N.Y. Comp. Codes R. & Regs. tit. 11, § 98.8 – Minimum reserves for variable life insurance policies.

(a) Reserve liabilities for variable life insurance policies shall be established in accordance with provisions of section 4240(d) of the Insurance Law, in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees. The requirements of this section apply to policies issued on and after January 1, 2000 and supersede the requirements of section 54.8 of this Title for such policies.
(b) In addition to the requirements of this subdivision, the requirements of sections 98.4(a)(1)(i), (3)-(5), (b)(5)-(8), (c)-(e), (h)-(i), (l)-(u) and 98.9 of this Part shall apply to variable life insurance policies. Variable universal life insurance policies are also subject to section 98.7 of this Part. In projecting future benefits for determining basic reserves and deficiency reserves for variable universal life products, use the calendar year statutory valuation interest rate for life insurance policies with guarantee durations in excess of 20 years.
(c) The reserve for a variable life insurance policy shall not be less than the greater of:
1. (1) the sum of the reserves required by subdivisions (a), (b) and (d) of this section ignoring paragraph (d)(2) of this section; or
2. (2) the sum of reserves required by subdivisions (a) and (b) of this section ignoring any guaranteed minimum death benefit and the reserves required by subdivision (d) of this section.
(d) Reserves for the guaranteed minimum death benefit for each variable life insurance policy shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer and shall not be less than the greater of the reserves required by paragraph (1) of this subdivision or the reserves required by paragraph (2) of this subdivision:
1. (1) the term cost, if any, covering a period of one full year from the valuation date or, if less, covering the period provided for in the guarantee not otherwise provided for by the reserves held in the separate account assuming an immediate one-third depreciation in the current value of the assets in the separate account followed by a net investment return equal to the assumed investment rate or, if no assumed investment rate is specified in the policy, the calendar year statutory valuation interest rate for life insurance policies with guarantee durations in excess of 20 years; or
2. (2) the attained age level reserve shall be no less than zero and shall equal the residue, as described in subparagraph (i) of this paragraph, of the prior year's “attained age level” reserve on the contract, with any such residue increased or decreased by a payment computed on an attained age basis as described in subparagraph (ii) of this paragraph:
  1. (i) the residue of the prior year's attained age level reserve shall not be less than zero and shall be determined by adding interest at the valuation interest rate to the prior year's reserve, deducting the tabular claims based on the excess, if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of a guarantee, and dividing the net result by the tabular probability of survival. The excess referred to in the preceding sentence shall be based on the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year;
  2. (ii) the payment referred to in this paragraph shall be computed so that the present value of a level payment of such amount each year over the future period for which charges for this risk will be collected under the policy, is equal to (A) minus (B) minus (C), where (A) is the present value of the future guaranteed minimum death benefits, (B) is the present value of the future death benefits that would be payable in the absence of such guarantee, and (C) is any residue, as described in subparagraph (i) of this paragraph, of the prior year's attained age level reserve. The level payment is calculated by dividing the result of (A) minus (B) minus (C) by an annuity of one dollar for the period the premiums or charges are collected, but not beyond the duration the account value would go to zero. If no future charges for this risk will be collected under the contract, the payment shall equal (A) minus (B) minus (C). The amounts of the future death benefits referred to in (B) shall be computed assuming a net investment return of the separate account which may differ from the assumed investment rate or the valuation interest rate but in no event may exceed the maximum interest rate permitted for the valuation of life policies;
3. (3) the valuation interest rate and mortality table used in computing the two minimum reserves described in paragraphs (1) and (2) of this subdivision shall conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserves, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.
(e) Reserves for all fixed incidental insurance benefits and any guarantees associated with variable incidental insurance benefits shall be maintained in the general account, and reserve liabilities for all variable aspects of the variable incidental insurance benefits shall be maintained in a separate account, in amounts determined in accordance with the actuarial procedures appropriate to the benefit.