SECTION .0500 ‑ LIFE INSURANCE ILLUSTRATIONS

11 NCAC 04 .0501 SCOPE AND DEFINITIONS

(a) These Rules apply to all policies sold on and after the effective dates of these Rules and to all certificates issued under those policies.

(b) As used in this Section, the following terms have the following meanings:

(1) "Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.

(2) "Basic illustration" means a ledger or proposal used in the sale of a policy that shows both guaranteed and non‑guaranteed elements.

(3) "Contract premium" means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.

(4) "Currently payable scale" means a scale of non‑guaranteed elements in effect for a policy as of the preparation date of the illustration or declared to become effective within the next 95 days.

(5) "Disciplined current scale" means a scale of non‑guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer.

(6) "Guaranteed elements" means the premiums, benefits, values, credits, or charges under a policy that are guaranteed and determined at issue.

(7) "Illustrated scale" means a scale of non‑guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(A) The disciplined current scale; or

(B) The currently payable scale.

(8) "Illustration" means a presentation or depiction that includes non‑guaranteed elements of a policy over a period of years and that is either a basic illustration, in‑force illustration, or a supplemental illustration.

(9) "In force illustration" means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

(10) "Illustration actuary" means an actuary meeting the requirements of 11 NCAC 04 .0509 who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.

(11) "Lapse‑supported illustration" means an illustration of a policy failing the test of self‑supporting as defined in this Subparagraph (b)(16) of this Rule, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent policy persistency thereafter.

(12) "Non‑guaranteed elements" means the premiums, benefits, values, credits, or charges under a policy that are not guaranteed or not determined at issue.

(13) "Policy" means a group or individual life insurance policy or certificate. "Policy" does not include:

(A) A variable life insurance policy or certificate.

(B) An annuity contract.

(D) A life insurance policy with no illustrated death benefit on any individual exceeding ten thousand dollars ($10,000).

(14) "Policy owner" means the owner named in a policy or the certificate holder in the case of a group policy.

(15) "Premium outlay" means the amount of premium assumed to be paid by the policy owner or other premium payer out‑of‑pocket.

(16) "Self‑supporting illustration" means an illustration of a policy for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second‑or‑later‑to‑die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.

(17) "Supplemental illustration" means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this Section, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non‑guaranteed elements that is permitted in a basic illustration.

History Note: Authority G.S. 58-2-40; 58-58-1; 58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;

Eff. January 1, 1997;

Readopted Eff. December 1, 2021.