Ins 2.30 History
History: Cr.
Register, November, 1985, No. 359, eff. 12-1-85; am.
Register, October, 1998, No. 514, eff. 1-1-99;
CR 14-076: r. and recr. (2), am. (3) (c), cr. (3) (cm), (3m)
Register August 2015 No. 716, eff. 9-1-15.
Ins 2.35
Ins 2.35
Smoker and nonsmoker mortality tables for minimum reserve liabilities and minimum nonforfeiture benefits. Ins 2.35(1)(1)
Purpose. This section implements ss.
623.06 (2) (am) 3. and
632.43 (6m) (e) 3. f., Stats., by permitting the use of mortality tables that reflect differences in mortality between smokers and nonsmokers. These mortality tables are used in determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits for plans of insurance with separate premium rates for smokers and nonsmokers.
Ins 2.35(2)(a)
(a) “1980 CSO table, with or without 10-year select mortality factor" means that mortality table, consisting of separate rates of mortality for male and female lives, incorporated in ss.
623.06 (2) (am) 3 and
632.43 (6m) (e) 3. f., Stats., and referred to in those statutes as the commissioner's 1980 standard ordinary mortality table, with or without 10-year select mortality factors.
Ins 2.35(2)(b)
(b) “1980 CET table" means that mortality table consisting of separate rates of mortality for male and female lives incorporated in ss.
623.06 (2) (am) 3. and
632.43 (6m) (e) 3. f., Stats., and referred to in those statutes as the commissioner's 1980 extended term insurance table.
Ins 2.35(2)(c)
(c) “1980 CSO smoker and nonsmoker mortality tables" means the mortality tables with separate rates of mortality for smokers and nonsmokers derived from the tables defined in par.
(a), and adopted by the National Association of Insurance Commissioners in December 1983.
Ins 2.35 Note
Note: Mortality rates for these tables are published on pp. 406-413, Proceedings of the National Association of Insurance Commissioners, 1984 Vol. I.
Ins 2.35(2)(d)
(d) “1980 CET smoker and nonsmoker mortality tables" means the mortality tables with separate rates of mortality for smokers and nonsmokers derived from the tables defined in par.
(b), and adopted by the National Association of Insurance Commissioners in December 1983.
Ins 2.35 Note
Note: Mortality rates for these tables are published on pp. 406-413, Proceedings of the National Association of Insurance Commissioners, 1984 Vol. I.
Ins 2.35(2)(e)
(e) “Composite mortality tables" means the mortality tables defined in pars.
(a) and
(b), as originally published with rates of mortality that do not distinguish between smokers and nonsmokers.
Ins 2.35(3)
(3) Alternate tables. At the option of the company and subject to the condition that the company use the same select factors for both smoker and nonsmoker tables, and the conditions stated in sub.
(4), for any policy of insurance delivered or issued for delivery in this state after the operative date of s.
632.43 (6m) (h), Stats., for that policy form:
Ins 2.35(3)(a)
(a) The company may substitute the 1980 CSO smoker and nonsmoker mortality tables, with or without 10-year select mortality factors for the 1980 CSO table, with or without 10-year select mortality factors, for use in determining minimum reserve liabilities, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; and
Ins 2.35(3)(b)
(b) The company may substitute the 1980 CET smoker and nonsmoker mortality tables for the 1980 CET Table for use in determining minimum reserve liabilities, minimum cash surrender values and amounts of paid-up nonforfeiture benefits.
Ins 2.35(4)
(4) Conditions. For each plan of insurance with separate rates for smokers and nonsmokers the company may:
Ins 2.35(4)(a)
(a) Use composite mortality tables to determine minimum reserve liabilities, minimum cash surrender values and amounts of paid-up nonforfeiture benefits;
Ins 2.35(4)(b)
(b) Use 1980 CSO or 1980 CET smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by s.
623.06 (7), Stats., and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or
Ins 2.35(4)(c)
(c) Use 1980 CSO or 1980 CET smoker and nonsmoker mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.
Ins 2.35 History
History: Cr.
Register, November, 1988, No. 395, eff. 12-1-88.
Ins 2.40
Ins 2.40
Annuity contracts without life contingencies. Ins 2.40(1)(1)
Purpose. This section implements and interprets s.
632.66, Stats., by authorizing life insurers to issue annuity contracts without life contingencies and setting forth the conditions under which these annuity contracts may be issued.
Ins 2.40(2)
(2) Scope. This section applies to all annuity contracts without life contingencies and which are classified as life and disability insurance under s.
Ins 6.75 (1).
Ins 2.40(3)
(3) Grant of authority. A life insurer that holds a valid certificate of authority to transact the business of life insurance and annuities in this state may issue in this state annuity contracts without life contingencies, subject to the following conditions:
Ins 2.40(3)(a)
(a) No insurer may base the consideration to be paid to the insurer for the annuity contract without a life contingency upon the age or condition of health of the purchaser of the contract or any other person, or on any mortality or morbidity contingencies.
Ins 2.40(3)(b)
(b) An insurer shall base the amounts guaranteed to be paid under an annuity contract without a life contingency upon reasonable assumptions as to investment income and expenses, determined in a manner which is equitable to all holders of such contracts.
Ins 2.40(3)(c)
(c) An insurer may offer to the public an annuity contract without a life contingency only through licensed intermediaries or directly by the insurer.
Ins 2.40(4)
(4) Applicable statutes and administrative rules. An annuity contract without a life contingency is deemed to be an annuity for purposes of chs.
600 to
645, Stats., and all rules adopted thereunder, including, but not limited to, ch.
623, Stats., ss.
631.20 to
631.27, Stats., and ss.
Ins 2.07,
2.15,
6.05, and
51.80.
Ins 2.40 History
History: Cr.
Register, December, 1988, No. 396, eff. 1-1-89; correction in (4) made under s. 13.93 (2m) (b) 7., Stats.,
Register, June, 1999, No. 522.
Ins 2.45
Ins 2.45
Charitable organizations; insurable interest. Ins 2.45(1)(1)
Purpose. The purpose of this section is to interpret s.
631.07, Stats., with respect to the insurable interest of charitable organizations. This section does not limit or abridge any insurable interest existing at common law or by statute.
Ins 2.45(2)
(2) Scope. This section applies to life insurance policies issued in this state, including, but not limited to, policies in force on March 1, 1994.
Ins 2.45(3)(b)
(b) “Life insurance" includes endowment policies and annuities.
Ins 2.45(4)
(4) Insurable interest. A charitable organization may be the applicant, owner or beneficiary of a life insurance policy issued on the life of any individual. A charitable organization is deemed to have an insurable interest in the individual. For insurance applied for on or after March 1, 1994, the charitable organization has an insurable interest only if it obtains the consent of the individual in writing or by other means authorized by common law or by statute.
Ins 2.45 History
History: Cr.
Register, February, 1994, No. 458, eff. 3-1-94.
Ins 2.80
Ins 2.80
Valuation of life insurance policies. Ins 2.80(1)(a)(a) This section establishes minimum standards under ch.
623, Stats., for life insurance policy reserves by providing tables of select mortality factors, establishing rules concerning a minimum standard for the valuation of plans with non-level premiums or benefits, and establishing rules concerning a minimum standard for the valuation of plans with secondary guarantees.
Ins 2.80(1)(b)
(b) The method for calculating basic reserves defined in this section constitutes the commissioner's reserve valuation method for policies to which this section is applicable.
Ins 2.80(2)
(2) Scope. This section applies to all life insurance policies, wherever sold, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the following exceptions and conditions:
Ins 2.80(2)(a)
(a) This section does not apply to any individual life insurance policy issued on or after January 1, 2000, if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount that was issued before January 1, 2000 that guarantees the premium rates of the new policy. This section also does not apply to subsequent policies issued as a result of the exercise of such a provision in the new policy.
Ins 2.80(2)(b)
(b) This section does not apply to any of the following:
Ins 2.80(2)(b)1.
1. Any universal life policy that meets all the following requirements:
Ins 2.80(2)(b)1.b.
b. The specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in sub.
(3) (f) and the applicable valuation interest rate.
Ins 2.80(2)(b)1.c.
c. The initial surrender charge is not less than 100% of the first year annualized specified premium for the secondary guarantee period.
Ins 2.80(2)(b)2.
2. Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
Ins 2.80(2)(b)3.
3. Any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
Ins 2.80(2)(b)4.
4. Group life insurance certificates, unless the certificates provide for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.
Ins 2.80(2)(c)
(c) Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, other than universal life policies, or both, shall be in accordance with the provisions of sub.
(5).
Ins 2.80(2)(d)
(d) Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of sub.
(6).
Ins 2.80(2)(e)
(e) This section applies to policies that are subject to s.
Ins 2.81 in the manner specified in that section.
Ins 2.80(3)(a)
(a) “Basic reserves" means reserves calculated in accordance with the principles of s.
623.06 (3), Stats.
Ins 2.80(3)(b)
(b) “Contract segmentation method" means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment, or from policy inception for the first segment, to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation table and, if elected, the optional minimum mortality standard for deficiency reserves in sub.
(4) (b). The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than Rt. If Gt never exceeds Rt the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy. Gt and Rt are defined as follows:
where:
x = original issue age;
k = the number of years from the date of issue to the beginning of the segment;
t = the number of years from the beginning of the segment
= 1, 2, ...; t is reset to 1 at the beginning of each segment;
GPx+k+t-1 = Guaranteed gross premium per thousand of face amount, ignoring policy fees only if level for the premium paying period of the policy, for year t of the segment.
However, if GPx+k+t is greater than 0 and GP
x+k+t-1 is equal to 0, Gt shall be deemed to be 1000. If GPx+k+t and GPx+k+t-1 are both equal to 0, Gt shall be deemed to be 0.
however, Rt may be increased or decreased by one percent in any policy year, at the insurer's option, but Rt may not be less than one;
where:
x, k and t are as defined above, and
qx+k+t-1 = valuation mortality rate for deficiency reserves in policy year k+t but using the mortality of sub. (4) (b) 2. if sub. (4) (b) 3. is elected for deficiency reserves.
Ins 2.80 Note
Note: The purpose of the one percent tolerance in the R factor is to prevent irrational segment lengths due to such things as premium rounding. For example, consider a plan in which gross premiums are designed at some point to be a ratio times the underlying ultimate mortality rates, where the ratio varies by issue age. The resulting segments may be greater than one year, because the gross premiums are not expressed in fractional cents. The tolerance factor allows the creation of one-year segments for a plan in which premiums parallel the underlying valuation mortality table.
Ins 2.80(3)(c)
(c) “Deficiency reserves" means the excess, if greater than zero, of minimum reserves calculated in accordance with the principles of s.
623.06 (7), Stats., over basic reserves.
Ins 2.80(3)(d)
(d) “Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.
Ins 2.80(3)(e)
(e) “Maximum valuation interest rates" means the interest rates defined in s.
623.06 (2m), Stats., that are to be used in determining the minimum standard for the valuation of life insurance policies.
Ins 2.80(3)(f)
(f) “1980 CSO valuation table" means the commissioner's' 1980 standard ordinary mortality table without 10-year select mortality factors, incorporated into the 1980 amendments to the national association of insurance commissioner's standard valuation law, as provided in s.
623.06 (2) (am), Stats., and variations of the 1980 CSO valuation table approved by the national association of insurance commissioners, such as the unisex and smoker and non-smoker versions approved in December 1983 and adopted by ss.
Ins 2.20 and
2.35.
Ins 2.80 Note
Note: This paragraph defines the 1980 CSO valuation table without the existing 10 year select mortality factors to assure that, if select mortality factors are elected, only one set of factors may be applied to the base valuation mortality table.
Ins 2.80(3)(g)
(g) “Scheduled gross premium" means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, “scheduled gross premium" means the smallest specified premium described in sub.
(6) (c), if any, or else the minimum prescribed in sub.
(6) (d).
Ins 2.80(3)(h)
(h) “Segmented reserves" means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment is calculated in the following manner:
Ins 2.80(3)(h)1.
1. The present value of the death benefits within the segment, plus
Ins 2.80(3)(h)2.
2. The present value of any unusual guaranteed cash value, as provided in sub.
(5) (g), occurring at the end of the segment, less
Ins 2.80(3)(h)3.
3. Any usual guaranteed cash value occurring at the start of the segment, plus
Ins 2.80(3)(h)4.a.
a. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium may not exceed the net level annual premium on the 19-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.
Ins 2.80(3)(h)4.b.
b. A net one-year term premium for the benefits provided for in the first policy year.
Ins 2.80(3)(h)5.
5. The length of each segment is determined by the contract segmentation method.
Ins 2.80(3)(h)6.
6. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the length of all segments of the policy.
Ins 2.80(3)(h)7.
7. For both basic reserves and deficiency reserves computed by the contract segmentation method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.
Ins 2.80 Note
Note: The segmentation requirement should not be limited to plans with no cash surrender values; otherwise companies could avoid segmentation entirely by designing policies with minimal (positive) cash values. Segmentation for plans with cash surrender values should be based solely upon gross premium levels. Basing segmentation upon the level of cash surrender values introduces complications because of the interrelationship between minimum cash surrender values and gross premium patterns. The requirements of this section relating to reserves or plans with unusual cash values and to reserves if cash values exceed calculated reserves serve to link required reserves and cash surrender values. The calculation of segmented reserves shall not be linked to the occurrence of a positive unitary terminal reserve at the end of a segment. The requirement of this section to hold the greater of the segmented reserve or the unitary reserve eliminates the need for any linkage.
Ins 2.80(3)(i)
(i) “Tabular cost of insurance" means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.
Ins 2.80(3)(j)
(j) “Ten-year select factors" means the select factors adopted with the 1980 amendments to the national association of insurance commissioner's standard valuation law as provided in s.
623.06 (2) (am), Stats.
