Sec. 53-1.3. Definitions

For purposes of this Part:

(a) Actuarial Standards Board means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

(b) Cash dividend means the current illustrated dividend which can be applied toward payment of the gross premium or paid in cash.

(c) Cash value or cash surrender value, as it applies to participating life insurance or non-participating life insurance other than universal life insurance or variable life insurance, means at the end of any policy year, assuming required or illustrative premiums are paid to such time, the sum of the guaranteed or tabular cash value plus the value of any dividends, if any, less any indebtedness.

(d) Contract means any individual immediate annuity contract, individual deferred annuity contract, fraternal benefit immediate annuity certificate, fraternal benefit deferred annuity certificate, individual funding agreement or group deferred annuity certificate subject to sections 3219 and 4223 of the Insurance Law.

(e) Contract premium means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(f) Contract surrender value means the contract value less the surrender charge and any indebtedness.

(g) Contract value, as it applies to annuity contracts, annuity certificates and funding agreements, means the gross consideration paid less any expense, mortality and administrative charges accumulated at the contract's credited interest rate.

(h) Currently payable scale means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days.

(i) Disciplined current scale means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards:

(1) are consistent with all provisions of this Part;

(2) limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(3) do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(4) do not permit assumed expenses to be less than minimum assumed expenses.

(j) Equivalent level death benefit of a policy or term life insurance rider means the amount calculated as follows:

(1) Accumulate the guaranteed amount payable upon death, regardless of the cause of death, at the beginning of each policy year for 10 and 20 years at five percent interest compounded annually to the end of the 10th and 20th policy years respectively.

(2) Divide each accumulation of paragraph (1) of this subdivision by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in paragraph (1) of this subdivision over the respective periods stipulated in paragraph (1) of this subdivision. If the period is 10 years, the factor is 13.207 and if the period is 20 years, the factor is 34.719.

(k) Generic name means a short title descriptive of the policy being illustrated such as “whole life,” “term life” or “flexible premium adjustable life.”

(l) Guaranteed elements means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.

(m) Illustrated scale means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policyowner than the lesser of:

(1) the disciplined current scale; or

(2) the currently payable scale.

(n) Illustration means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three types defined below:

(1) Basic illustration means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.

(2) Supplemental illustration means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this Part, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.

(3) In force illustration means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(o) Illustration actuary means an actuary meeting the requirements of section 53-3.7(c) of this Part who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.

(p) Indeterminate premium policy means any life insurance policy described in section 4231(g)(1)(D) of the Insurance Law.

(q) Initial interest rate means the rate in effect when the policy was issued.

(r) Lapse-supported illustration means an illustration of a policy form failing the test of self- supporting as defined in this Subpart, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter.

(s) Median scale means an insurer's illustrated scale used but with the non-guaranteed elements reduced as follows:

(1) dividends at 50 percent of the dividends contained in the illustrated scale used;

(2) non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(3) all non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

(t) Minimum assumed expenses means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from fully allocated expenses, marginal expenses and a generally recognized expense table approved by the superintendent based on fully allocated expenses representing a significant portion of insurance companies. Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

(u) Non-guaranteed elements means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.

(v) Non-term group life means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(1) every plan of coverage was selected by the employer or other group representative;

(2) some portion of the premium is paid by the group or through payroll deduction; and

(3) group underwriting or simplified underwriting is used.

(w) Policy means any life insurance policy issued by a life insurer, any life insurance certificate issued by a fraternal benefit society, or any life insurance policy issued by the life insurance department of a savings bank, including non-term group life insurance policies and other group life insurance policies marketed or sold using illustrations.

(x) Policyowner means the owner named in the policy or the certificateholder in the case of a group policy.

(y) Policy values means the accumulation or account value of a life insurance policy subject to section 4232(b) and, in respect to non-section 4232(b) life insurance policies, such term shall mean the cash value of the policy and any dividend standing to the credit of a participating policy.

(z) Premium outlay means the amount of premium assumed to be paid by the policyowner or other premium payer out-of-pocket.

(aa) Self-supporting illustration means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policyowner value available. For this purpose, policyowner value will include cash surrender values and any other illustrated benefit amounts available at the policyowner's election.

(ab) Total death benefit, as it applies to participating life insurance, means the sum of the death benefit provided by the policy, riders attached thereto, and the death benefits purchased by dividends.

(ac) Producer means an insurance agent or an insurance broker.