632.43(6)(a)(a) Except as otherwise provided in
par. (b) or
(c), all adjusted premiums and present values referred to in this section shall for all policies of ordinary insurance be calculated on the basis of the commissioners 1941 standard ordinary mortality table, except that for any category of ordinary insurance issued on female risks adjusted premiums and present values may be calculated according to an age not more than 3 years younger than the actual age of the insured, and such calculations for all policies of industrial insurance shall be made on the basis of the 1941 standard industrial mortality table. All calculations shall be made on the basis of the rate of interest, not exceeding 3.5 percent per year, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may not be more than 130 percent of the rates of mortality according to such applicable table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the commissioner.
632.43(6)(b)
(b) In the case of ordinary policies issued on or after the operative date of this paragraph, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1958 standard ordinary mortality table and the rate of interest, not exceeding 3.5% per year, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that for any category of ordinary insurance issued on female risks adjusted premiums and present values may be calculated according to an age not more than 6 years younger than the actual age of the insured. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1958 extended term insurance table. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the commissioner. After June 14, 1959, any company may file with the commissioner a written notice of its election to comply with the provisions of this paragraph after a specified date before January 1, 1966. After the filing of such notice, then upon such specified date, which shall be the operative date of this paragraph for such company, this paragraph shall become operative with respect to the ordinary policies thereafter issued by such company. If a company makes no such election, the operative date of this paragraph for such company shall be January 1, 1966.
632.43(6)(c)
(c) In the case of industrial policies issued on or after the operative date of this paragraph as defined herein, all adjusted premiums and present values referred to in this section shall be calculated on the basis of the commissioners 1961 standard industrial mortality table and the rate of interest, not exceeding 3.5 percent per year, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; provided, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioners 1961 industrial extended term insurance table, and for insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table of mortality as is specified by the company and approved by the commissioner. After May 19, 1963, any company may file with the commissioner a written notice of its election to comply with this paragraph after a specified date before January 1, 1968. After the filing of such notice, then upon such specified date, which shall be the operative date of this paragraph for such company, this paragraph shall become operative with respect to the industrial policies thereafter issued by such company. If a company makes no such election, the operative date of this paragraph for such company shall be January 1, 1968.
632.43(6)(d)
(d) A rate of interest not exceeding 5.5% per year may be used for ordinary policies or industrial policies, or both, issued on or after June 19, 1974, in lieu of the rate referred to in
pars. (b) and
(c).
632.43(6m)(a)1.
1. "Additional expense allowance" means the sum of the following:
632.43(6m)(a)1.a.
a. One percent of any positive excess of the average amount of insurance at the beginning of each of the first 10 policy years after an unscheduled change in benefits or premiums, over the average amount of insurance before the change at the beginning of each of the first 10 policy years after the next most recent change or date of issue, if there was no previous change.
632.43(6m)(a)1.b.
b. One-hundred twenty-five percent of any positive increase in the nonforfeiture net level premium.
632.43(6m)(a)2.
2. "Date of issue" means the date as of which the rated age of the insured is determined.
632.43(6m)(a)3.
3. "Nonforfeiture interest rate" means 125% of the applicable calendar year valuation interest rate under
s. 623.06 rounded to the nearest 0.25%.
632.43(6m)(a)4.
4. "Nonforfeiture net level premium" means the present value at the date of issue of the guaranteed benefits provided by a policy divided by the present value at the date of issue of an annuity of one per year payable on the date of issue and each policy anniversary on which a premium is due.
632.43(6m)(a)5.
5. "Premiums" do not include amounts payable as extra premiums to cover impairments or special hazards or a uniform annual contract charge or policy fee specified in the policy in the method to be used in calculating cash surrender values and paid-up nonforfeiture benefits.
632.43(6m)(b)
(b) Except as provided under
par. (d), adjusted premiums shall be calculated on an annual basis and shall be such a uniform percentage of the future premiums specified in the policy for each policy year that the present value at the date of issue of the adjusted premiums is equal to the sum of the following:
632.43(6m)(b)1.
1. The present value at the date of issue of the future guaranteed benefits provided by the policy.
632.43(6m)(b)2.
2. One percent of any uniform amount of insurance or one percent of the average amount of insurance at the beginning of each of the first 10 policy years.
632.43(6m)(b)3.
3. One-hundred twenty-five percent of the nonforfeiture net level premium. For purposes of this subdivision, the nonforfeiture net level premium shall not exceed 4% of any uniform amount of insurance or 4% of the average amount of insurance at the beginning of each of the first 10 policy years.
632.43(6m)(c)
(c) For policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums or which provide an option for changes in benefits or premiums other than a change to a new policy:
632.43(6m)(c)1.
1. The adjusted premiums and present values shall at the date of issue be calculated on the assumption that future benefits and premiums do not change and at the time of the change the future adjusted premiums, nonforfeiture net level premiums and present value shall be recalculated on the assumption that future benefits and premiums do not undergo further change.
632.43(6m)(c)2.
2. Except as provided under
par. (d), the recalculated future adjusted premiums for the policy shall be such a uniform percentage of the future premiums specified in the policy for each policy year that the present value at the time of the change of the adjusted premiums is equal to the excess of the sum of the present value at the time of the change of the future guaranteed benefits provided by the policy and any additional expense allowance over any cash surrender value at the time of the change or present value at the time of the change of any paid-up nonforfeiture benefit.
632.43(6m)(c)3.
3. The recalculated nonforfeiture net level premium is equal to the sum of the nonforfeiture net level premium applicable before the change multiplied by the present value of an annuity of one per year payable on each anniversary of the policy on or after the date of the change on which a premium would have fallen due had the change not occurred, and the present value at the time of the change of the increase in future guaranteed benefits provided by the policy, divided by the present value at the time of the change of an annuity of one per year payable on each anniversary of the policy on or after the date of change on which a premium falls due.
632.43(6m)(d)
(d) For a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for the substandard policy may be calculated as if it were issued to provide the higher uniform amounts of insurance on the standard basis.
632.43(6m)(e)
(e) All adjusted premiums and present values under this section shall be calculated on the following bases:
632.43(6m)(e)1.
1. For ordinary insurance policies, the commissioners 1980 standard ordinary mortality table or, at the election of the company for any one or more specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with 10-year select mortality factors.
632.43(6m)(e)2.
2. For industrial insurance policies, the commissioners 1961 standard industrial mortality table.
632.43(6m)(e)3.
3. For policies issued in a calendar year, a rate of interest not exceeding the nonforfeiture interest rate for policies issued in that calendar year, except that:
632.43(6m)(e)3.a.
a. At the option of the company, calculations for all policies issued in a calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate for policies issued in the immediately preceding calendar year.
632.43(6m)(e)3.b.
b. Under any paid-up nonforfeiture benefit or any paid-up dividend addition, any cash surrender value available shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of the paid-up nonforfeiture benefit or paid-up dividend additions.
632.43(6m)(e)3.c.
c. A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit or any paid-up addition on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
632.43(6m)(e)3.d.
d. In calculating the present value of any paid-up term insurance with any accompanying pure endowment offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those in the commissioners 1980 extended term insurance table for policies of ordinary insurance and not more than those in the commissioners 1961 industrial extended term insurance table for policies of industrial insurance.
632.43(6m)(e)3.e.
e. For insurance issued on a substandard basis, the calculation of adjusted premiums and present values may be based on appropriate modifications of those tables.
632.43(6m)(e)3.f.
f. Any ordinary mortality tables adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum nonforfeiture standard, may be substituted for the commissioners 1980 standard ordinary mortality table with or without 10-year select mortality factors or for the commissioners 1980 extended term insurance table.
632.43(6m)(e)3.g.
g. Any industrial mortality tables adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum nonforfeiture standard, may be substituted for the commissioners 1961 standard industrial mortality table or the commissioners 1961 industrial extended term insurance table.
632.43(6m)(f)
(f) Any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values does not require refiling of any other provisions of that policy form.
632.43(6m)(g)
(g) This subsection applies to all policies issued on or after the operative date under
par. (h) and
subs. (4) to
(6) do not apply to policies issued on or after the operative date under
par. (h).
632.43(6m)(h)
(h) After May 1, 1982, any company may file with the commissioner a written notice of its election to comply with this subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for the company. If a company makes no election, the operative date of this subsection for the company is January 1, 1989.
632.43(6t)(a)(a) In this subsection, "plan" means a plan of life insurance:
632.43(6t)(a)1.
1. Providing for premiums based on recent estimates of future experience available on or near a premium due date; or
632.43(6t)(a)2.
2. For which the minimum nonforfeiture values cannot be determined under this section.
632.43(6t)(b)
(b) No plan may be issued in this state unless the commissioner determines that:
632.43(6t)(b)1.
1. The benefits and pattern of premiums do not mislead prospective policyholders or insureds; and
632.43(6t)(b)2.
2. The benefits are substantially as favorable to policyholders and insureds as the minimum benefits required under this section.
632.43(6t)(c)
(c) The commissioner shall by rule adopt a method consistent with the principles of this section for determining the minimum cash surrender values and paid-up nonforfeiture benefits provided by a plan.
632.43(7)
(7) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values under
subs. (2) to
(6m) may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide the additions. Notwithstanding
sub. (2), additional benefits payable in the event of death or dismemberment by accident or accidental means, in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply, as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if the term insurance expires before the child's age is 26, is uniform in amount after the child's age is one, and has not become paid up by reason of the death of a parent of the child, and as other policy benefits additional to life insurance and endowment benefits, and premiums for all of these additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and none of these additional benefits may be required to be included in any paid-up nonforfeiture benefits.
632.43(7m)(a)(a) This subsection applies to all policies issued on or after January 1, 1984. 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 0.2% of any uniform amount of insurance or 0.2% of the average amount of insurance at the beginning of each of the first 10 policy years, from the sum of the following:
632.43(7m)(a)1.
1. The greater of zero and the basic cash value under
par. (b) on the policy anniversary.
632.43(7m)(a)2.
2. The present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.
632.43(7m)(b)
(b) The basic cash value is the present value 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 company, if there had been no default, less the present value on the policy anniversary of the nonforfeiture factors under
par. (c) corresponding to premiums which would have fallen due on and after the policy anniversary. The effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage under
subs. (2) or
(4) to
(6) shall be the same as the effects under
subs. (2) or
(4) to
(6) on the cash surrender values under those subsections.
632.43(7m)(c)
(c) The nonforfeiture factor for each policy year is an amount equal to a percentage of the adjusted premium under
subs. (4) to
(6m) for the policy year. Except as provided under
par. (d), the percentage:
632.43(7m)(c)1.
1. Must be the same for each policy year between the 2nd policy anniversary and the later of the 5th policy anniversary and the first policy anniversary at which there is available a cash surrender value, before including any paid-up additions and before deducting any indebtedness, of at least 0.2% of any uniform amount of insurance or 0.2% of the average amount of insurance at the beginning of each of the first 10 policy years; and
632.43(7m)(c)2.
2. Must apply to at least 5 consecutive policy years after the latest of the policy anniversaries under
subd. 1.
632.43(7m)(d)
(d) No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy under
sub. (6m) were substituted for the nonforfeiture factors in the calculation of the basic cash value.
632.43(7m)(e)
(e) All adjusted premiums and present values under this subsection shall be calculated on the mortality and interest bases applicable to the policy under this section. The cash surrender values under this subsection include any endowment benefits provided by the policy.
632.43(7m)(f)
(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 in the event of default in a premium payment shall be determined by methods consistent with the methods under
subs. (1) to
(3),
(6m) and
(7). The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits the same or similar to those under
sub. (7) shall conform to the principles of this subsection.
632.43(8)(a)5.
5. Term policy of uniform amount which provides no guaranteed nonforfeiture or endowment benefits of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy.
632.43(8)(a)6.
6. Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated under
subs. (4) to
(6m) is less than the adjusted premium calculated under
subs. (4) to
(6m) on a term policy of uniform amount providing no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy.
632.43(8)(a)7.
7. Policy providing no guaranteed nonforfeiture or endowment benefits, for which any cash surrender value or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated under
subs. (2) to
(6m), does not exceed 2.5% of the amount of insurance at the beginning of the same policy year.
632.43(8)(a)8.
8. Policy delivered outside this state through an agent or other representative of the company issuing the policy.
632.43(8)(b)
(b) For purposes of this subsection, the age at expiry for a joint term life insurance policy is the age at expiry of the oldest life.
632.43(9)
(9) After May 22, 1943, any company may file with the commissioner a written notice of its intention to comply with the provisions hereof after a specified date before January 1, 1948. After the filing of such notice, then upon such specified date, this section shall become fully effective with respect to policies thereafter issued by such company and all previously existing provisions of law inconsistent with this section shall become inapplicable to such policies. Except as herein provided, this section shall become effective January 1, 1948, and shall from and after said date supersede all provisions of law inconsistent or in conflict therewith.
632.435
632.435
Standard nonforfeiture law for individual deferred annuities. 632.435(1)(1) No contract of annuity shall be delivered or issued for delivery in this state unless it contains in substance the following provisions or corresponding provisions which in the opinion of the commissioner are at least as favorable to the contract holder:
632.435(1)(a)
(a) Upon cessation of payment of considerations under a contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity on a plan stipulated in the contract of such value as is specified in
subs. (5) to
(8) and
(10).
632.435(1)(b)
(b) If a contract provides for a lump sum settlement at maturity or at any other time, upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of any paid-up annuity benefit a cash surrender benefit of such amount as is specified in
subs. (5),
(6),
(8), and
(10). The company may reserve the right to defer the payment of such cash surrender benefit, for a period not exceeding 6 months after demand therefor with surrender of the contract, if the company receives written approval from the commissioner upon the company's written request, which shall address the deferral's necessity and equitability to all policyholders.
632.435(1)(c)
(c) A statement of the mortality table, if any, and interest rates used in calculating any minimum paid-up annuity, cash surrender or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of such benefits.
632.435(1)(d)
(d) A statement that any paid-up annuity, cash surrender or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which such benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract or any prior withdrawals from or partial surrenders of the contract.
632.435(1)(e)
(e) Notwithstanding the requirements of this subsection, any deferred annuity contract may provide that if no considerations have been received under a contract for a period of 2 years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from considerations paid prior to such period would be less than $20 monthly, the company may terminate such contract by payment in cash of the then present value of such portion of the paid-up annuity benefit, calculated on the basis of the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by such payment shall be relieved of any further obligation under such contract.
632.435(4)(a)(a) In this subsection, "net considerations" means, for a given contract year, an amount equal to 87.5 percent of the gross considerations credited to the contract during that contract year.
632.435(4)(b)
(b) The minimum nonforfeiture amount at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time, at one or more rates of interest as indicated in
pars. (c) to
(e), of the net considerations paid prior to such time, decreased by the sum of all of the following:
632.435(4)(b)1.
1. Any prior withdrawals from or partial surrenders of the contract accumulated at one or more rates of interest as indicated in
pars. (c) to
(e).
632.435(4)(b)2.
2. An annual contract charge of $50, accumulated at one or more rates of interest as indicated in
pars. (c) to
(e).
632.435(4)(b)3.
3. Any premium tax paid by the company for the contract, accumulated at one or more rates of interest as indicated in
pars. (c) to
(e).
632.435(4)(b)4.
4. The amount of any indebtedness to the company on the contract, including interest due and accrued.
632.435(4)(c)
(c) The interest rate used to determine minimum nonforfeiture amounts shall be an annual rate of interest that is the lower of 3 percent and the higher of either of the following:
632.435(4)(c)1.
1. The 5-year constant maturity treasury rate reported by the federal reserve board as of a date, or average over a period, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under
par. (d), less 125 basis points or, if the contract provides substantive participation in an equity indexed benefit during the period or term, the contract may increase the reduction by up to an additional 100 basis points to reflect the value of the equity index benefit, and rounded to the nearest one-twentieth of 1 percent.
632.435(4)(d)
(d) The interest rate determined under
par. (c) shall apply for an initial period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the 5-year constant maturity treasury rate to be used at each redetermination date. The method for determining the interest rate under
par. (c) shall be specified in the contract if the interest rate will be reset.
632.435(4)(e)
(e) The present value at the contract issue date, and at each redetermination date, of the additional reduction under
par. (c) 1. for substantive participation in an equity index benefit may not exceed the market value of the benefit. The commissioner may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. The commissioner may disallow or limit the additional reduction if the commissioner determines that the demonstration is unacceptable.
