Vermont § 3791g - Reserve valuation method—Life insurance and endowment benefits

§ 3791g. Reserve valuation method—Life insurance and endowment benefits

• (a) Except as otherwise provided in sections 3791g, 3791h, and 3791m of this subchapter,
  reserves according to the Commissioner’s 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 the future guaranteed benefits provided for by
  those policies, over the then present value of any future modified net premiums therefor.
  The modified net premiums for a policy shall be the uniform percentage of the respective
  contract premiums for the benefits such that the present value, at the date of issue
  of the policy, of all modified net premiums shall be equal to the sum of the then
  present value of the benefits provided for by the policy and the excess of subdivision
  (1) over subdivision (2) of this subsection, as follows: (1) A net level annual premium equal to the present value, at the date of issue, of the
  benefits provided for after the first policy year, divided by the present value, at
  the date of issue, of an annuity of one per annum payable on the first and each subsequent
  anniversary of the policy on which a premium falls due. However, the net level annual
  premium shall not exceed the net level annual premium on the 19-year premium whole
  life plan for insurance of the same amount at an age one year higher than the age
  at issue of the policy. (2) A net one-year term premium for the benefits provided for in the first policy year. (b) For a life insurance policy issued on or after January 1, 1997, 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 the excess and that
  provides an endowment benefit or a cash surrender value or a combination in an amount
  greater than the excess premium, the reserve according to the Commissioner’s reserve
  valuation method as of any policy anniversary occurring on or before the assumed ending
  date defined as the first policy anniversary on which the sum of any endowment benefit
  and any cash surrender value then available is greater than the excess premium shall,
  except as otherwise provided in section 3791k of this subchapter, be the greater of
  the reserve as of the policy anniversary calculated as described in subsection (a)
  and the reserve as of the policy anniversary calculated as described in subsection
  (a) of this section, but with: (1) The value defined in subsection (a) of this section being reduced by 15 percent of
  the amount of such excess first year premium. (2) 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. (3) The policy being assumed to mature on that date as an endowment. (4) The cash surrender value provided on that date being considered as an endowment benefit.
  In making the above comparison, the mortality and interest bases stated in sections
  3791d and 3791e of this subchapter shall be used. (c) Reserves according to the Commissioner’s reserve valuation method shall be calculated
  by a method consistent with the principles of the preceding subsections of this section
  for: (1) life insurance policies providing for a varying amount of insurance or requiring the
  payment of varying premiums; (2) 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 may be amended; (3) disability and accidental death benefits in all policies and contracts; and (4) all other benefits, except life insurance and endowment benefits in life insurance
  policies and benefits provided by all other annuity and pure endowment contracts. (Added 2015, No. 63, § 1, eff. June 17, 2015.)