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) (3) Definitions. In this 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 GPx+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