Download as PDF
304.15-340 Adjusted premiums.
(1)
(2)
(3)
(4)
How calculated. This section shall not apply to policies issued on or after the
operative date of KRS 304.15-342 as defined therein. Except as provided in
subsection (4) of this section, the adjusted premiums for any policy shall be
calculated on an annual basis and shall be such uniform percentage of the
respective premiums specified in the policy for each policy year, excluding any
extra premiums charged because of impairment or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted premiums
shall be equal to the sum of:
(a) The then present value of the future guaranteed benefits provided for by
the policy;
(b) Two percent (2%) of the amount of insurance, if the insurance be uniform
in amount, or of the equivalent uniform amount, as hereinafter defined, if
the amount of insurance varies with duration of the policy;
(c) Forty percent (40%) of the adjusted premium for the first policy year; and
(d) Twenty-five percent (25%) of either the adjusted premium for the first
policy year or the adjusted premium for a whole life policy of the same
uniform or equivalent uniform amount with uniform premiums for the
whole of life issued at the same age for the same amount of insurance,
whichever is less.
In applying the percentages specified in paragraphs (c) and (d) of subsection
(1) of this section, no adjusted premium shall be deemed to exceed four
percent (4%) of the amount of insurance or uniform amount equivalent thereto.
Whenever the plan or term of a policy has been changed, either by request of
the insured or automatically in accordance with the provisions of the policy, the
date of issue of the changed policy for the purposes of determining a
nonforfeiture benefit or cash surrender value shall be the date as of which the
age of the insured is determined for the purposes of the changed policy. The
date of issue of a policy for the purpose of this section shall be the date as of
which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration
of the policy, the equivalent uniform amount thereof for the purpose of this
section shall be deemed to be the uniform amount of insurance provided by an
otherwise similar policy, containing the same endowment benefit or benefits, if
any, issued at the same age and for the same term, the amount of which does
not vary with duration and the benefits under which have the same present
value at the date of issue as the benefits under the policy; provided that in the
case of a policy providing a varying amount of insurance issued on the life of a
child under age ten (10), the equivalent uniform amount may be computed as
though the amount of insurance provided by the policy prior to the attainment
of age ten (10) were the amount provided by such policy at age ten (10).
The adjusted premiums for any policy providing term insurance benefits by
rider or supplemental policy provision shall be equal to:
(a) The adjusted premiums for an otherwise similar policy issued at the same
age without such term insurance benefits, increased, during the period for
which premiums for such term insurance benefits are payable, by
(b)
(5)
The adjusted premiums for such term insurance, paragraphs (a) and (b)
of this subsection being calculated separately and as specified in
subsections (1), (2) and (3) of this section, except that, for the purposes of
paragraphs (b), (c), and (d) of subsection (1) of this section, the amount of
insurance or equivalent uniform amount of insurance used in the
calculation of the adjusted premiums referred to in paragraph (b) of this
subsection shall be equal to the excess of the corresponding amount
determined for the entire policy over the amount used in the calculation of
the adjusted premiums in paragraph (a) of this subsection.
All adjusted premiums and present values referred to in KRS 304.15-310 to
304.15-360, inclusive, but not including KRS 304.15-342 and 304.15-344 shall
for all policies of ordinary insurance be calculated on the basis of the
Commissioners 1958 Standard Ordinary Mortality Table, provided that for any
category of ordinary insurance issued on female risks, adjusted premiums and
present values may be calculated according to an age not more than six (6)
years younger than the actual age of the insured, and such calculations for all
policies of industrial insurance shall be made on the basis of the
Commissioners 1961 Standard Industrial Mortality Table. All calculations shall
be made on the basis of the rate of interest specified in the policy for
calculating cash surrender values and paid-up nonforfeiture benefits provided
that such rate of interest shall not exceed four percent (4%) per year except
that a rate of interest not exceeding five and one-half percent (5.5%) per year
may be used for policies issued on or after June 17, 1978. In calculating the
present value of any paid-up term insurance with accompanying pure
endowment, if any, offered as a nonforfeiture benefit for ordinary insurance, the
rates of mortality assumed may not be more than those shown in the
Commissioners 1958 Extended Term Insurance Table and for industrial
insurance the rates of mortality may not be more than those shown in the
Commissioners 1961 Industrial Extended Term Insurance Table. For insurance
issued on a substandard basis, the calculation of any such adjusted premiums
and present values may be based on such other table of mortality as may be
specified by the insurer and approved by the commissioner.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 1184, effective July 15, 2010. -Amended 1982 Ky. Acts ch. 263, sec. 3, effective July 15, 1982. -- Amended
1978 Ky. Acts ch. 280, sec. 9, effective June 17, 1978. -- Created 1970 Ky. Acts
ch. 301, subtit. 15, sec. 34, effective June 18, 1970.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.