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304.6-150 Commissioners reserve valuation method defined.
(1)
(2)
Except as otherwise provided in KRS 304.6-141, 304.6-155, and 304.6-180,
reserves according to the commissioners reserve valuation method, for the life
insurance and endowment benefits of policies providing for a uniform amount of
insurance and requiring the payment of uniform premiums shall be the excess, if
any, of the present value, at the date of valuation, of such future guaranteed benefits
provided for by such policies, over the then present value of any future modified net
premiums therefor. The modified net premiums for any such policy shall be such
uniform percentage of the respective contract premiums for such benefits that the
present value, at the date of issue of the policy, of all such modified net premiums
shall be equal to the sum of the then present value of such benefits provided for by
the policy and the excess of (a) over (b), as follows:
(a) Net level annual premium. A net level annual premium equal to the present
value, at the date of issue, of such benefits provided for after the first policy
year, divided by the present value, at the date of issue, of an annuity of one (1)
per annum payable on the first and each subsequent anniversary of such policy
on which a premium falls due. Such net level annual premium shall not
exceed the net level annual premium on the nineteen (19) year premium whole
life plan for insurance of the same amount at an age one (1) year higher than
the age at issue of such policy.
(b) Net one (1) year term premium. A net one (1) year term premium for such
benefits provided for in the first policy year.
Provided that for any life insurance policy issued on or after January 1, 1986, for
which the contract premium in the first policy year exceeds that of the second year
and for which no comparable additional benefit is provided in the first year for such
excess and which provides an endowment benefit or a cash surrender value or a
combination thereof in an amount greater than such excess premium, the reserve
according to the commissioners reserve valuation method as of any policy
anniversary occurring on or before the assumed ending date defined herein as the
first policy anniversary on which the sum of any endowment benefit and any cash
surrender value then available is greater than such excess premium shall, except as
otherwise provided in KRS 304.6-180, be the greater of the reserve as of such
policy anniversary calculated as described in the preceding subsection and the
reserve as of such policy anniversary calculated as described in that subsection, but
with the value defined in paragraph (a) of that subsection being reduced by fifteen
percent (15%) of the amount of such excess first year premium, all present values of
benefits and premiums being determined without reference to premiums or benefits
provided for by the policy after the assumed ending date, the policy being assumed
to mature on such date as an endowment, and the cash surrender value provided on
such date being considered as an endowment benefit. In making the above
comparison the mortality and interest bases stated in KRS 304.6-140 and 304.6-145
shall be used.
Reserves according to the commissioners reserve valuation method for:
(a) Life insurance policies providing for a varying amount of insurance or
(b)
(c)
(d)
requiring the payment of varying premiums,
Group annuity and pure endowment contracts purchased under a retirement
plan or plan of deferred compensation, established or maintained by an
employer (including a partnership or sole proprietorship) or by an employee
organization, or by both, other than a plan providing individual retirement
accounts or individual retirement annuities under Section 408 of the Internal
Revenue Code, as now or hereafter amended,
Disability and accidental death benefits in all policies and contracts, and
All other benefits, except life insurance and endowment benefits in life
insurance policies and benefits provided by all other annuity and pure
endowment contracts, shall be calculated by a method consistent with the
provisions of this section, except that any extra premiums charged because of
impairments or special hazards shall be disregarded in the determination of
modified net premiums.
Effective: June 24, 2015
History: Amended 2015 Ky. Acts ch. 57, sec. 11, effective June 24, 2015. -- Amended
1982 Ky. Acts ch. 263, sec. 11, effective July 15, 1982. -- Amended 1978 Ky. Acts
ch. 280, sec. 3, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 301, subtit. 6,
sec. 15, effective June 18, 1970.
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