2006 Utah Code - 31A-22-408 — Standard Nonforfeiture Law for Life Insurance.
31A-22-408. Standard Nonforfeiture Law for Life Insurance.(1) This section is known as the "Standard Nonforfeiture Law for Life Insurance." It does not apply to group life insurance.
(2) In the case of policies issued on or after July 1, 1961, no policy of life insurance, except as stated in Subsection (8), may be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified, and are essentially in compliance with Subsection (8):
(a) That, in the event of default in any premium payment, after premiums have been paid for at least one full year the company will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as is specified in this section. In lieu of that stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits.
(b) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as is specified in this section.
(c) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default.
(d) That, if the policy shall have been paid by the completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or the fifth policy anniversary in the case of industrial insurance, the company will pay upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value in the amount specified in this section.
(e) In the case of policies which cause, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy.
(f) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company
on the policy; if a detailed statement of the method of computation of the values and benefits
shown in the policy is not stated therein, a statement that such method of computation has been
filed with the insurance supervisory official of the state in which the policy is delivered; and a
statement of the method to be used in calculating the cash surrender value and paid-up
nonforfeiture benefit available under the policy on any policy anniversary beyond the last
anniversary for which such values and benefits are consecutively shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of
insurance may, to the extent inapplicable, be omitted from the policy.
The company shall reserve the right to defer the payment of any cash surrender value for a
period of six months after demand therefor with surrender of the policy with the consent of the
commissioner; provided, however, that the policy shall remain in full force and effect until the
insurer has made the payment.
(3) Any cash surrender value available under the policy in the event of default in a
premium payment due on any policy anniversary, whether or not required by Subsection (2), shall
be an amount not less than the excess, if any, of the present value, on such anniversary, of the
future guaranteed benefits which would have been provided for by the policy, including any
existing paid-up additions, if there had been no default, over the sum of: (a) the then present
value of the adjusted premiums as defined in Subsections (5) and (6), corresponding to premiums
which would have fallen due on and after such anniversary, and (b) the amount of any
indebtedness to the company on the policy.
Provided, however, that for any policy issued on or after the operative date of Subsection
(6)(d) as defined therein, which provides supplemental life insurance or annuity benefits at the
option of the insured and for an identifiable additional premium by rider or supplemental policy
provision, the cash surrender value referred to in the first paragraph of this subsection shall be an
amount not less than the sum of the cash surrender value as defined in such paragraph for an
otherwise similar policy issued at the same age without such rider or supplemental policy
provision and the cash surrender value as defined in such paragraph for a policy which provides
only the benefits otherwise provided by such rider or supplemental policy provision.
Provided, further, that for any family policy issued on or after the operative date of
Subsection (6)(d) as defined therein, which defines a primary insured and provides term insurance
on the life of the spouse of the primary insured expiring before the spouse's age 71, the cash
surrender value referred to in the first paragraph of this subsection shall be an amount not less
than the sum of the cash surrender value as defined in such paragraph for an otherwise similar
policy issued at the same age without such term insurance on the life of the spouse and the cash
surrender value as defined in such paragraph for a policy which provides only the benefits
otherwise provided by such term insurance on the life of the spouse. Any cash surrender value
available within 30 days after any policy anniversary under any policy paid-up by completion of
all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether
or not required by Subsection (2) shall be an amount not less than the present value, on such
anniversary, of the future guaranteed benefits provided for by the policy, including any existing
paid-up additions, decreased by any indebtedness to the company on the policy.
(4) Any paid-up nonforfeiture benefit available under the policy in the event of default in
a premium payment due on any policy anniversary shall be such that its present value as of such
anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if
none is provided for, that cash surrender value which would have been required by this section in
the absence of the condition that premiums shall have been paid for at least a specified period.
(5) (a) This Subsection (5)(a) does not apply to policies issued on or after the operative
date of Subsection (6)(d) as defined therein. Except as provided in Subsection (5)(c), 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 impairments 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: (i) the
then present value of the future guaranteed benefits provided for by the policy; (ii) 2% of the
amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount
if the amount of insurance varies with duration of the policy; (iii) 40% of the adjusted premium
for the first policy year; and (iv) 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. Provided, however, that in applying the percentages specified in
Subsections (5)(a)(iii) and (iv), no adjusted premium shall be considered to exceed 4% of the
amount of insurance or uniform amount equivalent thereto. 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.
(b) 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 considered
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, however, that in the case of a
policy providing a varying amount of insurance issued on the life of a child under age ten, the
equivalent uniform amount may be computed as though the amount of insurance provided by the
policy prior to the attainment of age ten were the amount provided by such policy at age ten.
(c) The adjusted premiums for any policy providing term insurance benefits by rider or
supplemental policy provision shall be equal to: (i) 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 (ii) the adjusted
premiums for such term insurance, the foregoing items (i) and (ii) of this paragraph being
calculated separately and as specified in Subsections (5)(a) and (b) except that, for the purposes
of (ii), (iii), and (iv) of Subsection (5)(a), the amount of insurance or equivalent uniform amount
of insurance used in calculation of the adjusted premiums referred to in (ii) of this paragraph 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 (i) of this paragraph.
(d) Except as otherwise provided in Subsection (6), all adjusted premiums and present
values referred to in this section shall for all policies of ordinary insurance be calculated on the
basis of the Commissioner's 1941 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 three 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 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the
rate of interest, not exceeding 3-1/2% per annum, specified in the policy for calculating cash
surrender values and paid-up nonforfeiture benefits. Provided, however, that in calculating the
present value of any paid-up term insurance with accompanying pure endowment, if any, offered
as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130% of the rates
of mortality according to such applicable table. Provided, further, that 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 company and approved by the
commissioner.
(6) (a) This Subsection (6)(a) does not apply to ordinary policies issued on or after the
operative date of Subsection (6)(d) as defined therein. In the case of ordinary policies issued on
or after the operative date of Subsection (6)(a) as defined in Subsection (6)(b), all adjusted
premiums and present values referred to in this section shall be calculated on the basis of the
Commissioner's 1958 Standard Ordinary Mortality Table and the rate of interest as specified in
the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that
such rate of interest shall not exceed 3-1/2% per annum for policies issued before June 1, 1973,
4% per annum for policies issued on or after May 31, 1973, and before April 2, 1980, and the
rate of interest shall not exceed 5-1/2% per annum for policies issued after April 2, 1980, except
that for any single premium whole life or endowment insurance policy a rate of interest not
exceeding 6-1/2% per annum may be used, and 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 years younger than the actual age of the insured.
Provided, however, that in calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality
assumed may be not more than those shown in the Commissioner's 1958 Extended Term
Insurance Table. Provided, further, that 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 company and approved by the commissioner.
(b) Any company may file with the commissioner a written notice of its election to
comply with the provisions of Subsection (6)(a) after a specified date before January 1, 1966.
After filing such notice, then upon such specified date, which is the operative date of Subsection
(6) (a) for such company, this Subsection (6)(a) shall become operative with respect to the
ordinary policies thereafter issued by such company. If a company makes no such election, the
operative date of Subsection (6)(a) for such company is January 1, 1966.
(c) This Subsection (6)(c) does not apply to industrial policies issued after the operative
date of Subsection (6)(d) as defined therein. In the case of industrial policies issued on or after
the operative date of this Subsection (6)(c) as defined herein, all adjusted premiums and present
values referred to in this section shall be calculated on the basis of the Commissioner's 1961
Standard Industrial Mortality Table and 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 3-1/2% per annum for policies issued before June 1, 1973, 4% per annum for policies
issued after May 31, 1973, and before April 2, 1980, and 5-1/2% per annum for policies issued
after April 2, 1980, except that for any single premium whole life or endowment insurance policy
issued after April 2, 1980, a rate of interest not exceeding 6-1/2% per annum may be used.
Provided, however, that in calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality
assumed may be not more than those shown in the Commissioner's 1961 Industrial Extended
Term Insurance Table. Provided, further, that 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 company and approved by the commissioner.
Any company may file with the commissioner a written notice of its election to comply
with the provisions of this Subsection (6)(c) after a specified date before January 1, 1968. After
filing such notice, then upon that specified date, which is the operative date of this Subsection (6)
(c) for such company, this Subsection (6)(c) shall become operative with respect to the industrial
policies thereafter issued by such company. If a company makes no such election, the operative
date of this paragraph (c) for such company shall be January 1, 1968.
(d) (i) This Subsection (6)(d) applies to all policies issued on or after the operative date of
this subsection as defined herein. Except as provided in Subsection (6)(d)(vii), 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
amounts payable as extra premiums to cover impairments or special hazards and also excluding
any uniform annual contract charge or policy fee specified in the policy in a statement of the
method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that
the present value, at the date of issue of policy, of all 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) 1%
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 policy years; and (C) 125% of the nonforfeiture
net level premium as hereinafter defined. Provided, however, that in applying the percentage
specified in (C), no nonforfeiture net level premium shall be considered to exceed 4% 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 policy years. The date of issue of a policy for
the purpose of this subsection shall be the date as of which the rated age of the insured is
determined.
(ii) The nonforfeiture net level premium shall be equal to the present value, at the date of
issue of the policy, of the guaranteed benefits provided for by the policy divided by the present
value, at the date of issue of the policy, of an annuity of one per annum payable on the date of
issue of the policy and on each anniversary of such policy on which a premium falls due.
(iii) In the case of policies which cause on a basis guaranteed in the policy unscheduled
changes in benefits or premiums, or which provide an option for changes in benefits or premiums
other than change to a new policy, the adjusted premiums and present values shall initially be
calculated on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of the policy. At the time of any such change in the benefits or
premiums the future adjusted premiums, nonforfeiture net level premiums, and present values
shall be recalculated on the assumption that future benefits and premiums do not change from
those stipulated by the policy immediately after the change.
(iv) Except as otherwise provided in Subsection (6)(d)(vii), the recalculated future
adjusted premiums for any such policy shall be such uniform percentage of the respective future
premiums specified in the policy for each policy year, excluding amounts specified in the policy
for each policy year, excluding amounts payable as extra premiums to cover impairments and
special hazards, and also excluding any uniform annual contract charge or policy fee specified in
the policy in a statement of the method to be used in calculating the cash surrender values and
paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined
benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the
sum of: (I) the then present value of the then future guaranteed benefits provided for by the policy
and (II) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or
present value of any paid-up nonforfeiture benefit under the policy.
(v) The additional expense allowance, at the time of the change to the newly defined
benefits or premiums, shall be the sum of: (A) 1% of the excess, if positive, of the average
amount of insurance at the beginning of each of the first ten policy years subsequent to the change
over the average amount of insurance prior to the change at the beginning of each of the first ten
policy years subsequent to the time of the most recent previous change, or, if there has been no
previous change, the date of issue of the policy; and (B) 125% of the increase, if positive, in the
nonforfeiture net level premium.
(vi) The recalculated nonforfeiture net level premium shall be equal to the result obtained
by dividing (A) by (B) where
(A) equals the sum of:
(I) the nonforfeiture net level premium applicable prior to the change times the present
value of an annuity of one per annum payable on each anniversary of the policy on or subsequent
to the date of the change on which a premium would have fallen due had the change not occurred;
and
(II) the present value of the increase in future guaranteed benefits provided for by the
policy; and
(B) equals the present value of an annuity of one per annum payable on each anniversary
of the policy on or subsequent to the date of change on which a premium falls due.
(vii) Notwithstanding any other provision of this Subsection (6)(d) to the contrary, in the
case of a policy issued on a substandard basis which provides reduced graded amounts of
insurance so that, in each policy year, such policy has the same tabular mortality cost as an
otherwise similar policy issued on the standard basis which provides higher uniform amounts of
insurance, adjusted premiums and present values for such substandard policy may be calculated
as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
(viii) All adjusted premiums and present values referred to in this section shall for all
policies of ordinary insurance be calculated on the basis of: (A) the Commissioner's 1980
Standard Ordinary Mortality Table; or (B) at the election of the company for any one or more
specified plans of life insurance, the Commissioner's 1980 Standard Ordinary Mortality Table
with Ten-Year Select Mortality Factors; shall for all policies of industrial insurance be calculated
on the basis of the Commissioner's 1961 Standard Industrial Mortality Table; and shall for all
policies issued in a particular calendar year be calculated on the basis of a rate of interest not
exceeding the nonforfeiture interest rate as defined in this subsection, for policies issued in that
calendar year. Provided, however, that:
(I) At the option of the company, calculations for all policies issued in a particular
calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture
interest rate, as defined in this subsection, for policies issued in the immediately preceding
calendar year.
(II) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions,
any cash surrender value available, whether or not required by Subsection (2), shall be calculated
on the basis of the mortality table and rate of interest used in determining the amount of such
paid-up nonforfeiture benefit and paid-up dividend additions, if any.
(III) A company may calculate the amount of any guaranteed paid-up nonforfeiture
benefit, including paid-up additions under the policy, on the basis of an interest rate no lower than
that specified in the policy for calculating cash surrender values.
(IV) In calculating the present value of any paid-up term insurance with accompanying
pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be
not more than those shown in the Commissioner's 1980 Extended Term Insurance Table for
policies of ordinary insurance and not more than the Commissioner's 1961 Industrial Extended
Term Insurance Table for policies of industrial insurance.
(V) For insurance issued on a substandard basis, the calculation of any such adjusted
premiums and present values may be based on appropriate modifications of the aforementioned
tables.
(VI) Any ordinary mortality tables, adopted after 1980 by the National Association of
Insurance Commissioners, that are approved by rules adopted by the commissioner for use in
determining the minimum nonforfeiture standard, may be substituted for the Commissioner's 1980
Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the
Commissioner's 1980 Extended Term Insurance Table.
(VII) Any industrial mortality tables, adopted after 1980 by the National Association of
Insurance Commissioners, that are approved by rules adopted by the commissioner for use in
determining the minimum nonforfeiture standard may be substituted for the Commissioner's 1961
Industrial Extended Term Insurance Table.
(ix) The nonforfeiture interest rate per annum for any policy issued in a particular
calendar year shall be equal to 125% of the calendar year statutory valuation interest rate for such
policy as defined in the Standard Valuation Law, rounded to the nearest 1/4 of 1%.
(x) Notwithstanding any other provision in this title to the contrary, any refiling of
nonforfeiture values or their methods of computation for any previously approved policy form
which involves only a change in the interest rate or mortality table used to compute nonforfeiture
values does not require refiling of any other provisions of that policy form.
(xi) After the effective date of this Subsection (6)(d), any company may, at any time
before January 1, 1989, file with the commissioner a written notice of its election to comply with
the provisions of this subsection with regard to any number of plans of insurance after a specified
date before January 1, 1989, which specified date shall be the operative date of this Subsection
(6)(d) for the plan or plans, but if a company elects to make the provisions of this subsection
operative before January 1, 1989, for fewer than all plans, the company must comply with rules
adopted by the commissioner. There is no limit to the number of times this election may be
made. If the company makes no such election, the operative date of this subsection for such
company shall be January 1, 1989.
(7) In the case of any plan of life insurance which provides for future premium
determination, the amounts of which are to be determined by the insurance company based on the
estimates of future experience, or in the case of any plan of life insurance which is of such nature
that minimum values cannot be determined by the methods described in Subsection (2), (3), (4),
(5), (6)(a), (6)(b), (6)(c), or (6)(d) herein, then:
(a) the commissioner must be satisfied that the benefits provided under the plan are
substantially as favorable to policyholders and insureds as the minimum benefits otherwise
required by Subsection (2), (3), (4), (5), (6)(a), (6)(b), (6)(c), or (6)(d);
(b) the commissioner must be satisfied that the benefits and the pattern of premiums of
that plan are not such as to mislead prospective policyholders or insureds; and
(c) the cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this Standard Nonforfeiture Law for Life Insurance, as determined by rules adopted by the commissioner.
(8) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in Subsections (3), (4), (5), and (6) of this section may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, may not be less than the amounts used to provide such additions. Notwithstanding the provisions of Subsection (3), additional benefits payable: (a) in the event of death or dismemberment by accident or accidental means, (b) in the event of total and permanent disability, (c) as reversionary annuity or deferred reversionary annuity benefits, (d) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply, (e) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is 26, if uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child, and (f) as other policy benefits additional to life insurance endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.
(9) This subsection, in addition to all other applicable subsections of this section, applies to all policies issued on or after January 1, 1985. 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 2/10 of 1% 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 policy years, from the sum of: (a) the greater of zero and the basic cash value hereinafter specified, and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the company 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 company, 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 Subsection (3) or (5), whichever is applicable, shall be the same as are the effects specified in Subsection (3) or (5), whichever is applicable, on the cash surrender values defined in that subsection.
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 Subsection (5) or (6)(d), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage:
(a) must be the same percentage for each policy year between the second policy
anniversary and the later of: (i) the fifth policy anniversary and (ii) 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 2/10 of 1% 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 policy years; and
(b) must be such that no percentage after the later of the two policy anniversaries
specified in Subsection (9)(a) may apply to fewer than five 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 Subsection (5) or Subsection (6)(d),
whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the
basic value.
All adjusted premiums and present values referred to in this Subsection (9) 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 subsections of this law. The cash surrender
values referred to in this subsection 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 Subsections (2), (3), (4), (5), (6), and (8). 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 Subsections (8)(a) through (f) shall conform with the principles of this Subsection (9).
(10) This section does not apply to any of the following:
(a) reinsurance;
(b) group insurance;
(c) pure endowment;
(d) an annuity or reversionary annuity contract;
(e) a term policy of uniform amount, which provides no guaranteed nonforfeiture or
endowment benefits, or renewal thereof, of 20 years or less expiring before age 71, for which
uniform premiums are payable during the entire term of the policy;
(f) a term policy of decreasing amount, which provides no guaranteed nonforfeiture or
endowment benefits, on which each adjusted premium, calculated as specified in Subsections (5)
and (6), is less than the adjusted premium so calculated, on a term policy of uniform amount, or
renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the
same age and for the same initial amount of insurance, and for a term of 20 years or less expiring
before age 71, for which uniform premiums are payable during the entire term of the policy;
(g) a policy, which provides no guaranteed nonforfeiture or endowment benefits, for
which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the
beginning of any policy year, calculated as specified in Subsections (3), (4), (5), and (6) exceeds
2-1/2% of the amount of insurance at the beginning of the same policy year; or
(h) a policy which shall be delivered outside this state through an agent or other
representative of the company issuing the policy.
For purposes of determining the applicability of this section, the age of expiry for a joint
term insurance policy shall be the age of expiry of the oldest life.
(11) The commissioner may adopt rules interpreting, describing, and clarifying the application of this nonforfeiture law to any form of life insurance for which the interpretation, description, or clarification is deemed necessary by the commissioner, including but not limited to, unusual and new forms of life insurance.
Amended by Chapter 91, 1987 General Session
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