26.1-35 Standard Valuation Law - North Dakota Statutes

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CHAPTER 26.1-35STANDARD VALUATION LAW26.1-35-01.Commissioner to annually value liabilities for life policies andannuities. The commissioner shall annually value, or cause to be valued, the reserve liabilities,
in this chapter referred to as reserves, for all outstanding life insurance policies and annuity and
pure endowment contracts of every life insurance company doing business in this state, and may
certify the amount of the reserves, specifying the mortality table or tables, rate or rates of interest,
and methods, net level premium method or other, used in the calculation of the reserves. In
calculating the reserves, the commissioner may use group methods and approximate averages
for fractions of a year or otherwise. In lieu of the valuation of the reserves of any foreign or alien
company, the commissioner may accept any valuation made, or caused to be made, by the
insurance supervisory official of any state or other jurisdiction where the valuation complies with
the minimum standards provided in this chapter, if the official of that state or jurisdiction accepts
as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when
the certificate states the valuation to have been made in a specified manner according to which
the aggregate reserves would be at least as large as if they had been computed in the manner
prescribed by the law of that state or jurisdiction.26.1-35-01.1. Actuarial opinion of reserves. This section becomes operative at theend of the first full calendar year following the year of enactment.1.Every life insurance company doing business in this state shall annually submit the
opinion of a qualified actuary as to whether the reserves and related actuarial items
held in support of the policies and contracts specified by the commissioner by rule
are computed appropriately, are based on assumptions which satisfy contractual
provisions, are consistent with prior reported amounts, and comply with applicable
laws of this state. The commissioner by rule shall define the specifics of this opinion
and add any other items deemed to be necessary to its scope.2.Actuarial analysis of reserves and assets supporting such reserves.a.Every life insurance company, except as exempted by or pursuant to rule, shall
also annually include in the opinion required by subsection 1, an opinion of the
same qualified actuary as to whether the reserves and related actuarial items
held in support of the policies and contracts specified by the commissioner by
regulation, when considered in light of the assets held by the company with
respect to the reserves and related actuarial items, including the investment
earnings on the assets and the considerations anticipated to be received and
retained under the policies and contracts, make adequate provision for the
company's obligations under the policies and contracts, including the benefits
under and expenses associated with the policies and contracts.b.The commissioner may provide by rule for a transition period for establishing
any higher reserves which the qualified actuary may deem necessary in order
to render the opinion required by this section.3.Requirement for opinion under subsection 2. Each opinion required by subsection 2
must be governed by the following provisions:a.A memorandum, in form and substance acceptable to the commissioner as
specified by rule, must be prepared to support each actuarial opinion.b.If the insurance company fails to provide a supporting memorandum at the
request of the commissioner within a period specified by rule or the
commissioner determines that the supporting memorandum provided by the
insurance company fails to meet the standards prescribed by rule or is
otherwise unacceptable to the commissioner, the commissioner may engage aPage No. 1qualified actuary at the expense of the company to review the opinion and the
basis for the opinion and prepare such supporting memorandum as is required
by the commissioner.4.Requirement for all opinions.Every opinion must be governed by the followingprovisions:a.The opinion must be submitted with the annual statement reflecting the
valuation of such reserve liabilities for each year ending on or after
December 31, 1994.b.The opinion must apply to all business in force, including individual and group
health insurance plans, in form and substance acceptable to the commissioner
as specified by rule.c.The opinion must be based on standards adopted from time to time by the
actuarialstandardsboard and on such additional standards as thecommissioner may by rule prescribe.d.In the case of an opinion required to be submitted by a foreign or alien
company, the commissioner may accept the opinion filed by that company with
the insurance supervisory official of another state if the commissioner
determines that the opinion reasonably meets the requirements applicable to a
company domiciled in this state.e.For the purposes of this section, "qualified actuary" means a member in good
standing of the American academy of actuaries who meets the requirements
set forth in such regulations.f.Except in cases of fraud or willful misconduct, the qualified actuary is not liable
for damages to any person, other than the insurance company and the
commissioner, for any act, error, omission, decision, or conduct with respect to
the actuary's opinion.g.Disciplinary action by the commissioner against the company or the qualified
actuary must be defined in rules by the commissioner.h.Any memorandum in support of the opinion, and any other material provided by
the company to the commissioner in connection therewith, must be kept
confidential by the commissioner and may not be made public and is not
subject to subpoena, other than for the purpose of defending an action seeking
damages from any person by reason of any action required by this section or
by rules adopted hereunder; provided, however, that the memorandum or other
material may otherwise be released by the commissioner with the written
consent of the company or to the American academy of actuaries upon request
stating that the memorandum or other material is required for the purpose of
professional disciplinary proceedings and setting forth procedures satisfactory
to the commissioner for preserving the confidentiality of the memorandum or
other material. Once any portion of the confidential memorandum is cited by
the company in its marketing or is cited before any governmental agency other
than a state insurance department or is released by the company to the news
media, all portions of the confidential memorandum are no longer confidential.26.1-35-02. Minimum standards of valuation for life or accident insurance. Theminimum standards for the valuation of all life or accident insurance policies issued prior to
July 1, 1977, are those provided by sections 26-03-33, 26-03-34, and 26-10-01 as they existed
on June 30, 1977. Except as otherwise provided in sections 26.1-35-03 and 26.1-35-04, the
minimum standard for the valuation of all life or accident insurance policies and contracts issued
after June 30, 1977, is the commissioners' reserve valuation methods defined in sectionsPage No. 226.1-35-05, 26.1-35-06, and 26.1-35-09; five and one-half percent interest for single premium life
insurance policies and four and one-half percent interest for all other such policies and contracts,
other than annuity and pure endowment contracts, and the following tables:1.For all policies of ordinary life insurance issued on the standard basis, excluding any
disability and accidental death benefits in the policies, the commissioners' 1958
standard ordinary mortality table for policies issued on or after the operative date of
section 26.1-33-22 and prior to the earlier of a specified date filed by a company with
the commissioner in a written notice of the company's election to comply with this
chapter or January 1, 1989, provided that for any category of policies issued on
female risks, all modified net premiums and present values referred to in this chapter
may be calculated according to an age not more than six years younger than the
actual age of the insured; and for policies issued on or after the earlier of a specified
date filed by a company with the commissioner in a written notice of the company's
election to comply with this chapter or January 1, 1989:a.The commissioners' 1980 standard ordinary mortality table;b.At the election of the company for any one or more specified plans of life
insurance, the commissioners' 1980 standard ordinary mortality table with
ten-year select mortality factors; orc.Any ordinary mortality table, adopted after 1980 by the national association of
insurancecommissioners,thatisapproved by rule adopted by thecommissioner for use in determining the minimum standard of valuation for the
policies.2.For all policies of industrial life insurance issued on the standard basis, excluding
any disability and accidental death benefits in the policies, the commissioners' 1961
standard industrial mortality table or any industrial mortality table, adopted after 1980
by the national association of insurance commissioners, that is approved by rule
adopted by the commissioner for use in determining the minimum standard of
valuation for the policies.3.For total and permanent disability benefits in or supplementary to policies or
contracts, the tables of period 2 disablement rates and the 1930 to 1950 termination
rates of the 1952 disability study of the society of actuaries, with due regard to the
type of benefit or any tables of disablement rates and termination rates, adopted
after 1980 by the national association of insurance commissioners, that are
approved by rule adopted by the commissioner for use in determining the minimum
standard of valuation for the policies. The table must, for active lives, be combined
with a mortality table permitted for calculating the reserves for life insurance policies.4.For accidental death benefits in or supplementary to policies or contracts, the 1959
accidental death benefits table or any accidental death benefits table, adopted after
1980 by the national association of insurance commissioners, that is approved by
rule adopted by the commissioner for use in determining the minimum standard of
valuation for the policies.The table must be combined with a mortality tablepermitted for calculating the reserves for life insurance policies.5.For group life insurance, life insurance issued on the substandard basis and other
special benefits, any tables that may be approved by the commissioner.26.1-35-03. Minimum standards of valuation for annuities. Except as provided insection 26.1-35-04, the minimum standards for the valuation of all individual annuity and pure
endowment contracts, and for all annuities and pure endowments purchased under group annuity
and pure endowment contracts, must be the commissioners' reserve valuation methods defined
in sections 26.1-35-05 and 26.1-35-06 and the following tables and interest rates:Page No. 31.For individual single premium immediate annuity contracts, excluding any disability
and accidental death benefits in the contracts, the 1971 individual annuity mortality
table or any individual annuity mortality table, adopted after 1980 by the national
association of insurance commissioners, that is approved by rule adopted by the
commissioner for use in determining the minimum standard of valuation for the
contracts, or any modification of these tables approved by the commissioner, and
seven and one-half percent interest.2.For individual annuity and pure endowment contracts, other than single premium
immediate annuity contracts, excluding any disability and accidental death benefits
in the contracts, the 1971 individual annuity mortality table or any individual annuity
mortality table, adopted after 1980 by the national association of insurance
commissioners, that is approved by rule adopted by the commissioner for use in
determining the minimum standard of valuation for the contracts, or any modification
of these tables approved by the commissioner, and five and one-half percent interest
for single premium deferred annuity and pure endowment contracts and four and
one-half percent interest for all other individual annuity and pure endowment
contracts.3.For all annuities and pure endowments purchased under group annuity and pure
endowment contracts, excluding any disability and accidental death benefits
purchased under the contracts, the 1971 group annuity mortality table or any group
annuity mortality table, adopted after 1980 by the national association of insurance
commissioners, that is approved by rule adopted by the commissioner for use in
determining the minimum standard of valuation for the annuities and pure
endowments, or any modification of these tables approved by the commissioner,
and seven and one-half percent interest.26.1-35-04. Determination of standard for valuation - Interest rates. The calendaryear statutory valuation interest rates as defined in this section are:1.The interest rates used in determining the minimum standard for the valuation of:a.All life insurance policies issued in a particular calendar year, on or after the
earlier of a specified date filed by a company with the commissioner in a written
notice of the company's election to comply with this chapter or January 1, 1989.b.All individual annuity and pure endowment contracts issued in a particular
calendar year on or after January 1, 1984.c.All annuities and pure endowments purchased in a particular calendar year on
or after January 1, 1984, under group annuity and pure endowment contracts.d.The net increase, if any, in a particular calendar year after January 1, 1984, in
amounts held under guaranteed interest contracts.2.The calendar year statutory valuation interest rates, I, must be determined as follows
and the results rounded to the nearer one-quarter of one percent:a.For life insurance:I = .03 + W (R1- .03) + W (R2- .09)2b.For single premium immediate annuities and for annuity benefits involving life
contingencies arising from other annuities with cash settlement options and
from guaranteed interest contracts with cash settlement options:I = .03 + W (R - .03)Page No. 4where R1is the lesser of R and .09, R2is the greater of R and .09, R is thereference interest rate defined in this section, and W is the weighting factor
defined in this section.c.For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on an issue year basis, except
as stated in subdivision b, the formula for life insurance stated in subdivision a
applies to annuities and guaranteed interest contracts with guarantee durations
in excess of ten years and the formula for single premium immediate annuities
stated in subdivision b applies to annuities and guaranteed interest contracts
with guarantee duration of ten years or less.d.For other annuities with no cash settlement options and for guaranteed interest
contracts with no cash settlement options, the formula for single premium
immediate annuities stated in subdivision b applies.e.For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a change in fund basis, the
formula for single premium immediate annuities stated in subdivision b applies.However, if the calendar year statutory valuation interest rate for any life insurance
policies issued in any calendar year determined without reference to this sentence
differs from the corresponding actual rate for similar policies issued in the
immediately preceding calendar year by less than one-half of one percent, the
calendar year statutory valuation interest rate for the policies must equal the
corresponding actual rate for the immediately preceding calendar year.Forpurposes of applying the preceding sentence, the calendar year statutory valuation
interest rate for life insurance policies issued in a calendar year must be determined
for 1980 by using the reference interest rate defined for 1979, and must be
determined for each subsequent calendar year regardless of when section
26.1-33-26 becomes operative.3.The weighting factors referred to in the formulas in subsection 2 are given in the
following tables:a.The weighting factors for life insurance are:GuaranteeWeightingDurationFactors10 years or less.50More than 10 years, but notmore than 20 years.45More than 20 years.35For life insurance, the guarantee duration is the maximum number of years the
life insurance can remain in force on a basis guaranteed in the policy or under
options to convert to plans of life insurance with premium rates or nonforfeiture
values or both which are guaranteed in the original policy.b.The weighting factor for single premium immediate annuities and for annuity
benefits involving life contingencies arising from other annuities with cash
settlement options and guaranteed interest contracts with cash settlement
options is eighty hundredths.c.The weighting factors for other annuities and for guaranteed interest contracts,
except as stated in subdivision b, are as specified in paragraphs 1, 2, and 3,
according to the requirements and definitions in paragraphs 4, 5, and 6:(1)For annuities and guaranteed interest contracts valued on an issue year
basis:Page No. 5Weighting FactorGuaranteefor Plan TypeDurationABC5 years or less.80.60.50More than 5 years, but notmore than 10 years.75.60.50More than 10 years, butnot more than 20 years.65.50.45More than 20 years.45.35.35(2)For annuities and
guaranteed interest
contracts valued on
a change in fund basis,
the factors shown in
paragraph 1 increased
by.15.25.05(3)For annuities and
guaranteed interest
contracts valued on
an issue year basis,
other than those with
no cash settlement
options, which do not
guarantee interest on
considerations received
more than one year after
issue or purchase and
for annuities and
guaranteed interest
contracts valued on a
change in fund
basis which do not
guarantee interest
rates on considerations
received more
than twelve months beyond
the valuation date,
the factors shown in
paragraph 1 or
derived in paragraph 2
increased by.05.05.05(4)For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, the guarantee duration is the
number of years for which the contract guarantees interest rates in
excess of the calendar year statutory valuation interest rate for life
insurance policies with guarantee duration in excess of twenty years. For
other annuities with no cash settlement options and for guaranteed
interest contracts with no cash settlement options, the guarantee duration
is the number of years from the date of issue or date of purchase to the
date annuity benefits are scheduled to commence.(5)The plan type as used in the tables in this subsection is defined as
follows:(a)Plan type A: At any time the policyholder may withdraw funds only
with an adjustment to reflect changes in interest rates or asset
values since receipt of the funds by the insurance company,Page No. 6without such adjustment but in installments over five years or
more, as an immediate life annuity, or no withdrawal permitted.(b)Plan type B: Before expiration of the interest rate guarantee, the
policyholder may withdraw funds only with an adjustment to reflect
changes in interest rates or asset values since receipt of the funds
by the insurance company, without such adjustment but in
installments over five years or more, or no withdrawal permitted.
At the end of the interest rate guarantee, funds may be withdrawn
without such adjustment in a single sum or installments over less
than five years.(c)Plan type C:The policyholder may withdraw funds beforeexpiration of the interest rate guarantee in a single sum or
installments over less than five years either without adjustment to
reflect changes in interest rates or asset values since receipt of the
funds by the insurance company, or subject only to a fixed
surrender charge stipulated in the contract as a percentage of the
fund.(6)A company may elect to value guaranteed interest contracts with cash
settlement options and annuities with cash settlement options on either
an issue year basis or on a change in fund basis. Guaranteed interest
contracts with no cash settlement options and other annuities with no
cash settlement options must be valued on an issue year basis. An issue
year basis of valuation refers to a valuation basis under which the interest
rate used to determine the minimum valuation standard for the entire
duration of the annuity or guaranteed interest contract is the calendar
year valuation interest rate for the year of issue or year of purchase of the
annuity or guaranteed interest contract.A change in fund basis ofvaluation refers to a valuation basis under which the interest rate used to
determine the minimum valuation standard applicable to each change in
the fund held under the annuity or guaranteed interest contract is the
calendar year valuation interest rate for the year of the change in the
fund.4.The reference interest rate referred to in subsection 2 is defined as follows:a.For all life insurance, the lesser of the average over a period of thirty-six
months and the average over a period of twelve months, ending on June
thirtieth of the calendar year next preceding the year of issue, of Moody's
corporate bond yield average - monthly average corporates, as published by
Moody's investors service, incorporated.b.For single premium immediate annuities and for annuity benefits involving life
contingencies arising from other annuities with cash settlement options and
guaranteed interest contracts with cash settlement options, the average over a
period of twelve months, ending on June thirtieth of the calendar year of issue
or year of purchase, of Moody's corporate bond yield average - monthly
average corporates, as published by Moody's investors service, incorporated.c.For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a year of issue basis, except
as stated in subdivision b with guarantee duration in excess of ten years, the
lesser of the average over a period of thirty-six months and the average over a
period of twelve months, ending on June thirtieth of the calendar year of issue
or purchase, of Moody's corporate bond yield average - monthly average
corporates, as published by Moody's investors service, incorporated.Page No. 7d.For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a year of issue basis, except
as stated in subdivision b with guaranteed duration of ten years or less, the
average over a period of twelve months, ending on June thirtieth of the
calendar year of issue or purchase, of Moody's corporate bond yield average -
monthly average corporates, as published by Moody's investors service,
incorporated.e.For other annuities with no cash settlement options and for guaranteed interest
contracts with no cash settlement options, the average over a period of twelve
months, ending on June thirtieth of the calendar year of issue or purchase, of
Moody's corporate bond yield average - monthly average corporates, as
published by Moody's investors service, incorporated.f.For other annuities with cash settlement options and guaranteed interest
contracts with cash settlement options, valued on a change in fund basis,
except as stated in subdivision b the average over a period of twelve months,
ending on June thirtieth of the calendar year of the change in the fund, of
Moody's corporate bond yield average - monthly average corporates, as
published by Moody's investors service, incorporated.5.If Moody's corporate bond yield average - monthly average corporates is no longer
published by Moody's investors service, incorporated, or if the national association of
insurancecommissionersdeterminesthatMoody'scorporatebondyieldaverage - monthly average corporates as published by Moody's investors service,
incorporated, is no longer appropriate for the determination of the reference interest
rate, then an alternative method for determination of the reference interest rate,
which is adopted by the national association of insurance commissioners and
approved by rule adopted by the commissioner, may be substituted.26.1-35-05. Reserves by commissioners' reserve valuation method.1.Except as otherwise provided in sections 26.1-35-06 and 26.1-35-09, reserves
according to the commissioners' reserve valuation method, for the life insurance and
endowment benefits of policies providing for a uniform amount of insurance and
requiring the payment of uniform premiums, must be the excess, if any, of the
present value, at the date of valuation, of the future guaranteed benefits provided by
the policies, over the present value of any future modified net premiums for the
policies.The modified net premiums must be the uniform percentage of therespective contract premiums for the benefits that the present value, at the date of
issue of the policy, of all the modified net premiums equals the sum of the present
value of the benefits provided by the policy and the excess of subdivision a over
subdivision b as follows:a.A net level annual premium equal to the present value, at the date of issue, of
the benefits provided 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 of the policy on which a premium falls due; provided,
however, that the net level annual premium may not exceed the net level
annual premium on the nineteen-year premium whole life plan for insurance of
the same amount at an age one year higher than the age at issue of the policy.b.A net one-year term premium for the benefits provided in the first policy year.2.For any life insurance policy issued after December 31, 1986, for which the contract
premium in the first policy year exceeds that of the second year and for which no
comparable additional benefit is provided in the first year for the excess and which
provides an endowment benefit or a cash surrender value or a combination thereof
in an amount greater than the excess premium, the reserve according to thePage No. 8commissioners' reserve valuation method as of any policy anniversary occurring on
or before the assumed ending date, which is defined as the first policy anniversary
on which the sum of any endowment benefit and any cash surrender value then
available is greater than the excess premium, except as otherwise provided in
section 26.1-35-09, must be the greater of the reserve as of such policy anniversary
calculated as described in this section and the reserve as of such policy anniversary
calculated as described in this section, but with the value defined in subdivision a of
subsection 1 being reduced by fifteen percent of the amount of such excess first
year premium; all present values of benefits and premiums being determined
without reference to premiums or benefits provided for by the policy after the
assumed ending date; the policy being assumed to mature on such date as an
endowment; and the cash surrender value provided on such date being considered
as an endowment benefit.In making the above comparison, the mortality andinterest bases stated in sections 26.1-35-02 and 26.1-35-04 must be used.3.Reserves according to the commissioners' reserve valuation method for life
insurance policies providing a varying amount of insurance or requiring the payment
of varying premiums; group annuity and pure endowment contracts purchased under
a retirement plan or plan of deferred compensation, established or maintained by an
employer, including a partnership, limited liability company, or sole proprietorship, or
by an employee organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under section 408 of the
federal Internal Revenue Code, as amended; disability and accidental death benefits
in all policies and contracts; and all other benefits, except life insurance and
endowment benefits in life insurance policies and benefits provided by all other
annuity and pure endowment contracts, must be calculated by a method consistent
with the principles of this section.26.1-35-06.Reserves by commissioners' annuity reserve method.This sectionapplies to all annuity and pure endowment contracts other than group annuity and pure
endowment contracts purchased under a retirement plan or plan of deferred compensation,
established or maintained by an employer, including a partnership or sole proprietorship, or by an
employee organization, or by both, other than a plan providing individual retirement accounts or
individual retirement annuities under section 408 of the federal Internal Revenue Code of 1954,
as amended.Reserves according to the commissioners' annuity reserve method for benefits underannuity or pure endowment contracts, excluding any disability and accidental death benefits in
the contracts, must be the greatest of the respective excesses of the present values, at the date
of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits,
provided for by the contracts at the end of each respective contract year, over the present value,
at the date of valuation, of any future valuation considerations derived from future gross
considerations, required by the terms of the contracts, that become payable prior to the end of
such respective contract year. The future guaranteed benefits must be determined by using the
mortality tables, if any, and the interest rate, or rates, specified in the contracts for determining
guaranteed benefits.The valuation considerations are the portions of the respective grossconsiderations applied under the terms of the contracts to determine nonforfeiture values.26.1-35-07.Minimum aggregate reserves for life policies issued after June 30,1977.1.A company's aggregate reserves for all life insurance policies, excluding disability
and accidental death benefits, issued after June 30, 1977, may not be less than the
aggregate reserves calculated in accordance with the methods set forth in sections
26.1-35-05, 26.1-35-06, and 26.1-35-09 and the mortality table or tables and rate or
rates of interest used in calculating nonforfeiture benefits for the policies.Page No. 92.In no event may the aggregate reserves for all policies, contracts, and benefits be
less than the aggregate reserves determined by the qualified actuary to be
necessary to render the opinion required by section 26.1-35-01.1.26.1-35-08.Calculation of minimum aggregate reserves by other standards.Reserves for all policies and contracts issued prior to July 1, 1977, may be calculated, at the
option of the company, according to any standards which produce greater aggregate reserves for
the policies and contracts than the minimum reserves required by the laws in effect on June 30,
1977.Reserves for any category of policies, contracts, or benefits, as established by thecommissioner, issued on or after July 1, 1977, may be calculated, at the option of the company,
according to any standards which produce greater aggregate reserves for the category than
those calculated according to the minimum standard provided in this chapter, but the rate or
rates of interest used for policies and contracts, other than annuity and pure endowment
contracts, may not be higher than the corresponding rate or rates of interest used in calculating
any nonforfeiture benefits provided in the policies and contracts. Any company that has adopted
any standard of valuation producing greater aggregate reserves than those calculated according
to the minimum standard provided in this chapter may, with the approval of the commissioner,
adopt any lower standard of valuation, but not lower than the minimum provided in this chapter;
provided, however, that for the purposes of this section, the holding of additional reserves
previously determined by a qualified actuary to be necessary to render the opinion required by
section 26.1-35-01.1 may not be deemed to be the adoption of a higher standard of valuation.26.1-35-09. Minimum reserve if net premium exceeds gross premium.1.If in any contract year the gross premium charged by any life insurance company on
any policy or contract is less than the valuation net premium for the policy or contract
calculated by the method used in calculating the reserve on the policy or contract but
using the minimum valuation standards of mortality and rate of interest, the
minimum reserve required for the policy or contract is the greater of either the
reserve calculated according to the mortality table, rate of interest, and method
actually used for the policy or contract, or the reserve calculated by the method
actually used for the policy or contract but using the minimum valuation standards of
mortality and rate of interest and replacing the valuation net premium by the actual
gross premium in each contract year for which the valuation net premium exceeds
the actual gross premium. The minimum valuation standards of mortality and rate of
interest referred to in this section are those standards stated in sections 26.1-35-02
and 26.1-35-04.2.For any life insurance policy issued after December 31, 1986, for which the gross
premium in the first policy year exceeds that of the second year and for which no
comparable additional benefit is provided in the first year for the excess and which
provides an endowment benefit or a cash surrender value or a combination thereof
in an amount greater than the excess premium, subsection 1 must be applied as if
the method actually used in calculating the reserve for the policy was the method
described in section 26.1-35-05, ignoring subsection 2 of that section. The minimum
reserve at each policy anniversary must be the greater of the minimum reserve
calculated in accordance with section 26.1-35-05, including subsection 2 of that
section, and the minimum reserve calculated in accordance with this section.26.1-35-10. Future premium determination. In the case of any plan of life insurancewhich provides for future premium determination, the amounts of which are to be determined by
the insurance company based on then estimates of future experience, or in the case of any plan
of life insurance or annuity which is of such a nature that the minimum reserves cannot be
determined by the methods described in sections 26.1-35-05, 26.1-35-06, and 26.1-35-09, the
reserves which are held under the plan must be appropriate in relation to the benefits and the
pattern of premiums for that plan, and must be computed by a method that is consistent with the
principles of this chapter, as determined by rules adopted by the commissioner.Page No. 10Document Outlinechapter 26.1-35 standard valuation law