§ 10-7-306.1 — Calculation of values - new policies

Colorado § 10-7-306.1

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Life Insurance

Text

(1) (a) This section, in
addition to all other applicable sections of this part 3, shall apply to all policies
issued on or after January 1, 1985. Any cash surrender value available under a policy
in the event of default in a premium payment due on any policy anniversary shall be
in an amount which does not differ, by more than two-tenths of one percent of
either the amount of insurance, if the insurance be uniform in amount, or the
average amount of insurance at the beginning of each of the first ten policy years,
from the sum of:

(I) The greater of zero and the basic cash value specified in this section; and

(II) The present value of any existing paid-up additions less the amount of
any indebtedness to the company under the policy.

(b) The basic cash value shall be equal to the present value, on such
anniversary, of the future guaranteed benefits which would have been provided for
by the policy, excluding any existing paid-up additions and before deduction of any
indebtedness to the company, if there had been no default, less the then present
value of the nonforfeiture factors, corresponding to premiums which would have
fallen due on and after such anniversary. However, the effects on the basic cash
value of supplemental life insurance or annuity benefits or of family coverage, as
described in section 10-7-303 or 10-7-305, whichever is applicable, shall be the
same as are the effects specified in section 10-7-303 or 10-7-305, whichever is
applicable, on the cash surrender values defined in that section. The nonforfeiture
factor for each policy year shall be an amount equal to a percentage of the
adjusted premium for the policy year, as defined in section 10-7-305 or 10-7-305.1,
whichever is applicable.

(c) Except as is required by subsection (2) of this section, such percentage:

(I) Must be the same percentage for each policy year between the second
policy anniversary and the later of:

(A) The fifth policy anniversary; and

(B) The first policy anniversary at which there is available under the policy a
cash surrender value in an amount, before including any paid-up additions and
before deducting any indebtedness, of at least two-tenths of one percent of either
the amount of insurance, if the insurance is uniform in amount, or the average
amount of insurance at the beginning of each of the first ten policy years; and

(II) Must be such that no percentage after the later of the two policy
anniversaries specified in subparagraph (I) of this paragraph (c) may apply to fewer
than five consecutive policy years.

(2) No basic cash value may be less than the value which would be obtained
if the adjusted premiums for the policy, as defined in section 10-7-305 or 10-7-305.1, whichever is applicable, were substituted for the nonforfeiture factors in the
calculation of the basic cash value. All adjusted premiums and present values
referred to in this section shall for a particular policy be calculated on the same
mortality and interest bases as are used in demonstrating the policy's compliance
with the other provisions of this part 3. The cash surrender values referred to in this
section shall include any endowment benefits provided for by the policy.

(3) Any cash surrender value available other than in the event of default in a
premium payment due on a policy anniversary, and the amount of any paid-up
nonforfeiture benefit available under the policy in the event of default in a premium
payment shall be determined in manners consistent with the manners specified for
determining the analogous minimum amounts in sections 10-7-302, 10-7-303, 10-7-304, 10-7-305.1, and 10-7-306. The amounts of any cash surrender values and of
any paid-up nonforfeiture benefits granted in connection with additional benefits
such as those listed in section 10-7-306 shall conform with the principles of this
section.

Legislative History

Source: L. 81: Entire section added, p. 548, � 7, effective July 1.