Sec. 31. (a) If in any contract year the gross premium charged by a company on a contract is less than the valuation net premium for the contract calculated by the method used in calculating the reserve, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the contract is the greater of:

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

Terms Used In Indiana Code 27-1-12.8-31

  • 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
  • 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
  • Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(2) the reserve calculated by the method actually used for the contract, but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium with the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.

     (b) The minimum valuation standards of mortality and rate of interest referred to in this section are the standards specified in sections 24 and 26 of this chapter.

     (c) For a life insurance contract issued on or after January 1, 1985:

(1) for which:

(A) the gross premium in the first contract year exceeds the gross premium in the second contract year; and

(B) no comparable additional benefit is provided in the first contract year for the excess; and

(2) that provides an endowment benefit, a cash surrender value, or a combination, in an amount greater than the excess premium;

this section applies as if the method actually used in calculating the reserve for the contract were the method described in section 27(a), 27(b), and 27(d) of this chapter. The minimum reserve on each contract anniversary of a contract described in this subsection is the greater of the minimum reserve calculated in accordance with section 27 of this chapter and the minimum reserve calculated under this section.

As added by P.L.276-2013, SEC.10.

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