§ 27-4.3-8. Consistency of progression of cash surrender values with increasing policy duration.
(a) This section, in addition to all other applicable sections of this chapter, shall
apply to all policies issued on or after January 1, 1994. Any cash surrender value
available under the 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 (.2%) 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 (10) policy years, from the sum of: (1) The greater of zero (0) and the basic
cash value specified in subsection (b); and (2) The present value of any existing
paid-up additions less the amount of any indebtedness to the insurance company under
the policy.
(b) The basic cash value shall be equal to the present value, on the 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 insurance
company, if there had been no default, less the then present value of the nonforfeiture
factors, as defined in this section, corresponding to premiums which would have fallen
due on and after the anniversary; provided, that the effects on the basic cash value
of supplemental life insurance or annuity benefits or of family coverage, as described
in § 27-4.3-3 or 27-4.3-5, whichever is applicable, shall be the same as are the effects specified in § 27-4.3-3 or 27-4.3-5, whichever is applicable, on the cash surrender values defined in that section.
(c) 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 § 27-4.3-5. Except as is required in this section, the percentage:
(1) Must be the same percentage for each policy year between the second policy anniversary
and the later of: (i) The fifth policy anniversary; and (ii) 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 (.2%) 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 (10) policy years; and
(2) Must be such that no percentage after the later of the two policy anniversaries specified
in subsection (c)(1) may apply to fewer than five (5) consecutive policy years.
(d) No basic cash value may be less than the value which would be obtained if the adjusted
premiums for the policy, as defined in § 27-4.3-5, were substituted for the nonforfeiture factors in the calculation of the basic cash
value.
(e) 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 sections of this chapter. The cash surrender
values referred to in this section shall include any endowment benefits provided for
by the policy.
(f) 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 §§ 27-4.3-2 — 27-4.3-5 and 27-4.3-7. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits
granted in connection with additional benefits such as those listed subdivisions (1)
— (6) of § 27-4.3-7 shall conform with the principles of this section.