The life insurance surrender cost index shall be calculated as follows:

1. (1) Determine any guaranteed cash surrender value available at the end of the tenth and twentieth policy years;
2. (2) For participating policies, add any terminal dividend payable upon surrender to the accumulation of the annual cash dividends at 5 percent interest compounded annually to the end of the period selected and add this sum to the amount determined in subdivision 20:06:10:24(1).
3. (3) Divide the result of subdivision 20:06:10:24(2) {subdivision 20:06:10:24(1) for guaranteed cost policies} by an interest factor that converts it into an equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in subdivision 20:06:10:24(2) {subdivision 20:06:10:24(1) for guaranteed cost policies} over 10 to 20 years. If the period is 10 years, the factor is 13.207 and if the period is 20 years, the factor is 34.719;
4. (4) Determine the equivalent level premium by accumulating each annual premium payable for the basic policy or rider at 5 percent interest compounded annually to the end of 10 or 20 years and dividing the results by 13.207 or 34.719, respectively. This amount is the annual premium payable for a level premium plan;
5. (5) Subtract the result of subdivision 20:06:10:24(3) from subdivision 20:06:10:24(4); and
6. (6) Divide the results of subdivision 20:06:10:24(5) by the number of thousands of the equivalent level death benefit to arrive at the life insurance surrender cost index.

Source: 38 SDR 116, effective January 10, 2012.

General Authority: SDCL 58-33A-7.

Law Implemented: SDCL 58-33-5 , 58-33-6.