§ 2534.3. Insurance Policy Requirements.
10 CA ADC § 2534.3Barclays Official California Code of Regulations
10 CCR § 2534.3
§ 2534.3. Insurance Policy Requirements.
Policy Qualification. The Commissioner shall not approve any variable life insurance form filed pursuant to this regulation unless it conforms to the requirements of this Section.
(a) Filing of Variable Life Insurance Policies. All variable life insurance policies, riders, endorsements, applications and other related documents which are to be attached to and made a part of the policy shall be filed with the Commissioner and approved by him in writing prior to delivery or issuance for delivery in this State.
(3) The requirements of subsections (b)(1), (b)(4), and (c)(16) of this Section shall not apply to variable life insurance policies and related forms issued in connection with corporate pension and profit sharing plans and retirement income H.R. 10 pension plans which are exempt pursuant to Section 3(c)(11) of the Investment Company Act of 1940 and where applicable other provisions of the Federal securities laws because of their tax qualified status.
(2) Gross premiums for death benefits shall be a level amount for the duration of the premium payment period, but this subparagraph shall not be construed to prohibit temporary or permanent additional premiums for incidental insurance benefits or substandard risks. This subparagraph shall not be deemed to prohibit the use of fixed benefit preliminary term insurance for a period not to exceed 120 days from the date of the application for a variable life insurance policy. The premium rate for such preliminary term insurance shall be stated separately in the application or receipt.
(4) The amount payable upon the death of the insured so long as premiums are paid when due (subject to the provisions of subsection (d)(2) of this Section) shall be not less than a minimum multiple of the gross premium payable in that year, exclusive of that portion allocable to any incidental insurance benefit, by a person who meets standard underwriting requirements, as shown in the following table:
Issue Ages | Multiples |
---|
0-05 | 80 | |||
6-10 | 71 | |||
11-15 | 63 | |||
16-20 | 55 | |||
21-25 | 47 | |||
26-30 | 40 | |||
31-35 | 33 | |||
36-40 | 27 | |||
41-45 | 21 | |||
46-50 | 15 | |||
51-55 | 13 | |||
56-60 | 11 | |||
61-65 | 9 | |||
66-70 | 8 | |||
71 and over | 7 |
(5) The variable death benefit shall reflect the investment experience of the variable life insurance separate account established and maintained by the insurer and that the excess, positive or negative, of the net investment return over the assumed investment rate, as applied to the benefit base of each variable life insurance policy shall be used to provide either:
(8) The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other non-forfeiture benefits, as described either in the policy or in a statement filed with the Commissioner of the state in which the policy is delivered, or issued for delivery, shall be in accordance with the actuarial procedures that recognize the variable nature of the policy. The method of computation must be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other non-forfeiture benefits must be at least equal to the minimum values required by Sections 10159.1 through 10167 of the Insurance Code of this State (Standard Non-Forfeiture Law) for a fixed benefit policy with such premiums and benefits. The assumed investment rate shall not exceed the maximum interest rate permitted under the Standard Non-Forfeiture Law of this State. The method of computation may disregard incidental minimum guarantees as to the dollar amount payable. Incidental minimum guarantees, include, for example, but are not to be limited to, a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.
(10) (A) If the gross premiums for any variable life insurance policy delivered or issued for delivery in this State produce an excess of 1. over 2. as defined in (B) below, the present value as of the date of issue of the adjusted premiums used in determining the minimum cash values required by subsection (b)(8) of this Section shall be decreased by such excess by decreasing each adjusted premium by a uniform percentage.
1. Is the present value of the gross premiums for the policy, decreased by one dollar per thousand of equivalent uniform account for policies with an equivalent uniform amount of less than ten thousand, payable on an annual basis (exclusive of those portions of the gross premiums allocable to any incidental insurance benefits) by a person who meets standard underwriting requirements, and
2. Is the product of (1) times (2) where (1) is the present value of the maximum premium rates per thousand of insurance shown below payable at the beginning of each policy year to attained age 65 of the insured for issue ages below age 51, for fifteen years for issue ages 51 to 70 and for life for issue ages above age 70 and (2) is the ratio of (i) the present value of the benefits under the policy to (ii) the present value of an insurance of one thousand for the whole of life.
TABLE OF RATES
Age at Issue | Premium Rate | Age at Issue | Premium Rate |
---|
0 | $11.50 | 41 | $38.65 | |||
1 | 11.60 | 42 | 40.45 | |||
2 | 11.76 | 43 | 42.51 | |||
3 | 11.97 | 44 | 44.89 | |||
4 | 12.22 | 45 | 47.62 | |||
5 | 12.50 | 46 | 50.71 | |||
6 | 12.80 | 47 | 54.17 | |||
7 | 13.11 | 48 | 58.00 | |||
8 | 13.43 | 49 | 62.18 | |||
9 | 13.75 | 50 | 66.67 | |||
10 | 14.08 | 51 | 68.58 | |||
11 | 14.42 | 52 | 70.54 | |||
12 | 14.77 | 53 | 72.57 | |||
13 | 15.13 | 54 | 74.69 | |||
14 | 15.49 | 55 | 76.92 | |||
15 | 15.87 | 56 | 79.29 | |||
16 | 16.27 | 57 | 81.84 | |||
17 | 16.70 | 58 | 84.61 | |||
18 | 17.16 | 59 | 87.63 | |||
19 | 17.65 | 60 | 90.91 | |||
20 | 18.18 | 61 | 94.45 | |||
21 | 18.74 | 62 | 98.25 | |||
22 | 19.34 | 63 | 102.31 | |||
23 | 19.97 | 64 | 106.61 | |||
24 | 20.62 | 65 | 111.11 | |||
25 | 21.28 | 66 | 115.48 | |||
26 | 21.95 | 67 | 119.39 | |||
27 | 22.64 | 68 | 122.51 | |||
28 | 23.37 | 69 | 124.50 | |||
29 | 24.15 | 70 | 125.00 | |||
30 | 25.00 | 71 | 118.86 | |||
31 | 25.92 | 72 | 123.96 | |||
32 | 26.91 | 73 | 129.66 | |||
33 | 27.97 | 74 | 135.96 | |||
34 | 29.10 | 75 | 142.86 | |||
35 | 30.30 | 76 | 150.36 | |||
36 | 31.55 | 77 | 158.46 | |||
37 | 32.84 | 78 | 167.16 | |||
38 | 34.17 | 79 | 176.46 | |||
39 | 35.56 | 80 | 186.36 | |||
40 | 37.04 |
(B) A prominent statement in either contrasting color or in boldface type at least four points larger than the type size of the largest type size used in the text of any provision on that page, that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees);
(E) A captioned provision which provides that the policyholder may return the variable life insurance policy within 45 days of the date of the execution of the application or within 10 days of receipt of the policy by the policyholder, whichever is later, and receive a refund of all premium payments for such policy, and
(2) A provision for a grace period of not less than thirty-one days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date;
(3) A provision that the policy will be reinstated at any time within two years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:
(B) The assets of such separate account shall be available to cover liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account, and
(6) The policy shall also contain a provision that any time during the first eighteen months of the variable life insurance policy the owner may exchange the policy for a policy of permanent fixed benefits insurance for the same initial amount of insurance as the variable life insurance policy provided that the new policy:
(C) Include such riders and incidental insurance benefits as were included in the original policy if such riders and incidental insurance benefits are issued with the fixed benefit policy. If the exchange results in an increase or decrease in cash value such increase or decrease will be payable to the insurer or the insured as the case may be.
(D) The insurer must apply as an advance premium on the new policy any excess of the accrued premium on the original variable life insurance policy from the date of issue to the date of request for exchange over the corresponding accrued premium on the new fixed benefit policy except that any portion on such excess which is less than a regular mode premium on the new policy may either be applied as an advance premium or refunded in cash at the option of the insurer.
(B) One cash value schedule as described in paragraph (A) for the death benefit, or for each one thousand dollars of death benefit, which would be in effect if the net investment return is always equal to the assumed investment rate and a second schedule applicable to any adjustments to the death benefit (disregarding the minimum death benefit guarantee and term insurance amounts) if the net investment return does not equal the assumed investment rate at each age for at least 20 years from issue, or for the premium paying period if it is less than 20 years.
(G) The policy may provide that if, at any time, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110% of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request;
(J) In addition to the foregoing the policy may contain a partial surrender provision; however, any such provision shall provide that the policyholder may request part of the cash value and both the variable and minimum death benefits will be reduced in proportion to the percentage of the cash value received by the policyholder and the premium for the remaining amount of insurance will also be reduced to the appropriate rates for the reduced amount of insurance. The policy may provide that a partial surrender provision shall not require the insurer to reduce the amount of the minimum death benefit to less than the lowest amount of minimum death benefit which would have been issued to the insured under the insurance plans of the insurer at the time the policy was issued. The policy must clearly provide that the policyholder has the option of electing to exercise the cash value privileges of the policy loan or partial withdrawal provision rather than the partial surrender provision.
(L) Monies paid to the policyholders upon the exercise of any policy loan, partial withdrawal or partial surrender provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the monies for policy loans from the general account.
(4) A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans or partial withdrawals under subsection (d) of this Section, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed.
This database is current through 5/24/24 Register 2024, No. 21.
Cal. Admin. Code tit. 10, § 2534.3, 10 CA ADC § 2534.3
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