Study Notes and Published References - Note SN 81-104-03 - NAIC STANDARD NONFORFEITURE LAW FOR LIFE INSURANCE

Section 2 - Nonforfeiture Benefits

within 60 days of due date, nonf benefit kicks in
table and rate used must be specified in policy
statement that values >= min req'd values must be in policy
company can reserve right to defer payment up to 6 months

Section 3 - Computation of CSV

PVFB - PV Adj Prems - indebtedness + CV PUA
excludes rider/supp benefit prems when calcing

Section 4 - Computation of Paid-Up Nonf benefits

PV nonf benefits = CSV @ lapse

Section 5c - Calculations of Ajd Prems by nonf NLP method

80 CSO/CET or 1961 Std Industrial Mort Table
Jan 1, 1989
PV adj prem = PVFB = 1% ELA + min(1.25*nonf NLP, 0.04 ELA)
ELA = ten year BOY avg DB
nonf NLP = PVFB / adue(x) where adue is for prem period of policy
for non-guar pols - calc assuming no changes
- if changes - recalc adj prems
  - PV future adj prems = PVFB (as of reval date) + add'l expense allowance - CSV
Add'l expense allowance at time of change
- .01*max(0,ELA_new - ELA_old) + 1.25*max(adj prem_new - adjprem_old)
recalced nonf NLP (NFF)
- NFF_old*adue(x+t) + PVFB_new - PVFB_old) / adue(x+t)
80 COS w/ or w/o select factor
nonf int rate = 125% of cal year SVL rate rounded to nearest quarter of 1%

Section 6 - Nonf Benefits for Indeterminate Prem Plans

if min vals cannot be determined by other outlined methods
- commissioner must be satisfied that benefits provided are at least as good as min benefits otherwise req'd
- not misleading to PO
any policy must be approved by commissioner before it can be used

Section 7 - Proration of Values; Net Value of Paid Up Additions

pro-rata between anniversary
can ignore:
- ADB
- wvr
- reversionary or deferred reversionary annuity
- term riders (if rider would not qualify if stand alone)
- CTR
- other non-DB/Endow benefits

Section 8 - Consistency of Progression of Cash Surrender Values w/ increasing Policy Duration

CSV shan't vary by more than 0.2%*ELA from max(0,basic cv) + PUACV - loan
basic CV = PVFB min(PV NFF, PV future adj prems)

Section 9 - Exceptions

Does not apply to:
- Reinsurance
- Group INs
- PE
- Annuity or Reversionary Annuity
- 20 YR (or less) LT w/ expiry prior to age 71
- 20 YR (or less) DT w/ expiry prior to age 71
- Policies where no CVs exceed 2.5% of BOY Ins amt

Copyright © 2004 Steve Welander.
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