304.15-352 Cash surrender value -- Nonforfeiture factor.
(1)
(2)
(3)
(4)
This section, in addition to all other applicable sections of KRS 304.15-310 to
304.15-360, shall apply to all policies issued on or after January 1, 1986. Any cash
surrender value available under the policy in the event of default in a premium
payment due on any policy anniversary shall be in an amount which does not differ
by more than two-tenths of one percent (0.2%) of either the amount of insurance, if
the insurance be uniform in amount, or the average amount of insurance at the
beginning of each of the first ten (10) policy years, from the sum of the greater of
zero (0) and the basic cash value hereinafter specified and the present value of any
existing paid-up additions less the amount of any indebtedness to the insurer under
the policy.
The basic cash value shall be equal to the present value, on such anniversary, of the
future guaranteed benefits which would have been provided for by the policy,
excluding any existing paid-up additions and before deduction of any indebtedness
to the insurer, if there had been no default, less the then present value of the
nonforfeiture factors, as hereinafter defined, corresponding to premiums which
would have fallen due on and after such anniversary. Provided, however, that the
effects on the basic cash value of supplemental life insurance or annuity benefits or
of family coverage, as described in KRS 304.15-320, 304.15-340, or 304.15-342 is
applicable, shall be the same as are the effects specified in KRS 304.15-320,
304.15-340, or 304.15-342, whichever is applicable, on the cash surrender values
defined in that section.
The nonforfeiture factor for each policy year shall be an amount equal to a
percentage of the adjusted premium for the policy year, as defined in KRS 304.15340 or 304.15-342, whichever is applicable. Except as required in this subsection,
such percentage:
(a) Must be the same percentage for each policy year between the second policy
anniversary and the later of the fifth policy anniversary and the first policy
anniversary at which there is available under the policy a cash surrender value
in an amount, before including any paid-up additions and before deducting
any indebtedness, of at least two-tenths of one percent (0.2%) of either the
amount of insurance, if the insurance be uniform in amount, or the average
amount of insurance at the beginning of each of the first ten (10) policy years;
and
(b) Must be such that no percentage after the later of the two (2) policy
anniversaries specified in paragraph (a) of this subsection may apply to fewer
than five (5) consecutive policy years. Provided, that no basic cash value may
be less than the value which would be obtained if the adjusted premiums for
the policy, as defined in KRS 304.15-340 or 304.15-342, whichever is
applicable, were substituted for the nonforfeiture factors in the calculation of
the basic cash value.
All adjusted premiums and present values referred to in this section shall for a
particular policy be calculated on the same mortality and interest bases as are used
in demonstrating the policy's compliance with the other sections of KRS 304.15-310
(5)
to 304.15-360. The cash surrender values referred to in this section shall include any
endowment benefits provided for by the policy.
Any cash surrender value available other than in the event of default in a premium
payment due on a policy anniversary, and the amount of any paid-up nonforfeiture
benefit available under the policy in the event of default in a premium payment,
shall be determined in manners consistent with the manners specified for
determining the analogous minimum amounts in KRS 304.15-310, 304.15-320,
304.15-330, 304.15-342 and 304.15-350. The amounts of any cash surrender values
and of any paid-up nonforfeiture benefits granted in connection with additional
benefits such as those listed as paragraphs (a) to (f) of KRS 304.15-350 shall
conform with the principles of this section.
Effective: July 15, 1982
History: Created 1982 Ky. Acts ch. 263, sec. 7, effective July 15, 1982.
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