# Title 45 — Insurance, Commissioner of

## Article 45-04 — Life Insurance

## Chapter 45-04-12 — Valuation of Life Insurance Policies

Reserves
Gross Premiums or Guaranteed Nonlevel Benefits, Other Than Universal Life
Policies
Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of
a Policy Owner to Keep a Policy in Force Over a Secondary Guarantee Period
### § 45-04-12-01. Applicability.

This chapter shall apply to all life insurance policies, with or without nonforfeiture values, issued on
or after January 1, 2000, subject to the following exceptions and conditions:
1. Exceptions.
a. This chapter shall not apply to any individual life insurance policy issued on or after
January 1, 2000, if the policy is issued in accordance with and as a result of the exercise
of a reentry provision contained in the original life insurance policy of the same or greater
face amount issued before January 1, 2000, which guarantees the premium rates of the
new policy. This chapter also shall not apply to subsequent policies issued as a result of
the exercise of such a provision, or a derivation of the provision, in the new policy.
b. This chapter shall not apply to any universal life policy that meets all the following
requirements:
(1) Secondary guarantee period, if any, is five years or less;
(2) Specified premium for the secondary guarantee period is not less than the net level
reserve premium for the secondary guarantee period based on the CSO valuation
tables as defined in subsection 6 of section 45-04-12-02 and the applicable
valuation interest rate; and
(3) The initial surrender charge is not less than one hundred percent of the first year
annualized specified premium for the secondary guarantee period.
c. This chapter shall not apply to any variable life insurance policy that provides for life
insurance, the amount or duration of which varies according to the investment
experience of any separate account or accounts.
d. This chapter shall not apply to any variable universal life insurance policy that provides
for life insurance, the amount or duration of which varies according to the investment
experience of any separate account or accounts.
e. This chapter shall not apply to a group life insurance certificate unless the certificate
provides for a stated or implied schedule of maximum gross premiums required in order
to continue coverage in force for a period in excess of one year.
2. Conditions.

a. Calculation of the minimum valuation standard for policies with guaranteed nonlevel
gross premiums or guaranteed nonlevel benefits, other than universal life policies, or
both, shall be in accordance with the provisions of section 45-04-12-04.
b. Calculation of the minimum valuation standard for flexible premium and fixed premium
universal life insurance policies, that contain provisions resulting in the ability of a
policyholder to keep a policy in force over a secondary guarantee period, shall be in
accordance with the provisions of section 45-04-12-05.
History: Effective January 1, 2000.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-35
### § 45-04-12-02. Definitions.

For purposes of this chapter:
1. "Basic reserves" means reserves calculated in accordance with North Dakota Century Code
section 26.1-35-05.
2. "Contract segmentation method" means the method of dividing the period from issue to
mandatory expiration of a policy into successive segments, with the length of each segment
being defined as the period from the end of the prior segment, from policy inception for the
first segment, to the end of the latest policy year as determined below. All calculations are
made using the 1980 CSO valuation tables or any other valuation mortality table adopted by
the national association of insurance commissioners after January 1, 2000, and promulgated
by rule by the commissioner for this purpose, and, if elected, the optional minimum mortality
standard for deficiency reserves stipulated in subsection 2 of section 45-04-12-03.
The length of a particular contract segment shall be set equal to the minimum of the value t for
which G is greater than R, if G never exceeds R the segment length is deemed to be the
t t t t
number of years from the beginning of the segment to the mandatory expiration date of the
policy, where G and R are defined as follows:
t t
x+k+t
t
x+k+t-1
where:
x = original issue age;
k = the number of years from the date of issue to the
beginning of the segment;
t = 1, 2, ...; t is reset to 1 at the beginning of each
segment; and
GP = Guaranteed gross premium per thousand of face
x+k+t-1
amount for year t of the segment, ignoring
policy fees only if level for the
premium paying period of the policy.
q
x+k+t
R = _____________, however, R may be increased
t t
q or decreased by one percent in any
x+k+t-1

policy year, at the company's option,
but R shall not be less than one;
t
where:
x, k, and t are as defined above, and
q Valuation mortality rate for deficiency
x+k+t-1=
reserves in policy year k+t but using the
mortality of subdivision b of subsection 2
of section 45-04-12-03 if subdivision c of
subsection 2 of section 45-04-12-03 is elected
for deficiency reserves.
However, if GP is greater than 0 and GP is equal to 0, G shall be deemed to be 1000.
x+k+t x+k+t-1 t
If GP and GP are both equal to 0, G shall be deemed to be 0.
x+k+t x+k+t-1 t
3. "Deficiency reserves" means the excess, if greater than zero, of:
a. Minimum reserves calculated in accordance with North Dakota Century Code section
26.1-35-09.
b. Basic reserves.
4. "Guaranteed gross premiums" means the premiums under a policy of life insurance that are
guaranteed and determined at issue.
5. "Maximum valuation interest rates" means the interest rates defined in North Dakota Century
Code section 26.1-35-04, computation of minimum standard by calendar year of issue, which
are to be used in determining the minimum standard for the valuation of life insurance policies.
6. "1980 CSO valuation tables" means the commissioners' 1980 standard ordinary mortality
table (1980 CSO table) without ten-year selection factors, incorporated into the 1980
amendments to the national association of insurance commissioners standard valuation law,
and variations of the 1980 CSO table approved by the national association of insurance
commissioners, such as the smoker and nonsmoker versions approved in December 1983.
7. "Scheduled gross premium" means the smallest illustrated gross premium at issue for other
than universal life insurance policies. For universal life insurance policies, scheduled gross
premium means the smallest specified premium described in subdivision c of subsection 1 of
section 45-04-12-05, if any, or else the minimum premium described in subdivision d of
subsection 1 of section 45-04-12-05.
8. a. "Segmented reserves" means reserves, calculated using segments produced by the
contract segmentation method, equal to the present value of all future guaranteed
benefits less the present value of all future net premiums to the mandatory expiration of a
policy, when the net premiums within each segment are a uniform percentage of the
respective guaranteed gross premiums within the segment. The uniform percentage for
each segment is such that, at the beginning of the segment, the present value of the net
premiums within the segment equals:
(1) The present value of the death benefits within the segment; plus
(2) The present value of any unusual guaranteed cash value (see subsection 4 of
section 45-04-12-04) occurring at the end of the segment; less
(3) Any unusual guaranteed cash value occurring at the start of the segment; plus

(4) For the first segment only, the excess of subparagraph a over subparagraph b, as
follows:
(a) A net level annual premium equal to the present value, at the date of issue, of
the benefits provided for in the first segment 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 within the first segment
on which a premium falls due. However, the net level annual premium shall not
exceed the net level annual premium on the nineteen-year premium whole life
plan of insurance of the same renewal year equivalent level amount at an age
one year higher than the age at issue of the policy.
(b) A net one-year term premium for the benefits provided for in the first policy
year.
b. The length of each segment is determined by the contract segmentation method, as
defined in this section.
c. The interest rates used in the present value calculations for any policy may not exceed
the maximum valuation interest rate, determined with a guarantee duration equal to the
sum of the lengths of all segments of the policy.
d. For both basic reserves and deficiency reserves computed by the segmented method,
present values shall include future benefits and net premiums in the current segment and
in all subsequent segments.
9. "Tabular cost of insurance" means the net single premium at the beginning of a policy year for
one-year term insurance in the amount of the guaranteed death benefit in that policy year.
10. "Ten-year select factors" means the select factors adopted with the 1980 amendments to the
national association of insurance commissioners standard valuation law.
11. a. "Unitary reserves" means the present value of all future guaranteed benefits less the
present value of all future modified net premiums, when:
(1) Guaranteed benefits and modified net premiums are considered to the mandatory
expiration of the policy; and
(2) Modified net premiums are a uniform percentage of the respective guaranteed gross
premiums, when the uniform percentage is such that, at issue, the present value of
the net premiums equals the present value of all death benefits and pure
endowments, plus the excess of subparagraph a over subparagraph b, as follows:
(a) A net level annual premium equal to the present value, at the date of issue, of
the 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 the policy on which a premium falls due. However,
the net level annual premium shall not exceed the net level annual premium on
the nineteen-year premium whole life plan of insurance of the same renewal
year equivalent level amount at an age one year higher than the age at issue
of the policy.
(b) A net one-year term premium for the benefits provided for in the first policy
year.

b. The interest rates used in the present value calculations for any policy may not exceed
the maximum valuation interest rate, determined with a guarantee duration equal to the
length from issue to the mandatory expiration of the policy.
12. "Universal life insurance policy" means any individual life insurance policy under the
provisions of which separately identified interest credits, other than in connection with dividend
accumulations, premium deposit funds, or other supplementary accounts, and mortality or
expense charges are made to the policy.
History: Effective January 1, 2000.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-35
### § 45-04-12-03. General calculation requirements for basic reserves and premium deficiency

reserves.
1. At the election of the company for any one or more specified plans of life insurance, the
minimum mortality standard for basic reserves may be calculated using the 1980 CSO
valuation tables with select mortality factors, or any other valuation mortality table adopted by
the national association of insurance commissioners after January 1, 2000, and promulgated
by rule by the commissioner for this purpose. If select mortality factors are elected, they may
be:
a. The ten-year select mortality factors incorporated into the 1980 amendments to the
national association of insurance commissioners standard valuation law;
b. The select mortality factors in the appendix; or
c. Any other table of select mortality factors adopted by the national association of
insurance commissioners after January 1, 2000, and promulgated by rule by the
commissioner for the purpose of calculating basic reserves.
2. Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero,
of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic
reserve for the policy using guaranteed gross premiums instead of net premiums when the
guaranteed gross premiums are less than the corresponding net premiums. At the election of
the company for any one or more specified plans of insurance, the quantity A and the
corresponding net premiums used in the determination of quantity A may be based upon the
1980 CSO valuation tables with select mortality factors, or any other valuation mortality table
adopted by the national association of insurance commissioners after January 1, 2000, and
promulgated by rule by the commissioner. If select mortality factors are elected, they may be:
a. The ten-year select mortality factors incorporated into the 1980 amendments to the
national association of insurance commissioners standard valuation law;
b. The select mortality factors in the appendix of this chapter;
c. For durations in the first segment, X percent of the select mortality factors in the
appendix, subject to the following:
(1) X may vary by policy year, policy form, underwriting classification, issue age, or any
other policy factor expected to affect mortality experience;
(2) X shall not be less than twenty percent;
(3) X shall not decrease in any successive policy years;

(4) X is such that, when using the valuation interest rate used for basic reserves,
subparagraph a is greater than or equal to subparagraph b:
(a) The actuarial present value of future death benefits, calculated using the
mortality rates resulting from the application of X;
(b) The actuarial present value of future death benefits calculated using
anticipated mortality experience without recognition of mortality improvement
beyond the valuation date;
(5) X is such that the mortality rates resulting from the application of X are at least as
great as the anticipated mortality experience, without recognition of mortality
improvement beyond the valuation date, in each of the first five years after the
valuation date;
(6) The appointed actuary shall increase X at any valuation date when it is necessary to
continue to meet all the requirements of subdivision c of subsection 2;
(7) The appointed actuary may decrease X at any valuation date as long as X does not
decrease in any successive policy years and as long as it continues to meet all the
requirements of subdivision c of subsection 2;
(8) The appointed actuary shall specifically take into account the adverse effect on
expected mortality and lapsation of any anticipated or actual increase in gross
premiums; and
(9) If X is less than one hundred percent at any duration for any policy, the following
requirements shall be met:
(a) The appointed actuary shall annually prepare an actuarial opinion and
memorandum for the company in conformance with the requirements of
chapter 45-03-19; and
(b) The appointed actuary shall annually opine for all policies subject to this rule
as to whether the mortality rates resulting from the application of X meet the
requirements of subdivision c of subsection 2. This opinion shall be supported
by an actuarial report, subject to appropriate actuarial standards of practice
promulgated by the actuarial standards board of the American academy of
actuaries. The X factors shall reflect anticipated future mortality, without
recognition of mortality improvement beyond the valuation date, taking into
account relevant emerging experience.
d. Any other table of select mortality factors adopted by the national association of
insurance commissioners after January 1, 2000, and promulgated by rule by the
commissioner for the purpose of calculating deficiency reserves.
3. This subsection applies to both basic reserves and deficiency reserves. Any set of select
mortality factors may be used only for the first segment. However, if the first segment is less
than ten years, the appropriate ten-year select mortality factors incorporated into the 1980
amendments to the national association of insurance commissioners standard valuation law
may be used thereafter through the tenth policy year from the date of issue.
4. In determining basic reserves or deficiency reserves, guaranteed gross premiums without
policy fees may be used when the calculation involves the guaranteed gross premium but only
if the policy fee is a level dollar amount after the first policy year. In determining deficiency
reserves, policy fees may be included in guaranteed gross premiums, even if not included in
the actual calculation of basic reserves.

5. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits,
guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue
and that are effective for more than one year after the date of the change shall be the greatest
of the following:
a. Reserves calculated ignoring the guarantee;
b. Reserves assuming the guarantee was made at issue; and
c. Reserves assuming that the policy was issued on the date of the guarantee.
6. The commissioner may require that the company document the extent of the adequacy of
reserves for specified blocks, including policies issued prior to January 1, 2000. This
documentation may include a demonstration of the extent to which aggregation with other
nonspecified blocks of business is relied upon in the formation of the appointed actuary
opinion pursuant to and consistent with the requirements of chapter 45-03-19.
History: Effective January 1, 2000.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-35
### § 45-04-12-04. Calculation of minimum valuation standard for policies with guaranteed

nonlevel gross premiums or guaranteed nonlevel benefits, other than universal life policies.
1. Basic reserves. Basic reserves shall be calculated as the greater of the segmented reserves
and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy
shall use the same valuation mortality table and selection factors. At the option of the insurer,
in calculating segmented reserves and net premiums, either of the adjustments described in
subdivision a or b may be made:
a. Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a
pure endowment and subtract the unitary reserve, if greater than zero, applicable at the
beginning of each segment from the present value of guaranteed life insurance and
endowment benefits for each segment.
b. Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of
each segment as a pure endowment and subtract the guaranteed cash surrender value,
if greater than zero, applicable at the beginning of each segment from the present value
of guaranteed life insurance and endowment benefits for each segment.
2. Deficiency reserves.
a. The deficiency reserve at any duration shall be calculated:
(1) On a unitary basis if the corresponding basic reserve determined by subsection 1 is
unitary;
(2) On a segmented basis if the corresponding basic reserve determined by
subsection 1 is segmented; or
(3) On the segmented basis if the corresponding basic reserve determined by
subsection 1 is equal to both the segmented reserve and the unitary reserve.
b. This subsection shall apply to any policy for which the guaranteed gross premium at any
duration is less than the corresponding modified net premium calculated by the method
used in determining the basic reserves, but using the minimum valuation standards of
mortality, specified in subsection 2 of section 45-04-12-03, and rate of interest.

c. Deficiency reserves, if any, shall be calculated for each policy as the excess if greater
than zero, for the current and all remaining periods, of the quantity A over the basic
reserve, where A is obtained as indicated in subsection 2 of section 45-04-12-03.
d. For deficiency reserves determined on a segmented basis, the quantity A is determined
using segment lengths equal to those determined for segmented basic reserves.
3. Minimum value. Basic reserves may not be less than the tabular cost of insurance for the
balance of the policy year if mean reserves are used. Basic reserves may not be less than the
tabular cost of insurance for the balance of the current modal period or to the paid-to date, if
later, but not beyond the next policy anniversary, if midterminal reserves are used. The tabular
cost of insurance shall use the same valuation mortality table and interest rates as that used
for the calculation of the segmented reserves. However, if select mortality factors are used,
they shall be the ten-year select factors incorporated into the 1980 amendments of the
national association of insurance commissioners standard valuation law. In no case may total
reserves, including basic reserves, deficiency reserves, and any reserves held for
supplemental benefits that would expire upon contract termination, be less than the amount
that the policy owner would receive, including the cash surrender value of the supplemental
benefits, if any, referred to above, exclusive of any deduction for policy loans, upon
termination of the policy.
4. Unusual pattern of guaranteed cash surrender values.
a. For any policy with an unusual pattern of guaranteed cash surrender values, the reserves
actually held prior to the first unusual guaranteed cash surrender value shall not be less
than the reserves calculated by treating the first unusual guaranteed cash surrender
value as a pure endowment and treating the policy as an n-year policy providing term
insurance plus a pure endowment equal to the unusual cash surrender value, when n is
the number of years from the date of issue to the date the unusual cash surrender value
is scheduled.
b. The reserves actually held subsequent to any unusual guaranteed cash surrender value
shall not be less than the reserves calculated by treating the policy as an n-year policy
providing term insurance plus a pure endowment equal to the next unusual guaranteed
cash surrender value, and treating any unusual guaranteed cash surrender value at the
end of the prior segment as a net single premium, when:
(1) n is the number of years from the date of the last unusual guaranteed cash
surrender value prior to the valuation date to the earlier of:
(a) The date of the next unusual guaranteed cash surrender value, if any, that is
scheduled after the valuation date; or
(b) The mandatory expiration date of the policy;
(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; and
(3) The net to gross ratio is equal to subparagraph a divided by subparagraph b as
follows:
(a) 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.

(b) The present value, at the beginning of the n-year period, of the scheduled
gross premiums payable during the n-year period.
c. For purposes of this subsection, 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:
(1) One hundred ten percent of the scheduled gross premium for that year;
(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; and
(3) Five percent of the first policy year surrender charge, if any.
5. Optional exemption for yearly renewable term reinsurance. At the option of the company, the
following approach for reserves on yearly renewable term reinsurance may be used:
a. Calculate the valuation net premium for each future policy year as the tabular cost of
insurance for that future year.
b. Basic reserves shall never be less than the tabular cost of insurance for the appropriate
period, as determined under subsection 3.
c. Deficiency reserves.
(1) For each policy year, calculate the excess, if greater than zero, of the valuation net
premium over the respective maximum guaranteed gross premium.
(2) Deficiency reserves shall never be less than the sum of the present values, at the
date of valuation, of the excesses determined in accordance with paragraph 1.
d. For purposes of this subsection, the calculations use the maximum valuation interest rate
and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any
other table adopted after January 1, 2000, by the national association of insurance
commissioners and promulgated by rule by the commissioner for this purpose.
e. A reinsurance agreement shall be considered yearly renewable term reinsurance for
purposes of this subsection if only the mortality risk is reinsured.
f. If the assuming company chooses this optional exemption, the ceding company's
reinsurance reserve credit shall be limited to the amount of reserve held by the assuming
company for the affected policies.
6. Optional exemption for attained-age-based yearly renewable term life insurance policies. At
the option of the company, the following approach for reserves for attained-age-based yearly
renewable term life insurance policies may be used:
a. Calculate the valuation net premium for each future policy year as the tabular cost of
insurance for that future year.
b. Basic reserves shall never be less than the tabular cost of insurance for the appropriate
period, as defined in paragraph 3 of subdivision f.
c. Deficiency reserves.

(1) For each policy year, calculate the excess, if greater than zero, of the valuation net
premium over the respective maximum guaranteed gross premium.
(2) Deficiency reserves shall never be less than the sum of the present values, at the
date of valuation, of the excesses determined in accordance with paragraph 1.
d. For purposes of this subsection, the calculations use the maximum valuation interest rate
and the 1980 CSO valuation tables with or without ten-year select mortality factors, or
any other table adopted after Janaury 1, 2000, by the national association of insurance
commissioners and promulgated by rule by the commissioner for this purpose.
e. A policy shall be considered an attained-age-based yearly renewable term life insurance
policy for purposes of this subsection if:
(1) 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; and
(2) 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.
f. For policies that become attained-age-based yearly renewable term policies after an
initial period of coverage, the approach of this subsection may be used after the initial
period if:
(1) The initial period is constant for all insureds of the same sex, risk class, and plan of
insurance; or
(2) The initial period runs to a common attained age for all insureds of the same sex,
risk class, and plan of insurance; and
(3) After the initial period of coverage, the policy meets the conditions of subdivision e.
g. If this election 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
January 1, 2000.
7. Exemption from unitary reserves for certain n-year renewable term life insurance policies.
Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if
the following conditions are met:
a. 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 ten 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;
b. The guaranteed gross premiums in all n-year periods are not less than the corresponding
net premiums based upon the 1980 CSO valuation table with or without the ten-year
select mortality factors; and
c. There are no cash surrender values in any policy year.

8. Exemption from unitary reserves for certain juvenile policies. Unitary basic reserves and
unitary deficiency reserves need not be calculated for a policy if the following conditions are
met, based upon the initial current premium scale at issue:
a. At issue, the insured is age twenty-four or younger;
b. Until the insured reaches the end of the juvenile period, which shall occur at or before
age twenty-five, the gross premiums and death benefits are level, and there are no cash
surrender values; and
c. After the end of the juvenile period, gross premiums are level for the remainder of the
premium paying period, and death benefits are level for the remainder of the life of the
policy.
History: Effective January 1, 2000.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-35
### § 45-04-12-05. Calculation of minimum valuation standard for flexible premium and fixed

premium universal life insurance policies that contain provisions resulting in the ability of a
policy owner to keep a policy in force over a secondary guarantee period.
1. General.
a. Policies with a secondary guarantee include:
(1) A policy with a guarantee that the policy will remain in force at the original schedule
of benefits, subject only to the payment of specified premiums;
(2) A policy in which the minimum premium at any duration is less than the
corresponding one-year valuation premium, calculated using the maximum
valuation interest rate and the 1980 CSO valuation tables with or without ten-year
select mortality factors, or any other table adopted after January 1, 2000, by the
national association of insurance commissioners and promulgated by rule by the
commissioner for this purpose; or
(3) A policy with any combination of paragraphs 1 and 2.
b. A secondary guarantee period is the period for which the policy is guaranteed to remain
in force subject only to a secondary guarantee. When a policy contains more than one
secondary guarantee, the minimum reserve shall be the greatest of the respective
minimum reserves at that valuation date of each unexpired secondary guarantee,
ignoring all other secondary guarantees. Secondary guarantees that are unilaterally
changed by the insurer after issue shall be considered to have been made at issue.
Reserves described in subsections 2 and 3 shall be recalculated from issue to reflect
these changes.
c. Specified premiums mean the premiums specified in the policy, the payment of which
guarantees that the policy will remain in force at the original schedule of benefits, but
which otherwise would be insufficient to keep the policy in force in the absence of the
guarantee if maximum mortality and expense charges and minimum interest credits were
made and any applicable surrender charges were assessed.
d. For purposes of this section, the minimum premium for any policy year is the premium
that, when paid into a policy with a zero account value at the beginning of the policy year,
produces a zero account value at the end of the policy year. The minimum premium

calculation shall use the policy cost factors, including mortality charges, loads, and
expense charges, and the interest crediting rate, which are all guaranteed at issue.
e. The one-year valuation premium means the net one-year premium based upon the
original schedule of benefits for a given policy year. The one-year valuation premiums for
all policy years are calculated at issue. The select mortality factors defined in
subdivisions b, c, and d of subsection 2 of section 45-04-12-03 may not be used to
calculate the one-year valuation premiums.
f. The one-year valuation premium should reflect the frequency of fund processing, as well
as the distribution of deaths assumption employed in the calculation of the monthly
mortality charges to the fund.
2. Basic reserves for the secondary guarantees. Basic reserves for the secondary guarantees
shall be the segmented reserves for the secondary guarantee period. In calculating the
segments and the segmented reserves, the gross premiums shall be set equal to the specified
premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the
segments will be determined according to the contract segmentation method as defined in
subsection 2 of section 45-04-12-02.
3. Deficiency reserves for the secondary guarantees. Deficiency reserves, if any, for the
secondary guarantees shall be calculated for the secondary guarantee period in the same
manner as described in subsection 2 of section 45-04-12-04 with gross premiums set equal to
the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in
force.
4. Minimum reserves. The minimum reserves during the secondary guarantee period are the
greater of:
a. The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for
the secondary guarantees; or
b. The minimum reserves required by other rules or rules governing universal life plans.
History: Effective January 1, 2000.
General Authority: NDCC 28-32-02
Law Implemented: NDCC 26.1-35



















