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304.15-352 Cash surrender value -- Nonforfeiture factor.
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(2)
(3)
(4)
(5)
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
304.15-340 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 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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