Mo. Code Regs. Ann. tit. 20, § 200-1.160
PURPOSE: The purpose of this regulation is to provide: 1) tables of select mortality factors and rules for their use; 2) rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits; and 3) rules concerning a minimum standard for the valuation of plans with secondary guarantees. The method for calculating basic reserves defined in this regulation will constitute the Commissioners’ Reserve Valuation Method for policies to which this regulation is applicable.
(1) Applicability. This rule shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this rule, subject to the following exceptions and conditions:
(A) Exceptions.
vidual life insurance policy issued on or after the effective date of this rule if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this rule, that guarantees the premium rates of the new policy. This rule also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.
versal life policy that meets all the following requirements:
any, is five (5) years or less;
ondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in subsection (2)(F) and the applicable valuation interest rate; and
less than one hundred percent (100%) of the first year annualized specified premium for the secondary guarantee period.
able life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
able universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.
life insurance certificate unless the certificate provides 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 (1) year.
(B) Conditions.
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 section (4).
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 section (5).
(2) Definitions. For purposes of this rule:
(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 (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 tables, as defined in subsection (F) of this section (or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC), after the effective date of this rule and promulgated by rule by the director for this purpose) and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in subsection (3)(B) of this rule. The length of a particular contract segment shall be 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), where Gt and Rt are defined as follows:
GPx+k+t
Gt = GPx+k+t–1
where: x = original issue age; k = the number of years from the date of issue to the beginning of the segment; t = 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 for year t of the segment, ignoring policy fees only if level for the premium paying period of the policy. qx+k+t = Rt qx+k+t–1 20 CSR 200-1
However, Rt may be increased or decreased by one percent in any policy year, at the company’s option, but Rt shall 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 paragraph (3)(B)2. if paragraph (3)(B)3. is elected for deficiency reserves.
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.
(C) “Deficiency reserves” means the excess, if greater than zero, of—
suant to section 376.380.1(2)(h), RSMo, over
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 equals:
efits within the segment, plus
guaranteed cash value (see subsection (4)(D)) occurring at the end of the segment, less
occurring at the start of the segment, plus
excess of part (I) over part (II) as follows:
equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen (19)-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one (1)-year higher than the age at issue of the policy.
um for the benefits provided for in the first policy year.
mined by the “contract segmentation method,” as defined in this section.
value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.
cy reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.
(K) Unitary Reserves.
value of all future guaranteed benefits less the present value of all future modified net premiums, where:
net premiums are considered to the mandatory expiration of the policy; and
form percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of part (I) over part (II), as follows:
equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one (1) per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen (19)-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one (1) year higher than the age at issue of the policy.
um for the benefits provided for in the first policy year.
value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.
(3) General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves.
(A) At the election of the company for any one (1) or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this rule and promulgated by rule by the director for this purpose). If select mortality factors are elected, they may be:
tors incorporated into section 376.380, RSMo, and 20 CSR 400-1.100, 20 CSR 400- 1.120, and 20 CSR 400-1.130;
Appendix, included herein; or
factors adopted by the NAIC after the effective date of this rule and promulgated by rule by the director for the purpose of calculating basic reserves.
(B) Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one (1) or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this rule and promulgated by rule by the director). If select mortality factors are elected, they may be—
tors incorporated into section 376.380, RSMo, and 20 CSR 400-1.110, 20 CSR 400- 1.120, and 20 CSR 400-1.130;
Appendix, included herein;
percent of the select mortality factors in the Appendix, subject to the following:
form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;
uation interest rate used for basic reserves, part (I) is greater than or equal to part (II):
future death benefits, calculated using the mortality rates resulting from the application of X;
future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;
resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date;
increase X at any valuation date where it is necessary to continue to meet all the requirements of paragraph (3)(B)3.;
decrease X at any valuation date as long as X continues to meet all the requirements of paragraph (3)(B)3.;
ically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums; and
cent (100%) at any duration for any policy, the following requirements shall be met:
annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of section 20 CSR 200-1.116(6);
annually opine for all policies subject to this rule as to whether the mortality rates resulting from the application of X meet the requirements of paragraph (3)(B)3. This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience;
disclose, in the regulatory asset adequacy issues summary, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one (1) or more interim periods; and
opinion(s) required by parts (I), (II), or (III) of this subparagraph with the director of the Department of Commerce and Insurance as an attachment or attachments to and at the same time as the company’s annual statement to which such opinion(s) relate; and
factors adopted by the NAIC after the effective date of this rule and promulgated by rule by the director for the purpose of calculating deficiency reserves.
(E) Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one (1) year after the date of the change shall be the greatest of the following:
guarantee;
made at issue; and
issued on the date of the guarantee.
(4) Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies).
(A) Basic Reserves. Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in paragraph 1. or 2. of this subsection may be made:
than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment;
value, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.
(B) Deficiency Reserves.
shall be calculated:
sponding basic reserve determined by subsec- 20 CSR 200-1
tion (A) of this section is unitary;
sponding basic reserve determined by subsection (A) of this section is segmented; or
responding basic reserve determined by subsection (A) of this section is equal to both the segmented reserve and the unitary reserve.
policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in subsection (3)(B)) and rate of interest.
calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in subsection (3)(B).
on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.
(D) Unusual Pattern of Guaranteed Cash Surrender Values.
tern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term AND INSURANCE
insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.
to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:
date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:
guaranteed cash surrender value, if any, that is scheduled after the valuation date; or
of the policy; and
during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and
part (I) divided by part (II) as follows:
ning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period.
ning of the n year period, of the scheduled gross premiums payable during the n year period.
policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year’s guaranteed cash surrender value by more than the sum of:
of the scheduled gross premium for that year;
one (1)-year’s accrued interest on the sum of the prior year’s guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and
icy year surrender charge, if any.
(E) Optional Exemption for Yearly Renewable Term Reinsurance (YRT). At the option of the company, the following approach for reserves on YRT reinsurance may be used:
for each future policy year as the tabular cost of insurance for that future year;
the tabular cost of insurance for the appropriate period, as defined in subsection (4)(C);
3. Deficiency reserves.
excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with subparagraph A. of this paragraph.
calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten (10)-year select mortality factors, or any other table adopted by the NAIC after the effective date of this rule and promulgated by rule of the director for this purpose.
considered YRT reinsurance for purposes of this subsection if only the mortality risk is reinsured.
optional exemption, the ceding company’s reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.
(F) Optional Exemption for Attained-Age- Based Yearly Renewable Term Life Insurance Policies. At the option of the company, the following approach for reserves for attainedage-based YRT life insurance policies may be used:
for each future policy year as the tabular cost of insurance for that future year.
the tabular cost of insurance for the appropriate period, as defined in subsection (4)(C);
3. Deficiency reserves.
excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.
less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with subparagraph A. of this paragraph.
calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten (10)-year select mortality factors, or any other table adopted by the NAIC after the effective date of this rule and promulgated by rule by the director for this purpose.
attained-age-based YRT life insurance policy for purposes of this subsection if:
initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and
initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insured persons of the same sex, risk class, plan of insurance and attained age.
based YRT policies after an initial period of coverage, the approach of this subsection may be used after the initial period if:
all insured persons of the same sex, risk class, and plan of insurance; or
mon attained age for all insureds of the same sex, risk class, and plan of insurance; and
age, the policy meets the conditions of paragraph 5. of this subsection.
shall be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this rule.
(G) Exemption for Unitary Reserves for Certain n-Year Renewable Term Life Insurance Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:
year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than ten (10) years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;
n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten (10)-year select mortality factors; and
any policy year.
(H) Exemption from Unitary Reserves for Certain Juvenile Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:
four (24) or younger;
the juvenile period, which shall occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and
gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.
(5) Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period.
(A) General.
include:
policy will remain in force at the original schedule of benefits, subject only to the payment of specified premiums;
premium at any duration is less than the corresponding one (1)-year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten (10)-year select mortality factors, or any other table adopted after the effective date of this rule by the NAIC and promulgated by regulation by the director for this purpose; or
subparagraphs A. and B. of this paragraph.
period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in subsections (B) and (C) below shall be recalculated from issue to reflect these changes.
ums specified in the policy, the payment of 20 CSR 200-1
which guarantees that the policy will remain (6) This rule includes herein the Appendix in force at the original schedule of benefits, containing tables of select mortality factors. but which otherwise would be insufficient to
keep the policy in force in the absence of the effective thirty (30) days after publication in guarantee if maximum mortality and expense charges and minimum interest credits were 1, 2001, whichever later occurs. made and any applicable surrender charges were assessed.
imum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest crediting rate which are all guaranteed at issue.
means the net one (1) year premium based upon the original schedule of benefits for a given policy year. The one (1)-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in paragraphs (3)(B)2., 3., and 4. may not be used to calculate the one (1)-year valuation premiums.
should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.
(D) Minimum Reserves. The minimum reserves during the secondary guarantee period are the greater of:
guarantee plus the deficiency reserve, if any, for the secondary guarantees; or
other rules or regulations governing universal life plans. AND INSURANCE Division 200—Insurance Solvency and Company Regulation
Appendix to Rule 20 CSR 200-1.160 Valuation of Life Insurance Policies
SELECT MORTALITY FACTORS
This appendix contains tables of select mortality factors that are the bases to which the respective percentage of paragraphs (3)(A)2., (3)(B)2., and (3)(B)3. are applied.
The six tables of select mortality factors contained herein include: (1) male aggregate, (2) male nonsmoker, (3) male smoker, (4) female aggregate, (5) female nonsmoker, and (6) female smoker.
These tables apply to both age last birthday and age nearest birthday mortality tables.
For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix. AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AND INSURANCE Division 200—Insurance Solvency and Company Regulation AUTHORITY: section 374.045, RSMo Supp. 2010 and sections 376.380, 376.670, and 376.676, RSMo 2000.* Original rule filed June 15, 2000, effective Jan. 1, 2001. Amended: Filed Sept. 5, 2001, effective March 30, 2002. Amended: Filed Feb. 14, 2011, effective Aug. 30, 2011. Non-substantive change filed Sept. 11, 2019, published Oct. 31, 2019. *Original authority: 374.045, RSMo 1967, amended 1993, 1995, 2008; 376.380, RSMo 1939, amended 1943, 1947, 1959, 1961, 1965, 1971, 1975, 1979, 1982, 1993; 376.670, RSMo 1943, amended 1959, 1961, 1965, 1975, 1979, 1982; and 376.676, RSMo 2000.