For the purposes of this subchapter, the following terms have
the following meanings unless the explicit wording of a section or
portion of a section directs otherwise.
(1) Actuarial Standards Board--the board established
by the American Academy of Actuaries to develop and promulgate standards
of actuarial practice.
(2) Concept Illustration--the use of non-guaranteed
policy values to pay premiums or policy expenses (suspension or reduction
of premiums) or to generate distributions to the policyholder or owner
(cash flows).
(3) Contract premium--the gross premium that is required
to be paid under a fixed premium policy, including the premium for
a rider for which benefits are shown in the illustration.
(4) Currently payable scale--a scale of non-guaranteed
elements in effect for a policy form as of the illustration date or
declared to become effective within 95 days of the illustration date.
(5) Disciplined current scale--a scale of non-guaranteed
elements constituting a limit on illustrations currently being illustrated
by an insurer that is reasonably based on actual recent historical
experience, as certified annually by an illustration actuary designated
by the insurer. Further guidance in determining the disciplined current
scale as contained in standards established by the Actuarial Standards
Board may be relied upon if the standards:
(A) are consistent with all provisions of this regulation;
(B) limit a disciplined current scale to reflect only
actions that have already been taken or events that have already occurred;
(C) do not permit a disciplined current scale to include
any projected trends of improvements in experience or any assumed
improvements in experience beyond the illustration date; and
(D) do not permit assumed expenses to be less than
minimum assumed expenses.
(6) Generic name--a short title descriptive of the
policy being illustrated such as "whole life," "term
life" or "flexible premium adjustable life."
(7) Guaranteed elements--the premiums, benefits, values,
credits or charges under a policy of life insurance that are guaranteed
and determined at issue.
(8) Illustrated scale--a scale of non-guaranteed elements
currently being illustrated that is not more favorable to the policy
owner than the lesser of:
(A) the disciplined current scale; or
(B) the currently payable scale.
(9) Illustration--a presentation or depiction used
in the solicitation or sale of a life insurance policy that includes
non-guaranteed elements of a policy of life insurance over a period
of years and includes but is not limited to the three types defined
in subparagraphs (A) - (C) of this paragraph.
(A) Basic illustration--an illustration that shows
both guaranteed and non-guaranteed elements.
(B) Supplemental illustration--an illustration furnished
in addition to a basic illustration that meets the applicable requirements
of this subchapter, and that may be presented in a format differing
from the basic illustration, but may only depict a scale of non-guaranteed
elements that is permitted in a basic illustration.
(C) In-force illustration--an illustration furnished
at any time after the policy that it depicts has been in force for
one year or more.
(10) Illustration actuary--an actuary meeting the requirements
of §21.2211(c) of this title (relating to Annual Certification)
who certifies to illustrations based on the standard of practice promulgated
by the Actuarial Standards Board.
(11) Illustration date--the date on which the illustration
was prepared.
(12) Insurer--a life insurance company as defined by
Insurance Code §841.001 and §982.001; a fraternal benefit
society as defined by Insurance Code §885.051 and §885.052;
a Mutual Life Insurance Company as defined by Insurance Code Chapter
882; or a Stipulated Premium Insurance Company as defined by Insurance
Code Chapter 884.
(13) Lapse-supported illustration--an illustration
of a policy form failing the test of self-supporting as defined in
this subchapter, under a modified persistency rate assumption using
persistency rates underlying the disciplined current scale for the
first five years and 100% policy persistency thereafter.
(14) Minimum assumed expenses--the minimum expenses
that may be used in the calculation of the disciplined current scale
for a policy form. The insurer may choose to designate each year the
method of determining assumed expenses for all policy forms from:
(A) fully allocated expenses;
(B) marginal expenses; and
(C) a generally recognized expense table based on fully
allocated expenses representing a significant portion of insurance
companies and approved by the National Association of Insurance Commissioners
or by the Commissioner. Marginal expenses may be used only if greater
than a generally recognized expense table. If no generally recognized
expense table is approved, fully allocated expenses must be used.
(15) Non-guaranteed elements--the premiums, benefits,
values, credits or charges under a policy of life insurance that are
not guaranteed or not determined at issue.
(16) Non-term group life--a group policy or individual
policies of life insurance issued to members of an employer group
or other permitted group where:
(A) every plan of coverage was selected by the employer
or other group representative;
(B) some portion of the premium is paid by the group
or through payroll deduction; and
(C) group underwriting or simplified underwriting is
used.
(17) Participating life insurance policy--a life insurance
policy which provides for possible policyholder dividends.
(18) Policy owner--the owner named in the policy or
the certificate holder in the case of a group policy.
(19) Premium outlay--the amount of premium assumed
to be paid by the policy owner or other premium payer out-of-pocket.
(20) Self-supporting illustration--an illustration
of a policy form for which it can be demonstrated that, when using
experience assumptions underlying the disciplined current scale, for
all illustrated points in time on or after the fifteenth policy anniversary
or the twentieth policy anniversary for second-or-later-to-die policies
(or upon policy expiration if sooner), the accumulated value of all
policy cash flows equals or exceeds the total policy owner value available.
For this purpose, policy owner value will include cash surrender values
and any other illustrated benefit amounts available at the policy
owner's election.
(21) Universal life insurance policy--a life insurance
policy under the provisions of which separately identified interest
credits (other than in connection with dividend accumulations, premium
deposit funds, or other separate accounts) and mortality and expense
charges are made to the policy. A universal life policy may provide
for other credits and charges, such as charges for the cost of benefits
provided by rider.
|
