§ 26.1-35-05 — Reserve valuation method - Life insurance and endowment benefits

1. Except as otherwise provided in sections 26.1-35-06, 26.1-35-09, and 26.1-35-11,
reserves according to the commissioners reserve valuation method, for the life
insurance and endowment benefits of policies providing for a uniform amount of
insurance and requiring the payment of uniform premiums, must be the excess, if any,
of the present value, at the date of valuation, of the future guaranteed benefits
provided for by those policies, over the then present value of any future modified net
premiums for the policies. The modified net premiums for a policy must be the uniform
percentage of the respective contract premiums for the benefits that the present value,
at the date of issue of the policy, of all the modified net premiums equals the sum of
the present value of the benefits provided by the policy and the excess of subdivision a
over subdivision b as follows:
a. A net level annual premium 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 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 may not exceed the net level annual premium on the
nineteen-year premium whole life plan for insurance of the same amount at an
age one year higher than the age at issue of the policy.
b. A net one-year term premium for the benefits provided in the first policy year.
2. For a life insurance policy issued after December 31, 1986, for which the contract
premium in the first policy year exceeds that of the second year and for which no
comparable additional benefit is provided in the first year for the excess and which
provides an endowment benefit or a cash surrender value or a combination thereof in
an amount greater than the excess premium, the reserve according to the
commissioners reserve valuation method as of any policy anniversary occurring on or
before the assumed ending date, which is defined as the first policy anniversary on
which the sum of any endowment benefit and any cash surrender value then available
is greater than the excess premium, except as otherwise provided in section
26.1-35-09, must be the greater of the reserve as of the policy anniversary calculated
as described in this section and the reserve as of the policy anniversary calculated as
described in this section, but with the value defined in subsection 1 being reduced by
fifteen percent of the amount of such excess first year premium; all present values of
benefits and premiums being determined without reference to premiums or benefits
provided for by the policy after the assumed ending date; the policy being assumed to
mature on such date as an endowment; and the cash surrender value provided on that
date being considered as an endowment benefit. In making the above comparison, the
mortality and interest bases stated in sections 26.1-35-02 and 26.1-35-04 must be
used.
3. Reserves according to the commissioners reserve valuation method must be
calculated by a method consistent with the principles as described in this section for:
a. Life insurance policies providing a varying amount of insurance or requiring the
payment of varying premiums;
b. Group annuity and pure endowment contracts purchased under a retirement plan
or plan of deferred compensation, established or maintained by an employer,

including a partnership, limited liability company, or sole proprietorship, or by an
employee organization, or by both, other than a plan providing individual
retirement accounts or individual retirement annuities under section 408 of the
federal Internal Revenue Code, as amended;
c. Disability and accidental death benefits in all policies and contracts; and
d. All other benefits, except life insurance and endowment benefits in life insurance
policies and benefits provided by all other annuity and pure endowment contracts.