Sec. 425.068. RESERVE COMPUTATION: GROSS PREMIUM CHARGED LESS THAN VALUATION NET PREMIUM. (a) If in a contract year the gross premium charged by a life insurance company on a policy or contract is less than the valuation net premium for the policy or contract computed by the method used in computing the reserve on the policy or contract but using the minimum valuation mortality standards and interest rate, the minimum reserve required for the policy or contract is the greater of:
(1) the reserve computed according to the mortality table, interest rate, and method actually used for the policy or contract; or
(2) the reserve computed by the method actually used for the policy or contract but using the minimum valuation mortality standards and interest rate and replacing the valuation net premium with the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.
(b) The minimum valuation mortality standards and interest rate under Subsection (a) are the standards and rate provided by Sections 425.058, 425.061, 425.062, and 425.063.
(c) This subsection applies only to a life insurance policy issued on or after January 1, 1985, for which the gross premium for the first policy year exceeds the gross premium for the second policy year, for which a comparable additional benefit is not provided in the first year for the excess premium, and that provides an endowment benefit, a cash surrender value, or a combination of an endowment benefit and cash surrender value, in an amount greater than the excess premium. For a policy to which this subsection applies, Subsections (a) and (b) shall be applied as if the method actually used in computing the reserve for the policy were the method described in Section 425.064, ignoring Section 425.064(c). The minimum reserve at each policy anniversary is the greater of:
(1) the minimum reserve computed in accordance with Section 425.064, including Section 425.064(c); or
(2) the minimum reserve computed in accordance with this section.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017), Sec. 1, eff. April 1, 2007.
Structure Texas Statutes
Title 4 - Regulation of Solvency
Subtitle B - Reserves and Investments
Chapter 425 - Reserves and Investments for Life Insurance Companies and Related Entities
Subchapter B. Standard Valuation Law
Section 425.054. Actuarial Opinion of Reserves Issued Before Operative Date of Valuation Manual
Section 425.0545. Actuarial Opinion of Reserves After Operative Date of Valuation Manual
Section 425.055. Supporting Memorandum for Actuarial Opinion
Section 425.056. Limitation on Liability for Actuarial Opinion
Section 425.057. Disciplinary Action: Company or Person Certifying Opinion
Section 425.058. Computation of Minimum Standard: General Rule
Section 425.059. Computation of Minimum Standard for Certain Annuities and Pure Endowment Contracts
Section 425.060. Applicability of Calendar Year Statutory Valuation Interest Rates
Section 425.061. Computation of Calendar Year Statutory Valuation Interest Rate: General Rule
Section 425.062. Weighting Factors
Section 425.063. Reference Interest Rate
Section 425.064. Commissioners Reserve Valuation Method for Life Insurance and Endowment Benefits
Section 425.066. Minimum Aggregate Reserves
Section 425.067. Optional Reserve Computations
Section 425.068. Reserve Computation: Gross Premium Charged Less Than Valuation Net Premium
Section 425.069. Reserve Computation: Indeterminate Premium Plans and Certain Other Plans
Section 425.070. Computation of Reserve for Certain Policies by Calendar Year of Issue
Section 425.071. Lapse Rates in Minimum Standard of Valuation
Section 425.072. Minimum Standard for Accident and Health Insurance Contracts
Section 425.074. Requirements of a Principle-Based Valuation