Vermont § 3768 - Calculations of adjusted premiums by the nonforfeiture net level premium method (a)(1) This section shall apply to all policies issued on or after the operative date of this section. Except as provided in subsection

§ 3768. Calculations of adjusted premiums by the nonforfeiture net level premium method (a)(1) This section shall apply to all policies issued on or after the operative date of this section. Except as provided in subsection

• (g) of this section, 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 the
  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) one percent 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 10 policy
  years; and (C) 125 percent of the nonforfeiture net level premium as defined in this section. (2) In applying the percentage specified in subdivision (1)(C) of this subsection, no
  nonforfeiture net level premium shall be deemed to exceed four percent 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 10 policy years. 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) 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 the policy
  on which a premium falls due. (c) In the case of policies that cause, on a basis guaranteed in the policy, unscheduled
  changes in benefits or premiums, or that provide an option for changes in benefits
  or premiums, other than a change to a new policy, the adjusted premiums and present
  values shall be calculated initially 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 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. (d) Except as otherwise provided in subsection (g) of this section, the recalculated future
  adjusted premiums for any policy shall be the uniform percentage of the respective
  future premiums 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: (1) the sum of: (A) the then present value of the then future guaranteed benefits provided for by the
  policy; and (B) the additional expense allowance, if any; over (2) the then cash surrender value, if any, or present value of any paid-up nonforfeiture
  benefit under this policy. (e) The additional expense allowance, at the time of the change to the newly defined benefits
  or premiums, shall be the sum of: (1) one percent of the excess, if positive, of the average amount of insurance at the
  beginning of each of the first 10 policy years subsequent to the change over the average
  amount of insurance prior to the change at the beginning of each of the first 10 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 (2) 125 percent of the increase, if positive, in the nonforfeiture net level premium. (f) The recalculated nonforfeiture net level premium shall be equal to the result obtained
  by dividing the sum arrived at under subdivision (1) of this subsection by the value
  specified in subdivision (2) of this subsection. (1) As used in this subsection, “sum” means: (A) 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; plus (B) the present value of the increase in future guaranteed benefits provided for by the
  policy. (2) As used in this subsection, “value” means 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. (g) Notwithstanding any other provisions of this section to the contrary, in the case
  of a policy issued on a substandard basis that provides reduced graded amounts of
  insurance so that, in each policy year, the policy has the same tabular mortality
  cost as an otherwise similar policy issued on the standard basis that provides higher
  uniform amount of insurance, adjusted premiums and present values for the substandard
  policy may be calculated as if it were issued to provide higher uniform amounts of
  insurance on the standard basis. (h) All adjusted premiums and present values referred to in this subchapter shall for
  all policies of ordinary insurance be calculated on the basis of the Commissioners’
  1980 Standard Ordinary Mortality Table or, at the election of the company, for any
  one or more specified plans of life insurance, the Commissioners’ 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 Commissioners’ 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 section, for policies issued in that calendar year,
  provided that: (1) 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 section, for policies issued in the immediately
  preceding calendar year. (2) Under a paid-up nonforfeiture benefit, including any paid-up dividend additions, any
  cash surrender value available, whether or not required by section 3762 of this subchapter,
  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. (3) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit,
  including any 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. (4) 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 Commissioners’ 1980 Extended Term Insurance
  Table for policies of ordinary insurance and not more than the Commissioners’ 1961
  Industrial Extended Term Insurance Table for policies of industrial insurance. (5) For insurance issued on a substandard basis, the calculation of any adjusted premiums
  and present values may be based on appropriate modifications of the aforementioned
  tables. (6)(A) For policies issued prior to the operative date of the Valuation Manual defined in
  subchapter 4A or this chapter, any Commissioners’ Standard Ordinary Mortality Tables,
  adopted after 1980 by the National Association of Insurance Commissioners, approved
  by rule adopted by the Commissioner for use in determining the minimum nonforfeiture
  standard may be substituted for the Commissioners’ 1980 Standard Ordinary Mortality
  Table with or without 10-Year Select Mortality Factors or for the Commissioners’ 1980
  Extended Term Insurance Table. (B) For policies issued on or after the operative date of the Valuation Manual, 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 10-Year Select Mortality Factors
  or for the Commissioners’ 1980 Extended Term Insurance Table. If the Commissioner
  adopts by rule a Commissioners’ Standard Ordinary Mortality Table adopted by the NAIC
  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. (7)(A) For policies issued prior to the operative date of the Valuation Manual, any Commissioners’
  Standard Industrial Mortality Tables, adopted after 1980 by the NAIC, approved by
  rule adopted by the Commissioner for use in determining the minimum nonforfeiture
  standard may be substituted for the Commissioners’ 1961 Standard Industrial Mortality
  Table or the Commissioners’ 1961 Industrial Extended Term Insurance Table. (B) For policies issued on or after the operative date of the Valuation Manual, 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 Commissioner adopts by rule a Commissioners’ Standard
  Industrial Mortality Table adopted by the NAIC 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. (i) The nonforfeiture interest rate is defined as follows: (1) For policies issued prior to the operative date of the Valuation Manual, the nonforfeiture
  interest rate per annum for any policy issued in a particular calendar year shall
  be equal to 125 percent of the calendar year statutory valuation interest rate for
  such policy as defined under subchapter 4A of this chapter, rounded to the nearer
  one quarter of one percent, provided the nonforfeiture interest rate shall not be
  less than four percent. (2) For policies issued on and after the operative date of the Valuation Manual, the nonforfeiture
  interest rate per annum for any policy issued in a particular calendar year shall
  be provided by the Valuation Manual. (j) Notwithstanding any other provision of law to the contrary, any refiling of nonforfeiture
  values or their methods of computation for any previously approved policy form that
  involves only a change in the interest rate or mortality table used to compute nonforfeiture
  values shall not require refiling of any other provisions of that policy form. (k) After the effective date of this section, any company may file with the Commissioner
  a written notice of its election to comply with the provision of this section after
  a specified date before January 1, 1989, which shall be the operative date of this
  section for the company. If a company makes no election, the operative date of this
  section for the company shall be January 1, 1989. (Added 2015, No. 63, § 2, eff. June 17, 2015.)