exceeds the premium charged for life insurance under twenty (20) payment life preliminary term contracts of the same company, the reserve on the contract at the end of any year, including the first, must not be less than the reserve on a twenty (20) payment life preliminary term contract issued in the same year at the same age, together with an amount that is equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period equal to the difference between the value at the end of the period of the twenty (20) payment life preliminary term contract and the full reserve at the time of the limited payment life or endowment contract.
(3) All contracts of life insurance, including contracts issued on a reducing premium plan or a return premium plan, must be valued according to this article. However, if the actual premium charged for an insurance contract is less than the net premium for the insurance contract, based on the American Men Ultimate Table of Mortality with three and one-half percent (3 1/2%) interest, the company must also establish an additional reserve equal to the value of an annuity, the amount of which must be equal to the difference between the premium charged and the net premium for insurance based on the American Men Ultimate Table with three and one-half percent (3 1/2%) interest and a term in years that is equal to the number of future annual payments due on the insurance at the date of valuation.
(4) Insurance against permanent mental or physical disability resulting from accident or disease or against accidental death, combined with a contract of life insurance, must be valued on a basis of fifty percent (50%) of the additional annual premium charged for the insurance.
(5) The department may at any time during the year ascertain the net reserve value of the contracts of a company, as provided in this section, to determine the solvency of the company.
(6) Reserves may be calculated, at the option of the company, according to standards that produce greater aggregate reserves for all contracts than the reserves produced by the standard specified in this section.
(7) A company that has adopted a standard of valuation producing greater aggregate reserves than the aggregate reserves calculated according to the minimum standard provided for in this section may, with the approval of the department, adopt a standard of valuation producing lower aggregate reserves, but not lower in the aggregate than the reserves produced by the standard specified in the company’s contracts.
(b) Subsection (a)(1) through (a)(3) applies only to the valuation of life insurance contracts.
As added by P.L.276-2013, SEC.10.