Ohio § 3915.071

§ 3915.071.

(A) As used in this section, “ operative date of the valuation manual ” means the January 1 of the first calendar year that the valuation manual, as defined

in section 3903.72 of the Revised Code , is effective. (B) No policy of life insurance shall be delivered or issued for delivery in this state,

on or after January 1, 1989, or the operative date (not before January 1, 1983) applicable

to such policy, as permitted by division (P) of this section, unless it contains in

substance the provisions set out in this division which are applicable to the plan

of insurance or corresponding provisions which, in the opinion of the superintendent

of insurance, are at least as favorable to the policyholder: (1) That the company will, upon proper request within sixty days after the due date of

a premium in default, grant a paid-up nonforfeiture benefit on a plan stated in the

policy.  The effective date of the benefit shall be the due date of the unpaid premium.  The benefit shall be in the amount specified in this section. (2) That upon proper request, within the same sixty-day period, the company may substitute

an alternative nonforfeiture benefit of an actuarially equivalent value.  The amount may be greater or the death benefit may be for a longer period.  If the benefit is an endowment benefit, the amount may be greater or payment may

be made earlier. (3) That after premiums have been paid for at least three full years for ordinary insurance

or for at least five full years for industrial insurance, the company will, upon surrender

of the policy within sixty days after the due date of an unpaid premium, pay a cash

surrender value in the amount specified in this section in lieu of any paid-up nonforfeiture

benefits. (4) That if another available nonforfeiture benefit is not elected within sixty days

after the due date of an unpaid premium, the paid-up nonforfeiture benefit specified

in the policy shall become effective. (5) That if all premiums for the policy have been paid, the company will pay the cash

surrender value, upon surrender of the policy within thirty days after a policy anniversary,

in the amount specified in this section.  That value will also be available within any such thirty-day period if the policy

is continuing under any 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. (6) A statement of the mortality table, interest rate, and method used in calculating

cash surrender values and paid-up nonforfeiture benefits available under policies

which guarantee unscheduled changes in benefits or premiums upon the happening of

specified events or upon the exercise of an option without change to a new policy. For all other policies, a statement of the mortality table and interest rate used

in calculating the cash surrender values and paid-up nonforfeiture benefits, together

with a table showing such values and benefits on each policy anniversary during the

first twenty policy years, or the term of the policy, if shorter.  Values and benefits are to be calculated on 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. (7) A statement that the cash surrender values and paid-up nonforfeiture benefits are

not less than those required by the law of the state in which the policy is delivered. (8) An explanation of the manner in which cash surrender values and paid-up nonforfeiture

benefits are increased by any paid-up additions to the policy and decreased by any

indebtedness to the company on the policy. (9) A statement that a detailed statement of the method of computation of values and

benefits has been filed with the insurance supervisory official of the state in which

the policy is delivered if such a detailed statement is not included in the policy. (10) A statement of the method used in calculating the cash surrender value and paid-up

nonforfeiture benefit available on any policy anniversary beyond the last anniversary

for which values and benefits are consecutively shown in 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 and surrender of the policy. (C) Upon default in payment of a premium due on a policy anniversary, any cash surrender

value shall be determined as of the due date.  The value shall be not less than the present value on the anniversary of the future

guaranteed benefits which would have been provided for by the policy, including any

existing paid-up additions, had default not occurred, less the present value on the

anniversary of the adjusted premiums corresponding to the premiums which would have

fallen due on and after such anniversary and less any indebtedness to the company

on the policy.  Any cash surrender value provided for by the policy shall be in substantial compliance

with section 3915.072 of the Revised Code . If supplemental life insurance or annuity benefits are added at issue, at the option

of the insured, to a policy by rider or supplemental policy provision and for an identifiable

additional premium, the cash surrender values for the basic insurance and for the

supplemental insurance or benefits shall be determined as if each had been issued

as a separate policy.  The cash surrender value of the policy shall be the sum of the cash surrender value

of the basic insurance and of the supplemental insurance or benefits. The cash surrender value for a family policy, which defines a primary insured and

which provides term insurance on the life of the spouse of the primary insured expiring

before the spouse's age seventy-one, is the sum of the cash surrender value of the

insurance on the primary insured and the cash surrender value of the term insurance

on the spouse, determined as if the insurance on each had been issued as a separate

policy. Any cash surrender value available within thirty days after a policy anniversary,

under a policy paid up by completion of all premium payments or continued under any

paid-up nonforfeiture benefit, shall be not less than the present value, on the anniversary,

of the future guaranteed benefits provided by the policy, including any paid-up additions,

and decreased by any indebtedness to the company on the policy. Any paid-up nonforfeiture benefit available upon default in payment of the premium

due on a policy anniversary shall have a present value as of the anniversary at least

equal to the policy's cash surrender value on that date or, if none is provided for,

the cash surrender value which would have been required by this section in the absence

of the condition that premiums shall have been paid for the requisite number of years. (D)(1) Amounts payable as extra premiums to cover impairments or special hazards and uniform

annual contract charges or policy fees specified in the policy statement of the method

to be used in calculating cash surrender values and paid-up nonforfeiture benefits

are excluded in calculating adjusted premiums and recalculated future adjusted premiums. A policy issued on a substandard basis but similar to one issued on a standard basis

may be considered the same as the standard policy in calculating adjusted premiums

and present values if tabular mortality costs in each policy year are the same as

those in the standard policy and if the policies differ only in that the substandard

policy provides reduced graded amounts of insurance and the standard policy provides

higher uniform amounts of insurance. (2) The adjusted premiums for any policy are calculated on an annual basis and shall

be a uniform per cent of the respective premiums specified in the policy for each

policy year such that the present value, at the date of issue, of all such adjusted

premiums is equal to the sum of the following: (a) The present value at the date of issue of the future guaranteed benefits; (b) One per cent of either the amount of insurance, if uniform in amount, or the average

amount of insurance at the beginning of each of the first ten policy years;  and (c) One hundred twenty-five per cent of the nonforfeiture net level premium, as defined

in division (D)(3) of this section, provided that for the purposes of this division

(D)(2)(c) the nonforfeiture net level premium shall not be deemed to exceed four per

cent of either the amount of insurance, if uniform in amount, or the average amount

of insurance at the beginning of each of the first ten policy years. The date of issue, as used in this division, is the date as of which the rated age

of the insured is determined. (3) The nonforfeiture net level premium is equal to the present value, at the date of

issue, of the guaranteed benefits provided for by the policy divided by the present

value, at the date of issue, of an annuity of one per annum payable on the date of

issue and on each anniversary of the policy on which a premium falls due. (4) Adjusted premiums, present values, additional expense allowances, and nonforfeiture

net level premiums for policies which guarantee unscheduled changes in benefits or

premiums upon the happening of specified events or upon the exercise of an option

without change to a new policy are determined as follows: (a) At the date of issue, adjusted premiums, nonforfeiture net level premiums, and present

values are calculated on the assumption that there will be no change in future benefits

or premiums; (b) At the time of a change in benefits or premiums, future adjusted premiums, nonforfeiture

net level premiums and present values are recalculated on the assumption that there

will be no other change in future benefits or premiums; (c) These recalculated future adjusted premiums are a uniform percentage of the respective

future premiums specified in the policy for each policy year after the change such

that the present value, at the time of change, of the future adjusted premiums is

equal to the sum of: (i) The present value at the time of change of all future guaranteed benefits provided

for by the policy; (ii) Any additional expense allowance less the cash surrender value at that time or, if

none, the value of any paid-up nonforfeiture benefit. (d) The additional expense allowance, at the time of change, is the sum of one per cent

of any increase in the average amount of insurance and one hundred twenty-five per

cent of any increase in the nonforfeiture net level premium.  The average amount of insurance after the change is the average amount of insurance

at the beginning of the first ten policy years following the change.  The average amount of insurance before the change is the average amount of insurance

at the beginning of each of the first ten policy years starting with the date of the

most recent previous change or, if there has been no change, the date of issue. (e) The recalculated nonforfeiture net level premium is the quotient of (i) the present

value of the increase in future guaranteed benefits provided by the policy plus (ii)

the nonforfeiture net level premium before the change times the present value of an

annuity of one per annum payable on each anniversary of the policy on and after the

date of change on which a premium would, except for the change, have fallen due divided

by (iii) the present value of an annuity of one per annum payable on each anniversary

on or after the date of change on which a premium falls due. (E) For policies issued prior to the operative date of the valuation manual: (1) For all policies of ordinary insurance issued on the standard basis, all adjusted

premiums and present values referred to in this section shall be calculated on the

basis of the commissioners 1980 standard ordinary mortality table and a rate of interest

not exceeding the nonforfeiture interest rate provided for by division (E)(3) of this

section or, at the option of the company, a rate not exceeding the nonforfeiture interest

rate for policies issued in the preceding calendar year.  The company may elect to use the commissioners 1980 standard ordinary mortality

table with ten-year select mortality factors for any specified plan of life insurance.  The superintendent may approve the use of any ordinary mortality table adopted after

1980 by the national association of insurance commissioners in determining the minimum

nonforfeiture standard for such policies. (2) For all policies of industrial insurance issued on the standard basis, all adjusted

premiums and present values referred to in this section shall be calculated on the

basis of the commissioners 1961 standard industrial mortality table and a rate of

interest not exceeding the nonforfeiture interest rate provided for by division (E)(3)

of this section or, at the option of the company, a rate not exceeding the nonforfeiture

interest rate for policies issued in the preceding calendar year.  The superintendent may approve the use of any industrial mortality table adopted

after 1980 by the national association of insurance commissioners in determining the

minimum nonforfeiture standard for such policies. (3) The nonforfeiture interest rate for a policy issued in any calendar year is equal

to one hundred twenty-five per cent of the valuation interest rate for the policy

as defined in section 3903.724 of the Revised Code , rounded to the nearer one-quarter of one per cent, provided, however, that the nonforfeiture

interest rate shall not be less than four per cent. (F) For all policies issued on or after the operative date of the valuation manual: (1) For all policies of ordinary insurance, the valuation manual shall provide the commissioners

standard mortality table for use in determining the minimum nonforfeiture standard

that may be substituted for the commissioners 1980 standard ordinary mortality table,

with or without ten-year select mortality factors, or for the commissioners 1980 extended

term insurance table.  If the superintendent approves by rule any commissioners standard ordinary mortality

table adopted by the national association of insurance commissioners for use in determining

the minimum nonforfeiture standard for policies issued on or after the operative date

of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum

nonforfeiture standard provided by the valuation manual. (2) For all policies of industrial insurance, the valuation manual shall provide the

commissioners standard mortality table for use in determining the minimum nonforfeiture

standard that may be substituted for the commissioners 1961 standard industrial mortality

table or the commissioners 1961 industrial extended term insurance table.  If the superintendent approves by rule any commissioners standard industrial mortality

table adopted by the national association of insurance commissioners for use in determining

the minimum nonforfeiture standard for policies issued on or after the operative date

of the valuation manual, then that minimum nonforfeiture standard supersedes the minimum

nonforfeiture standard provided by the valuation manual. (3) The nonforfeiture interest rate per annum for any policy issued in a particular calendar

year shall be provided by the valuation manual. (G) Any cash surrender value for any paid-up nonforfeiture benefit including any paid-up

dividend additions shall be calculated on the basis of the mortality table and rate

of interest used in determining the amount of such benefit and paid-up dividend additions. (H) Guaranteed paid-up nonforfeiture benefits, including any paid-up additions, shall

be calculated on the basis of an interest rate no lower than that specified in the

policy when calculating cash surrender values. (I) Present values, for any paid-up term insurance or any paid-up term insurance with

accompanying pure endowment offered as a nonforfeiture benefit, shall be calculated

using rates of mortality not to exceed those shown in the commissioners 1980 extended

term insurance table for policies of ordinary insurance and those shown in the commissioners

1961 industrial extended term insurance table for policies of industrial insurance.  The superintendent may approve the use of any extended term insurance table adopted

after 1980 by the national association of insurance commissioners in determining such

present values. (J) Adjusted premiums and present values for policies that are issued on a substandard

basis may be calculated on the basis of such table of mortality as may be specified

by the company and approved by the superintendent. (K) The superintendent of insurance may by rule adopt methods for computing cash surrender

values and paid-up nonforfeiture benefits for plans of life insurance which are of

such a nature that values cannot be determined by any method described in this section,

provided the superintendent is satisfied that the benefits provided in any such plan

are substantially as favorable to policyholders and insureds as the minimum benefits

otherwise required by this section and that the benefits and patterns of premiums

for the plan will not mislead prospective policyholders or insureds.  Such methods must be consistent with the principles of this section.  This division shall apply to any plan of life insurance which provides for future

premium determination, the amounts of which are to be determined by the company on

the basis of estimates of future experience made at the time of any such determination. (L) Any cash surrender value and any paid-up nonforfeiture benefit, available upon default

in payment of a premium due at any time other than on a policy anniversary, shall

be calculated with allowance for lapse of time and payment of fractional premiums

beyond the preceding policy anniversary.  All values referred to in 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 addition, other than paid-up term additions, shall

be not less than the amount used to provide such additions. (M) All other policy benefits additional to life insurance and endowment benefits shall

be disregarded, and premiums for all such additional benefits and any extra premiums

to cover impairments or special hazards shall be disregarded, in ascertaining the

cash surrender values and nonforfeiture benefits required by this section.  No such additional benefits shall be required to be included in any paid-up nonforfeiture

benefit.  Such benefits include additional benefits payable: (1) For death or dismemberment by accident or accidental means; (2) For total and permanent disability; (3) As reversionary annuity or deferred reversionary annuity benefits; (4) As term insurance benefits provided by rider or supplemental policy provisions to

which, issued as a separate policy, this section would not apply; (5) As term insurance on the life of a child or lives of children provided in a policy

on the life of a parent, if such term insurance expires before the child's age is

twenty-six, is uniform in amount after the child's age is one, and has not become

paid-up by reason of the death of a parent. (N) This section does not apply to any reinsurance, group insurance, pure endowment or

annuity or reversionary annuity contract nor to any: (1) Term policy, or renewal thereof, of uniform amount and for twenty years or less expiring

before age seventy-one which provides no guaranteed nonforfeiture or endowment benefit

and for which uniform premiums are payable during the entire term and any renewal

of the policy; (2) Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment

benefits, and for which each adjusted premium is less than the adjusted premium for

a term policy described in division (N)(1) of this section issued at the same age

and for the same initial amount of insurance; (3) Policy, which provides no guaranteed nonforfeiture or endowment benefits, and for

which the cash surrender value or present value of any paid-up nonforfeiture benefit

for any policy year calculated according to this section as of the beginning of such

policy year, does not exceed two and one-half per cent of the amount of insurance

at the beginning of the same policy year; (4) Policy which is delivered outside this state through an agent or other representative

of the company issuing the policy. For purposes of determining the applicability of this division to a joint-term life

insurance policy, the age at expiry shall be the age at expiry of the oldest life. (O) No approved policy form need be refiled if nonforfeiture values or methods for computing

such values for it are refiled and the only change is in the interest rate or the

mortality table. (P) The operative date of this section shall be January 1, 1989, except that an earlier

operative date may be elected as provided in this division.  A company may, by written notice filed with the superintendent, elect to issue all,

or one or more, of its policy forms pursuant to this section on and after a date specified

in the notice.  The date specified may be any date on or after January 1, 1983, and before January

1, 1989.  The date specified shall be the operative date of this section for the policy form

or forms specified in the notice. No other statute shall be construed to prohibit any life insurance company from classifying

its policies and electing to issue specified forms of policies pursuant to the plan

set forth in this section, while using other legal basis as to reserve calculations

and nonforfeiture values for other of its policies, nor shall it be construed to prohibit

any life insurance company from adopting other reasonable classifications of policies

or policyholders.