31A-17-511 - Reserve calculation -- Valuation net premium exceeding the gross premium charged.
31A-17-511. Reserve calculation -- Valuation net premium exceeding the grosspremium charged.
(1) If in any contract year the gross premium charged by any life insurance company onany policy or contract is less than the valuation net premium for the policy or contract calculatedby the method used in calculating the reserve thereon but using the minimum valuation standardsof mortality and rate of interest, the minimum reserve required for such policy or contract shall bethe greater of either the reserve calculated according to the mortality table, rate of interest, andmethod actually used for such policy or contract, or the reserve calculated by the method actuallyused for such policy or contract but using the minimum valuation standards of mortality and rateof interest and replacing the valuation net premium by the actual gross premium in each contractyear for which the valuation net premium exceeds the actual gross premium. The minimumvaluation standards of mortality and rate of interest referred to in this section are those standardsstated in Sections 31A-17-504 and 31A-17-506.
(2) Provided that for any life insurance policy issued on or after January 1, 1997, forwhich the gross premium in the first policy year exceeds that of the second year and for which nocomparable additional benefit is provided in the first year for such excess and which provides anendowment benefit or a cash surrender value or a combination thereof in an amount greater thansuch excess premium, the foregoing provisions of this section shall be applied as if the methodactually used in calculating the reserve for such policy were the method described in Section31A-17-507, ignoring Subsection 31A-17-507(2). The minimum reserve at each policyanniversary of such a policy shall be the greater of the minimum reserve calculated in accordancewith Section 31A-17-507, including Subsection 31A-17-507(2), and the minimum reservecalculated in accordance with this section.
Enacted by Chapter 305, 1993 General Session