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304.6-150 Commissioners reserve valuation method defined.
(1)
(2)
Except as otherwise provided in KRS 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
requiring the payment of varying premiums,
(b)
(c)
(d)
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:July 15, 1982
History: 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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