Ins 2.80(5)(h)2. 2. The net premium for a given year during the n-year period is equal to the product of the net-to-gross ratio and the respective gross premium.

Ins 2.80(5)(h)3. 3. The net-to-gross ratio is equal to the present value, at the beginning of the n-year period, of death benefits payable during the n-year period plus the present value, at the beginning of the n-year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n-year period divided by the present value, at the beginning of the n-year period, of the scheduled gross premiums payable during the n-year period.

Ins 2.80(5)(i) (i) For purposes of pars. (g) and (h), a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year’s guaranteed cash surrender value by more than the sum of all of the following:

Ins 2.80(5)(i)1. 1. One hundred ten percent of the scheduled gross premium for that year.

Ins 2.80(5)(i)2. 2. One hundred ten percent of one year’s accrued interest on the sum of the prior year’s guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values.

Ins 2.80(5)(i)3. 3. Five percent of the first policy year surrender charge, if any.

Ins 2.80(5)(j) (j) At the option of the insurer, the following approach for reserves on yearly renewable term reinsurance may be used:

Ins 2.80(5)(j)1. 1. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

Ins 2.80(5)(j)2. 2. Basic reserves may not be less than the tabular cost of insurance for the appropriate period, as defined in par. (f).

Ins 2.80(5)(j)3. 3. For deficiency reserves for each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium. Deficiency reserves may not be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with this subdivision.

Ins 2.80(5)(j)4. 4. For purposes of this paragraph, the calculations use the maximum valuation interest rate and the 1980 CSO valuation table with or without 10-year select mortality factors.

Ins 2.80(5)(j)5. 5. A reinsurance agreement shall be considered yearly renewable term reinsurance for purposes of this paragraph if only the mortality risk is reinsured.

Ins 2.80(5)(j)6. 6. If the assuming company chooses this optional exemption, The ceding company’s reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

Ins 2.80 Note Note: Traditional reserves for yearly renewable term reinsurance, the calculations of which par. (j) describes, are already adequate and sufficient. However, without this option, yearly renewable term reinsurance would be subject to the more complex segmentation calculations.

Ins 2.80(5)(k) (k) At the option of the insurer, the following approach for reserves for attained-age-based yearly renewable term life insurance policies may be used:

Ins 2.80(5)(k)1. 1. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

Ins 2.80(5)(k)2. 2. Basic reserves may not be less than the tabular cost of insurance for the appropriate period, as defined in par. (f).

Ins 2.80(5)(k)3. 3. For deficiency reserves for each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium. Deficiency reserves may not be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with this subdivision.

Ins 2.80(5)(k)4. 4. For purposes of this paragraph, the calculations use the maximum valuation interest rate and the 1980 CSO valuation table with or without 10-year select mortality factors.

Ins 2.80(5)(k)5. 5. A policy shall be considered an attained-age-based yearly renewable term life insurance policy for purposes of this paragraph if both of the following apply:

Ins 2.80(5)(k)5.a. a. The premium rates, on both the initial current premium scale and the guaranteed maximum premium scale, are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued.

Ins 2.80(5)(k)5.b. b. The premium rates, on both the initial current premium scale and the guaranteed maximum premium scale, are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.

Ins 2.80(5)(k)6. 6. For policies that become attained-age-based yearly renewable term policies after an initial period of coverage, the approach of this paragraph may be used after the initial period if both the following apply:

Ins 2.80(5)(k)6.a. a. The initial period is either constant or runs to a common attained age for all insureds of the same sex, risk class and plan of insurance.

Ins 2.80(5)(k)6.b. b. After the initial period of coverage, the policy meets the conditions of subd. 5.

Ins 2.80(5)(k)7. 7. If the election in this paragraph is made, this approach shall be applied in determining reserves for all attained-age-based yearly renewable term life insurance policies issued on or after the effective date of this section.

Ins 2.80 Note Note: Traditional reserves for attained-age-based yearly renewable term policies, the calculations of which this paragraph describes, are already adequate and sufficient. However, without this option, these policies would be subject to the more complex segmentation calculations.

Ins 2.80(5)(L) (L) Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if all of the following conditions are met:

Ins 2.80(5)(L)1. 1. The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level.