§ 27-4.5-8 - Reserve calculation – Valuation net premium exceeding the gross premium charged. - Rhode Island Statutes

SECTION 27-4.5-8

   § 27-4.5-8  Reserve calculation –Valuation net premium exceeding the gross premium charged. – (a) If in any contract year the gross premium charged by any life insurancecompany on any policy or contract is less than the valuation net premium forthe policy or contract calculated by the method used in calculating the reserveon it but using the minimum valuation standards of mortality and rate ofinterest, the minimum reserve required for the policy or contract shall be thegreater of either the reserve calculated according to the mortality table, rateof interest, and method actually used for the policy or contract, or thereserve calculated by the method actually used for the policy or contract butusing the minimum valuation standards of mortality and rate of interest andreplacing the valuation net premium by the actual gross premium in eachcontract year for which the valuation net premium exceeds the actual grosspremium. The minimum valuation standards of mortality and rate of interestreferred to in this section are those standards stated in §§ 27-4.5-4and 27-4.5-4.1.

   (b) For any life insurance policy issued on or after January1, 1994, for which the gross premium in the first policy year exceeds that ofthe second year and for which no comparable additional benefit is provided inthe first year for the excess, and which provides an endowment benefit or acash surrender value or a combination of them in an amount greater than theexcess premium, the provisions of subsection (a) shall be applied as if themethod actually used in calculating the reserve for the policy were the methoddescribed in § 27-4.5-5, ignoring § 27-4.5-5(b). The minimum reserveat each policy anniversary of the policy shall be the greater of the minimumreserve calculated in accordance with § 27-4.5-5, including §27-4.5-5(b), and the minimum reserve calculated in accordance with this section.