N.D. Admin. Code 45-04-05-03
1 Requirements.
Reserves by the net level premium method must be equal to ((A) -(B))r where (A), (B) and r are as defined below:
, where PVFB is the present value of all benefits guaranteed at issue assuming future guaranteed maturity premiums are paid by the policyowner and taking into account all guarantees contained in the policy or declared by the insurer.
ax and ax+t are present values of an annuity of one per year payable on policy anniversaries beginning at ages x and x+t, respectively, and continuing until the highest attained age at which a premium may be paid under the policy. (x) is defined as the issue age and (t) is defined as the issue age and (t) is defined as the duration of the policy.
The guaranteed maturity premium for flexible premium universal life insurance policies must be that level gross premium, paid at issue and periodically thereafter over the period during which premiums are allowed to be paid, which will mature the policy on the latest maturity date, if any, permitted under the policy (otherwise at the highest age in the valuation mortality table), for an amount which is in accordance with the policy structure. The guaranteed maturity premium is calculated at issue based on all policy guarantees at issue (excluding guarantees linked to an external referent). The guaranteed maturity premium for fixed premium universal life insurance policies must be the premium defined in the policy which at issue provides the minimum policy guarantees.
r is equal to one, unless the policy is a flexible premium policy and the policy value is less than the guaranteed maturity fund, in which case r is the ratio of the policy value to the guaranteed maturity fund.
The guaranteed maturity fund at any duration is that amount which, together with future guaranteed maturity premiums, will mature the policy based on all policy guarantees at issue.
where (a)-(b) is as described in [Section Four of the NAIC Standard Valuation Law, as amended in 1980] for the plan of insurance defined at issue by the guaranteed maturity premiums and all guarantees contained in the policy or declared by the insurer.
ax+t and ax are defined in (B) above.
The guaranteed maturity premium, the guaranteed maturity fund and (B) above must be recalculated to reflect any structural changes in the policy. This recalculation must be done in a manner consistent with the descriptions above. Future guaranteed benefits are determined by (a) projecting the greater of the guaranteed maturity fund and the policy value, taking into account future guaranteed maturity premiums, if any, and using all guarantees of interest, mortality, expense deductions, etc., contained in the policy or declared by the insurer; and (b) taking into account any benefits guaranteed in the policy or by declaration which do not depend on the policy value.
All present values shall be determined using (a) an interest rate (or rates) specified by [the NAIC Standard Valuation Law, as amended in 1980] for policies issued in the same year; (b) the mortality rates specified by [the NAIC Standard Valuation Law, as amended in 1980] for policies issued in the same year or contained in such other table as may be approved by the commissioner for this purpose; and (c) any other tables needed to value supplementary benefits provided by a rider which is being valued together with the policy.
For universal life insurance reserves on a net level premium basis, the valuation net premium
and for reserves on a commissioners reserve valuation method, the valuation net premium is
N.D. Admin Code 45-04-05-03
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-30, 26.1-33