623.06(2a)(c)
(c) For all annuities and pure endowments purchased prior to November 8, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts—the 1971 group annuity mortality table, or any modification of this table approved by the commissioner, and 6% interest.
623.06(2a)(d)
(d) For all annuities and pure endowments purchased on or after November 8, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits in those contracts, the 1971 group annuity mortality table or any group annuity mortality table adopted after 1980 by the national association of insurance commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those annuities and pure endowments, or any modification of either table approved by the commissioner, and 7.5% interest.
623.06(2b)
(2b) After June 19, 1974, any company may file with the commissioner a written notice of its election to comply with
sub. (2a) after a specified date before January 1, 1979, which shall be the operative date of
sub. (2a) for such company, but a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of
sub. (2a) for such company shall be January 1, 1979.
623.06(2m)(a)1.
1. "Change in fund basis" means a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under an annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.
623.06(2m)(a)2.a.
a. For life insurance, the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates, nonforfeiture values or both which are guaranteed in the original policy.
623.06(2m)(a)2.b.
b. For annuities and guaranteed interest contracts with cash settlement options, the number of years for which the contract guarantees interest rates in excess of the calendar year valuation interest rate for life insurance policies with a guarantee duration of more than 20 years.
623.06(2m)(a)2.c.
c. For annuities and guaranteed interest contracts without cash settlement options, the number of years from the date of issue or date of purchase to the date annuity or guaranteed interest benefits are scheduled to begin.
623.06(2m)(a)3.
3. "I" means the applicable calendar year valuation interest rate determined under
par. (c), rounded to the nearest 0.25%.
623.06(2m)(a)4.
4. "Issue year basis" means a valuation basis under which the interest rate used to determine the minimum valuation standard for the full duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract.
623.06(2m)(a)5.
5. "Moody's monthly average" means the corporate bond yield average (monthly average corporates), as published by Moody's investors service, inc.
623.06(2m)(a)6.a.
a. Withdraw funds with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company;
623.06(2m)(a)6.b.
b. Withdraw funds without adjustment in instalments over 5 years or more;
623.06(2m)(a)7.
7. "Plan type B" means that a policyholder is subject to any of
subd. 6. a.,
b. or
d. At the end of the interest rate guarantee, funds may be withdrawn without the adjustment under
subd. 6. a. in a single sum or instalments over less than 5 years.
623.06(2m)(a)8.
8. "Plan type C" means a policyholder may withdraw funds before the end of the interest rate guarantee in a single sum or instalments over less than 5 years without the adjustment under
subd. 6. a. or subject to a fixed surrender charge stipulated in the contract as a percentage of the fund.
623.06(2m)(a)9.
9. "R" means the applicable reference interest rate determined under
par. (f).
623.06(2m)(b)
(b) Except as provided in
par. (d), the formulas under
par. (c) shall be used in determining the minimum standard for the valuation of all of the following:
623.06(2m)(b)2.
2. Individual annuity and pure endowment contracts issued in a calendar year after 1982.
623.06(2m)(b)3.
3. Annuities and pure endowments purchased in a calendar year after 1982 under group annuity and pure endowment contracts.
623.06(2m)(b)4.
4. The net increase in a calendar year after 1982, in amounts held under guaranteed interest contracts.
623.06(2m)(c)1.1. For life insurance, I = 0.03 + W (R1 - 0.03) + W/2 (R2 - 0.09).
623.06(2m)(c)2.
2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options, I = 0.03 + W (R - 0.03).
623.06(2m)(c)3.
3. Except as provided under
subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having guarantee durations greater than 10 years, I = 0.03 + W (R1 - 0.03) W/2 (R2 - 0.09).
623.06(2m)(c)4.
4. Except as provided under
subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having guarantee durations not exceeding 10 years, I = 0.03 + W (R - 0.03).
623.06(2m)(c)5.
5. For annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, I = 0.03 + W (R - 0.03).
623.06(2m)(c)6.
6. For annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, I = 0.03 + W (R - 0.03).
623.06(2m)(d)
(d) Notwithstanding
par. (c) 1., if the calendar year valuation interest rate determined under
par. (c) 1. differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than 0.5%, the calendar year valuation interest rate for those policies is the corresponding actual rate for the immediately preceding calendar year. For purposes of this paragraph, the calendar year valuation interest rate for policies issued in 1980 shall be determined using the reference interest rate for 1979 and shall be determined under this paragraph for subsequent calendar years notwithstanding
s. 632.43 (6m).
623.06(2m)(e)1.b.
b. More than 10 years and not more than 20 years, the weighting factor is 0.45.
623.06(2m)(e)2.
2. For single premium immediate annuities and annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the weighting factor is 0.80.
623.06(2m)(e)3.
3. Except as provided in
subd. 2., for annuities and guaranteed interest contracts valued on an issue year basis and having a guarantee duration of:
623.06(2m)(e)3.a.
a. Not more than 5 years, the weighting factor is 0.80 for plan type A, 0.60 for plan type B and 0.50 for plan type C.
623.06(2m)(e)3.b.
b. More than 5 years and not more than 10 years, the weighting factor is 0.75 for plan type A, 0.60 for plan type B and 0.50 for plan type C.
623.06(2m)(e)3.c.
c. More than 10 years and not more than 20 years, the weighting factor is 0.65 for plan type A, 0.50 for plan type B and 0.45 for plan type C.
623.06(2m)(e)3.d.
d. More than 20 years, the weighting factor is 0.45 for plan type A and 0.35 for plan types B and C.
623.06(2m)(e)4.
4. Except as provided in
subd. 2., for annuities and guaranteed interest contracts valued on a change in fund basis, the weighting factor is that specified under
subd. 3. increased by 0.15 for plan type A, 0.25 for plan type B and 0.05 for plan type C.
623.06(2m)(e)5.
5. Except as provided under
subd. 2., for annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the weighting factor is that specified under
subd. 3. or
4. increased by 0.05 for plan types A, B and C.
623.06(2m)(f)1.1. For life insurance, the reference interest rate is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody's monthly average.
623.06(2m)(f)2.
2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody's monthly average.
623.06(2m)(f)3.
3. Except as provided under
subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having a guarantee duration in excess of 10 years, the reference interest is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's monthly average.
623.06(2m)(f)4.
4. Except as provided under
subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having a guarantee duration of 10 years or less, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's monthly average.
623.06(2m)(f)5.
5. For annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's monthly average.
623.06(2m)(f)6.
6. Except as provided under
subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody's monthly average.
623.06(2m)(g)
(g) If Moody's monthly average is no longer published, or if the national association of insurance commissioners determines that Moody's monthly average is no longer appropriate for the determination of the reference interest rate, an alternative method for determination of the reference interest rate, which is adopted by the national association of insurance commissioners and approved by rule adopted by the commissioner, may be substituted.
623.06(2m)(h)
(h) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on an issue year basis or a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis.
623.06(3)
(3) Except as provided in
subs. (4m) and
(7), 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 shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of
par. (a) over
par. (b), as follows:
623.06(3)(a)
(a) A net level annual premium equal to the present value, at the date of issue, of such 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 such policy on which a premium falls due; provided, that such net level annual premium shall not exceed the net level annual premium on the 19-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy.
623.06(3)(b)
(b) A net one-year term premium for such benefits provided for in the first policy year.
623.06(3m)(a)1.
1. "Assumed ending date" means 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.
623.06(3m)(a)2.
2. "Excess premium" means the amount by which a contract premium in the first policy year exceeds the contract premium in the 2nd policy year.
623.06(3m)(b)
(b) Except as provided under
sub. (7), any life insurance policy issued on or after January 1, 1984, for which no comparable benefit is provided in the first year for an excess premium and which provides an endowment benefit or a cash surrender value or a combination of both 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 is the greater of the reserve on that policy anniversary calculated under
sub. (3) and the reserve on that policy anniversary calculated under
sub. (3) subject to the following computational assumptions:
623.06(3m)(b)2.
2. All present values of benefits and premiums are determined without reference to premiums or benefits provided by the policy after the assumed ending date.
623.06(3m)(b)3.
3. The policy matures on the assumed ending date as an endowment.
623.06(3m)(b)4.
4. The cash surrender value provided on the assumed ending date is an endowment benefit.
623.06(3m)(c)
(c) In making the comparison under
par. (b) the mortality and interest bases stated in
subs. (2) and
(2m) shall be used.
623.06(4)
(4) Reserves according to the commissioners reserve valuation method for the following shall be calculated by a method consistent with the principles of
sub. (3), except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums:
623.06(4)(a)
(a) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums.
623.06(4)(b)
(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 or sole proprietorship, or by an employe organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section
408 of the internal revenue code, as amended.
623.06(4)(c)
(c) Disability and accidental death benefits in all policies and contracts.
623.06(4)(d)
(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.
623.06(4m)
(4m) This subsection applies to all annuity and pure endowment contracts other than 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 or sole proprietorship) or by an employe organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under section 408 of the U.S. internal revenue code, as now or hereafter amended. Reserves according to the commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.
623.06(5)(a)(a) In no event may a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the effective date of this section, be less than the aggregate reserves calculated in accordance with the method set forth in
subs. (3) to
(4m) and
(7) and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies.
623.06(5)(b)
(b) In no event may a company's aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by a qualified actuary in an opinion under
sub. (1m) (b) 1. to be necessary to make adequate provision for the company's obligations under the policies and contracts.
623.06(6)
(6) Reserves for all policies and contracts issued prior to the effective date of this subsection may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to such date. Reserves for any category of policies, contracts or benefits as established by the commissioner, issued on or after the effective date of this subsection, may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein. Any such company that at any time has adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard herein provided may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum herein provided. For the purposes of this subsection, holding any additional reserves that a qualified actuary, in an opinion under
sub. (1m) (b) 1., determined to be necessary to make adequate provision for the company's obligations under the policies and contracts shall not be considered the adoption of a higher standard of valuation.
623.06(7)(a)(a) If in any contract year the gross premium charged by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating its reserve but using the minimum valuation standards of mortality and rate of interest under
subs. (2) and
(2m), the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest under
subs. (2) and
(2m) and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.
623.06(7)(b)1.1. In this paragraph, "excess premium" means the amount by which a gross premium in the first policy year exceeds the gross premium in the 2nd policy year.
623.06(7)(b)2.
2. If a life insurance policy issued on or after January 1, 1984, provides no comparable benefit in the first year for an excess premium and provides an endowment benefit, cash surrender value or both in an amount greater than the excess premium, the minimum reserve at each policy anniversary is the greater of the minimum reserve under
subs. (3) to
(4) and the minimum reserve under
par. (a).
623.06(7)(b)3.
3. For purposes of
par. (a), the method used in calculating the reserve of a policy under
subd. 2. is specified under
subs. (3) to
(4).
623.06(7)(c)
(c) If a plan of life insurance provides for future determination of premiums based on recent estimates of future experience available at the time of the determination, or if the minimum reserves for a plan of life insurance or an annuity cannot be determined under
subs. (3) to
(4m) and this subsection, the commissioner shall by rule adopt a method for determining the minimum reserves for the plan or annuity. A rule adopted under this paragraph shall specify a method consistent with the principles of this section and appropriate in relation to the benefits and pattern of premiums for the plan or annuity.
