N.Y. Comp. Codes R. & Regs. tit. 11, § 98.6 – Minimum reserves for life insurance policies with nonlevel premiums and/or nonlevel death benefits.

(1) Methodology for calculating basic reserves.
1. (i) Except for a policy of varying premium term life insurance issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if optionally elected under subparagraph (iii) of this paragraph, as provided in subparagraph (ii) of this paragraph, basic reserves for each life insurance policy with nonlevel premiums and/or nonlevel death benefits shall be the greater of the unitary reserves or the segmented reserves as defined in paragraph (2) of this subdivision. The reserves shall be at least as great as those required by section 98.4 and paragraphs (3) through (6) of this subdivision regarding methodology and mortality, and interest rate considerations shall apply to such a policy.
2. (ii) For a policy of varying premium term life insurance issued on or after January 1, 2015 and prior to January 1, 2017, paragraphs (7) through (12) of this subdivision shall apply.
3. (iii) An insurer that as of December 31, 2016 utilized the provisions of paragraphs (7) through (12) of this subdivision for any varying premium term life insurance policies issued on or after January 1, 2015 and prior to January 1, 2017, may elect to continue to apply the provisions of said paragraphs to varying premium term life insurance policies issued on or after January 1, 2017 and prior to January 1, 2020, provided that:
  1. (a) in applying the provisions of paragraphs (7) through (12) of this subdivision, the insurer shall utilize the 2001 CSO Mortality Table, or for preferred lives meeting the conditions of section 100.9 of this Title (Regulation 179), the 2001 CSO Preferred Class Structure Mortality Table; and
  2. (b) the insurer provides written notification to the superintendent by February 28, 2020.
(2) Segmented reserves means the excess, if any, of the present value, at the date of valuation, of all future guaranteed life insurance and endowment benefits to the mandatory expiry date of the policy over the present value of all future modified net premiums to such date. The length of each segment is determined at issue by the contract segmentation method as described in section 98.5 of this Part. All present values shall be calculated using the same mortality and interest rates that were used in calculating basic unitary reserves. The modified net premiums within each segment of a policy shall be a uniform percentage of the respective gross premiums within such segment. The segmented reserve shall not be less than the reserve determined using the commissioners reserve valuation method prescribed in paragraph (3) of this subdivision.
(3) Commissioners reserve valuation method for policies with nonlevel premiums and/or nonlevel death benefits.
1. (i) Except as otherwise provided in section 4218 of the Insurance Law, reserves according to the commissioners reserve valuation method for policies with nonlevel benefits and/or nonlevel premiums shall be the excess, if any, of the present value, at the date of valuation, of future guaranteed life insurance and endowment benefits provided for by such policies over the then present value of any future modified net premiums therefor. The modified net premiums shall be determined in accordance with the remainder of this paragraph.
2. (ii) The modified net premiums for the first segment shall be such uniform percentage of the respective guaranteed gross premiums within the first segment that the present value, at the date of issue of the policy, of the modified net premiums in the first segment shall be equal to the sum of the then present value of guaranteed life insurance and endowment benefits provided for in the first segment plus the present value of any unusual guaranteed cash value occurring at the end of the segment less any unusual guaranteed cash value occurring at the start of the segment, plus the excess of clause (a) over clause (b) of this subparagraph, as follows:
  1. (a) A net level premium equal to the present value, at the date of issue, of such benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of the greater of:
    1. (1) an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due; or
    2. (2) an annuity of the guaranteed gross premium payable on the first and each subsequent anniversary within the first segment on which a premium falls due, divided by the guaranteed gross premium payable at issue; provided, however, that such net level annual premium shall not exceed the net level annual premium on the 19-year premium whole life plan insurance of the same amount at an age one year higher than the age at issue of the policy.
  2. (b) A net one-year term premium for such benefits provided for in the first policy year.
3. (iii) The modified net premiums for the second and subsequent segments shall be calculated by the net level premium method; that is, they shall be such uniform percentage of the respective guaranteed gross premiums within the particular segment that the present value of modified net premiums as of the beginning of the segment shall equal the present value of guaranteed life insurance and endowment benefits for the segment.
4. (iv) At the option of the insurer, in calculating modified net premiums in accordance with subparagraphs (ii) and (iii) of this paragraph, the adjustment in either clause (a) or (b) of this subparagraph may be made:
  1. (a) treat the basic unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the basic unitary reserve, if greater than zero, applicable at the beginning of each segment (other than the first segment) from the present value of guaranteed life insurance and endowment benefits for such segment; and
  2. (b) treat the guaranteed cash value, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the guaranteed cash value, if greater than zero, applicable at the beginning of each segment (other than the first segment) from the present value of guaranteed life insurance and endowment benefits for such segment.
(4) The special optional minimum mortality standard for basic reserves as defined in section 98.4(a)(2)-(3) of this Part, may only be used for determining valuation mortality rates for the first segment. Valuation mortality rates for the second and later segments must be obtained from:
1. (i) the 1980 CSO tables without 10-year select mortality factors; or
2. (ii) if the first segment is less than 10 years, the 1980 CSO tables with 10-year select mortality factors may be used through the end of the 10th policy year.
(5) Unitary reserves must be determined using the same valuation interest rate and the same valuation mortality rates as used for determining segmented reserves.
(6) The interest rate used in the present value calculations for any policy shall not exceed the maximum valuation interest rate.
(7) For a varying premium term life insurance policy issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if optionally elected under subparagraph (1)(iii) of this subdivision, basic reserves for a life insurance policy with non-level premiums or non-level death benefits shall be the greater of the unitary reserves or the segmented reserves for varying premium term life insurance prescribed in paragraph (8) of this subdivision.
(8) Segmented reserves for varying premium term life insurance means the excess, if any, of the present value, at the date of valuation, of all future guaranteed life insurance benefits to the mandatory expiry date of the policy over the present value of all future modified net premiums to such date. The length of each segment shall be determined at issue by the Contract Segmentation Method as described in section 98.5 of this Part. All present values shall be calculated using the same mortality and interest rates that were used in applying the Contract Segmentation Method. The modified net premiums within each segment of a policy shall be a uniform percentage of the respective gross premiums within such segment. The segmented reserve for varying premium term life insurance shall not be less than the reserve determined using the commissioners reserve valuation method for varying premium term life insurance prescribed in paragraph (9) of this subdivision.
(9) Commissioners reserve valuation method for varying premium term life insurance.
1. (i) Except as otherwise provided in Insurance Law section 4218, reserves according to the commissioners reserve valuation method for varying premium term life insurance shall be the excess, if any, of the present value, at the date of valuation, of future guaranteed life insurance benefits provided for by such policies over the then-present value of any future modified net premiums therefor. The modified net premiums shall be determined in accordance with the remainder of this paragraph.
2. (ii) The modified net premiums for the first segment shall be such uniform percentage of the respective guaranteed gross premiums within the first segment that the present value, at the date of issue of the policy, of the modified net premiums in the first segment shall be equal to the sum of the then-present value of guaranteed life insurance benefits provided for in the first segment, plus clause (a) plus clause (b) minus clause (c) minus clause (d) of this subparagraph, as follows:
  1. (a) net level premium equal to the present value, at the date of issue, of such benefits provided for in the first segment after the second policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the second and each subsequent anniversary within the first segment on which a premium falls due;
  2. (b) the present value at issue of the net level premium calculated in clause (a) of this subparagraph discounted from the beginning of policy year two;
  3. (c) a net one year term premium for such benefits provided for in the first policy year; and
  4. (d) the present value at issue of the net one year term premium for such benefits provided for in the second policy year.
3. (iii) The modified net premiums for the second and subsequent segments shall be calculated by the net level premium method; that is, they shall be such uniform percentage of the respective guaranteed gross premiums within the particular segment that the present value of modified net premiums as of the beginning of the segment shall equal the present value of guaranteed life insurance benefits for the segment.
(10) An insurer may use the select and ultimate mortality rates in the 2001 CSO Mortality Table and the 2001 CSO Preferred Class Structure Mortality Table only for the first segment. An insurer shall use the ultimate mortality rates in the 2001 CSO Mortality Table and the 2001 CSO Preferred Class Structure Mortality Table for second and later segments.
(11) An insurer shall determine unitary reserves using the same valuation interest rate and the same valuation mortality rates as used for determining segmented reserves for varying premium term life insurance.
(12) The interest rate used in the present value calculations for any policy shall not exceed the maximum valuation interest rate.
1. (i) Except as provided in subparagraph (ii) of this paragraph, this paragraph shall apply to any policy for which the gross premium at any future duration is less than the corresponding modified net premium calculated on the basis of the commissioners reserve valuation method using the method (unitary or segmented) that produces the greater basic reserve and using the maximum allowable valuation interest rate and the minimum mortality standards allowable for deficiency reserves.
2. (ii) For a policy of varying premium term life insurance issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if optionally elected under subparagraph (a)(1)(iii) of this section, this paragraph shall apply to any policy for which the gross premium at any future duration is less than the corresponding modified net premium calculated on the basis of the commissioners reserve valuation method for varying premium term life insurance, as specified in paragraph (a)(9) of this section.
(b) Deficiency reserves.
(1)
(2) Deficiency reserves, if any, shall be calculated for each policy as the excess of quantity A over basic reserves, where quantity A shall be determined by recalculating basic reserves using the commissioners reserve valuation method and, for varying premium term life insurance issued on or after January 1, 2015 and prior to January 1, 2017, or on or after January 1, 2015 and prior to January 1, 2020 if optionally elected under subparagraph (a)(1)(iii) of this section, the commissioners reserve valuation method for varying premium term life insurance, as specified in paragraph (a)(9) of this section, and using the maximum allowable valuation interest rate and the minimum mortality standard allowable for deficiency reserves and replacing the modified net premium by the gross premium for the policy for each contract year for which the modified net premium exceeds the gross premium. The quantity A should be calculated on a unitary basis if basic reserves are unitary, and on a segmented basis if basic reserves are segmented. If unitary and segmented basic reserves are equal, deficiency reserves should be calculated on a segmented basis. When deficiency reserves are calculated on a segmented basis the length of each segment for quantity A segmented reserves shall equal the length of the corresponding segment for basic segmented reserves. Quantity A segmented reserves shall reflect benefits and premiums in the current segment and all future segments.
(3) The following optional provision applies to policies issued after the relevant date of section 98.2(d) of this Part but before January 1, 2000. If and only if the length of the first segment for the basic segmented reserves, as determined by the contract segmentation method, is not greater than five years, then, for the first segment only, gross premiums payable in the first segment need not be substituted for modified net premiums in calculating quantity A segmented reserves or quantity A unitary reserves even if such gross premiums are less than the corresponding modified net premiums. Gross premiums payable in the second and later segments must be substituted for modified net premiums in calculating quantity A if such gross premiums are less than the corresponding modified net premiums.
(4) The special optional minimum mortality standard for deficiency reserves as defined in section 98.4(b)(4)-(5) of this Part may only be used for determining valuation mortality rates for the first segment. Valuation mortality rates for the second and later segments must be obtained from:
1. (i) the 1980 CSO tables without 10-year select mortality factors; or
2. (ii) if the first segment is less than 10 years, the 1980 CSO Tables with 10-year select mortality factors may be used through the end of the 10th policy year.
(c) Where the conditions of section 4217(c)(6)(B) of the Insurance Law (pertaining to a special endowment and/or cash surrender benefit) apply, reserves shall not be less than the reserves determined in accordance with such section.
1. (1) at issue, the insured is age 24 or younger;
2. (2) until the insured reaches the end of the juvenile period:
  1. (i) both the initial current and gross premium scales and death benefits are level; and
  2. (ii) there are no cash surrender values;
3. (3) after the end of the juvenile period:
  1. (i) both the initial current and gross premium scales are level for the remainder of the premium paying period; and
  2. (ii) death benefits are level for the remainder of the life of the policy; and
4. (4) the juvenile period ends at age 25 or earlier.
  (e) Exemption from 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:
5. (1) the policy consists of a series of n-year periods (including the first period and 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 10 years and less than twice the size of the earlier n-year periods, and, for each n-year period, the premium rate (on both the initial current gross premium scale and the guaranteed gross premium scale) is level;
6. (2) the guaranteed gross premium in all n-year periods is not less than the corresponding modified net premium calculated based on the 1980 CSO table with or without 10-year select mortality factors; and
7. (3) there are no cash surrender values in any policy year.
(d) 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:

(a) Basic reserves.