Tex.
Ins. Code Section 1105.101
Nonforfeiture Benefits for Indeterminate Premium Plans and Certain Other Plans
(a)
This section applies to a plan of life insurance that:(1)
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(2)
is such that minimum values cannot be determined by a method described by Sections 1105.004-1105.009, Subchapter B, or Subchapter D.(b)
The department must be satisfied that:(1)
the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by Sections 1105.004-1105.009, Subchapter B, or Subchapter D; and(2)
the benefits and the pattern of premiums of the plan are not such as to mislead prospective policyholders or insured persons.(c)
The cash surrender values and paid-up nonforfeiture benefits provided by the plan may not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this subchapter as determined under rules adopted by the commissioner.(d)
Notwithstanding any other law of this state, any policy, contract, or certificate providing life insurance under the plan must be approved by the department before the plan may be marketed, issued, delivered, or used in this state.(b)
The adjusted premiums for a policy to which this section applies must be computed on an annual basis or, at the option of the company, on a fully continuous basis if that basis is consistent with actual policy provisions and the use of that basis is specified by the policy.(c)
Except as provided by Subsection (f), the adjusted premiums must be a uniform percentage of the respective premiums specified by the policy for each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, so that the present value, as of the date the policy is issued, of all the adjusted premiums is equal to the sum of:(1)
the then present value of the future guaranteed benefits available under the policy;(2)
two percent of:(A)
the amount of insurance, if the insurance is uniform in amount; or(B)
the equivalent uniform amount of insurance, as determined under this section, if the amount of insurance varies with the duration of the policy;(3)
40 percent of the adjusted premium for the first policy year; and(4)
25 percent of the lesser of:(A)
the adjusted premium for the first policy year; or(B)
the adjusted premium for a whole life policy of the same or an equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance.(d)
In applying the percentages specified by Subsections (c)(3) and (4), an adjusted premium may not be considered to exceed four percent of the amount of insurance or equivalent uniform amount.(e)
For purposes of this section, for a policy that provides an amount of insurance that varies with the duration of the policy:(1)
except as provided by Subdivision (2), the equivalent uniform amount of insurance is considered to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy; and(2)
if the policy is issued on the life of a child younger than 10 years of age, the equivalent uniform amount of insurance may be computed as though the amount of insurance provided by the policy before the insured reaches 10 years of age were the amount provided by the policy at age 10.(f)
The adjusted premiums for a policy that provides term insurance benefits by rider or a supplemental policy provision must be equal to the adjusted premiums for an otherwise similar policy issued at the same age without the term insurance benefits, increased, during the period for which premiums for the term insurance benefits are payable, by the adjusted premiums for the term insurance. The adjusted premiums specified by this subsection must be computed separately in the manner specified by Subsections (b)-(e).(b)
This section also applies to an ordinary policy issued by a company after a date specified in a written notice:(1)
that was filed by the company with the State Board of Insurance after August 23, 1963, but before January 1, 1974; and(2)
under which the company filing the notice elected to comply before January 1, 1974, with the law codified by this section.(c)
An adjusted premium or present value determined under this chapter as to a policy to which this section applies must be computed on the basis of the Commissioners 1958 Standard Ordinary Mortality Table.(d)
A computation as to a policy to which this section applies must be made using the rate of interest specified by the policy for computing cash surrender values and paid-up nonforfeiture benefits, except that the rate of interest may not exceed:(1)
3-1/2 percent a year for a policy issued before June 14, 1973;(2)
4 percent a year for a policy issued on or after June 14, 1973, and before August 29, 1977;(3)
5-1/2 percent a year for a policy issued on or after August 29, 1977, other than a single premium whole life or endowment insurance policy; or(4)
6-1/2 percent a year for a single premium whole life or endowment insurance policy issued on or after August 29, 1977.(e)
For a category of ordinary insurance issued to insure a female risk:(1)
an adjusted premium or present value for a policy issued before August 29, 1977, may be computed according to an age not more than three years younger than the actual age of the insured; and(2)
an adjusted premium or present value for a policy issued on or after August 29, 1977, may be computed according to an age not more than six years younger than the actual age of the insured.(f)
In the computation of the present value of paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates shown in the Commissioners 1958 Extended Term Insurance Table.(g)
Subject to approval by the department, a company may specify a mortality table other than the table required by this section for use in computing an adjusted premium or present value for insurance issued on a substandard basis.(b)
This section also applies to an industrial policy issued by a company after a date specified in a written notice:(1)
that was filed by the company with the State Board of Insurance after August 23, 1963, but before January 1, 1974; and(2)
under which the company filing the notice elected to comply before January 1, 1974, with the law codified by this section.(c)
An adjusted premium or present value determined under this chapter as to a policy to which this section applies must be computed on the basis of the Commissioners 1961 Standard Industrial Mortality Table.(d)
A computation as to a policy to which this section applies must be made using the rate of interest specified by the policy for computing cash surrender values and paid-up nonforfeiture benefits, except that the rate of interest may not exceed:(1)
3-1/2 percent a year for a policy issued before June 14, 1973;(2)
4 percent a year for a policy issued on or after June 14, 1973, and before August 29, 1977;(3)
5-1/2 percent a year for a policy issued on or after August 29, 1977, other than a single premium whole life or endowment insurance policy; or(4)
6-1/2 percent a year for a single premium whole life or endowment insurance policy issued on or after August 29, 1977.(e)
In the computation of the present value of paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may not exceed the rates shown in the Commissioners 1961 Industrial Extended Term Insurance Table.(f)
Subject to approval by the department, a company may specify a mortality table other than the table required by this section for use in computing an adjusted premium or present value for insurance issued on a substandard basis.
Source:
Section 1105.101 — Nonforfeiture Benefits for Indeterminate Premium Plans and Certain Other Plans, https://statutes.capitol.texas.gov/Docs/IN/htm/IN.1105.htm#1105.101 (accessed May 11, 2024).
