Sec. 27. (a) Except as provided in sections 28, 31, and 33 of this chapter, reserves according to the commissioners reserve valuation method for the life insurance and endowment benefits of a contract providing for a uniform amount of insurance and requiring the payment of uniform premiums is the excess, if any, of the present value (on the date of valuation) of the future guaranteed benefits provided for by the contract over the then present value of any future modified net premiums for the contract.

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Terms Used In Indiana Code 27-1-12.8-27

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Contract: A legal written agreement that becomes binding when signed.
  • contract: means a contract or a policy. See Indiana Code 27-1-12.8-6
  • Insurance: means a contract of insurance or an agreement by which one (1) party, for a consideration, promises to pay money or its equivalent or to do an act valuable to the insured upon the destruction, loss or injury of something in which the other party has a pecuniary interest, or in consideration of a price paid, adequate to the risk, becomes security to the other against loss by certain specified risks; to grant indemnity or security against loss for a consideration. See Indiana Code 27-1-2-3
  • life insurance: means insurance under a contract that incorporates mortality risk, including annuity and pure endowment contracts. See Indiana Code 27-1-12.8-10
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • premium: means money or any other thing of value paid or given in consideration to an insurer, insurance producer, or solicitor on account of or in connection with a contract of insurance and shall include as a part but not in limitation of the above, policy fees, admission fees, membership fees and regular or special assessments and payments made on account of annuities. See Indiana Code 27-1-2-3
  • reserves: means reserve liabilities. See Indiana Code 27-1-12.8-15
  • Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
     (b) The modified net premiums for a contract described in subsection (a) are the uniform percentage of the respective contract premiums for the benefits such that the present value (on the date of issue of the contract) of all modified net premiums is equal to the sum of the then present value of the benefits provided for by the contract plus the excess of subdivision (1) over subdivision (2), as follows:

(1) A net level annual premium equal to the present value (on the date of issue) of the benefits provided for after the first contract year, divided by the present value (at the date of issue) of an annuity of one (1) per annum payable on the first and each subsequent anniversary of the contract on which a premium falls due. However, the net level annual premium must not exceed the net level annual premium on the nineteen (19) year premium whole life plan for insurance of the same amount at an insured age one (1) year greater than the age of the insured on the date of issue of the contract.

(2) A net one (1) year term premium for the benefits provided for in the first contract year.

     (c) For a life insurance contract issued on or after January 1, 1985:

(1) for which:

(A) the contract premium in the first contract year exceeds the contract premium in the second contract year; and

(B) no comparable additional benefit is provided in the first contract year for the excess; and

(2) that provides an endowment benefit, a cash surrender value, or a combination, in an amount greater than the excess premium;

the reserve according to the commissioners reserve valuation method on a contract anniversary that occurs on or before the assumed ending date (defined to be the first contract anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium) is, except as provided in section 31 of this chapter, the reserve determined under subsection (d).

     (d) For purposes of subsection (c), the reserve is the greater of:

(1) the reserve on the contract anniversary calculated under subsections (a) and (b); or

(2) the reserve as of the contract anniversary calculated under subsections (a) and (b) with:

(A) the value described in subsection (b)(1) reduced by fifteen percent (15%) of the amount of the excess first year premium;

(B) all present values of benefits and premiums determined without reference to premiums or benefits provided for by the contract after the assumed ending date;

(C) the contract assumed to mature on the assumed ending date as an endowment; and

(D) the cash surrender value provided on the assumed ending date considered as an endowment benefit.

In making the comparison described in this subsection, the mortality and interest bases specified in sections 24 and 26 of this chapter must be used.

     (e) Reserves according to the commissioners reserve valuation method must be calculated by a method consistent with the principles of this section for the following:

(1) A life insurance contract that provides for a varying amount of insurance or requires the payment of varying premiums.

(2) A group annuity or a pure endowment contract that is purchased under a retirement plan or plan of deferred compensation that is established or maintained by:

(A) an employer (including a partnership or sole proprietorship);

(B) an employee organization; or

(C) both;

other than a plan that provides individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code.

(3) Disability and accidental death benefits provided in any contract.

(4) All other benefits, except life insurance and endowment benefits in a life insurance contract and benefits provided by any other annuity or pure endowment contract.

As added by P.L.276-2013, SEC.10.

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