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Texas Insurance Code - Section 425.058. Valuation Of Policy Or Contract: General Rule

Legal Research Home > Texas Lawyer > Insurance Code > Texas Insurance Code - Section 425.058. Valuation Of Policy Or Contract: General Rule

§ 425.058. VALUATION OF POLICY OR CONTRACT:  GENERAL 
RULE.  (a) Except as otherwise provided by Section 425.059, 
425.060, 425.061, 425.062, or 425.063, the minimum standard for the 
valuation of an outstanding life insurance policy or annuity or 
pure endowment contract issued by a life insurance company on or 
after the date on which Chapter 1105 applies to policies issued by 
the company, as determined under Section 1105.002(a) or (b), is the 
commissioners reserve valuation method described by Sections 425. 
064, 425.065, and 425.068, computed using the table prescribed by 
this section and with interest at 3-1/2 percent or at the following 
rate, if applicable:
		(1)  in the case of a policy or contract issued on or 
after June 14, 1973, and before August 29, 1977, other than an 
annuity or pure endowment contract, four percent;
		(2)  in the case of a single premium life insurance 
policy issued on or after August 29, 1977, 5-1/2 percent;  or
		(3)  in the case of a life insurance policy issued on or 
after August 29, 1977, other than a single premium life insurance 
policy, 4-1/2 percent.
	(b)  Except as provided by Subsection (c), for an ordinary 
life insurance policy issued on the standard basis, excluding any 
disability or accidental death benefits in the policy, the 
applicable table is the Commissioners 1941 Standard Ordinary 
Mortality Table, if the policy was issued before the date on which 
Section 1105.152 would apply to the policy, as determined under 
Section 1105.152(a) or (b), or the Commissioners 1958 Standard 
Ordinary Mortality Table, if Section 1105.152 applies to the 
policy.  For a policy that is issued to insure a female risk:
		(1)  a modified net premium or present value for a 
policy issued before August 29, 1977, may be computed according to 
an age not more than three years younger than the insured's actual 
age;  and
		(2)  a modified net premium or present value for a 
policy issued on or after August 29, 1977, may be computed according 
to an age not more than six years younger than the insured's actual 
age.
	(c)  For an ordinary life insurance policy issued on the 
standard basis, excluding any disability or accidental death 
benefits in the policy, and to which Subchapter B, Chapter 1105, 
applies, the applicable table is:
		(1)  the Commissioners 1980 Standard Ordinary 
Mortality Table;              
		(2)  at the insurer's option for one or more specified 
life insurance plans, the Commissioners 1980 Standard Ordinary 
Mortality Table with Ten-Year Select Mortality Factors;  or
		(3)  any ordinary mortality table adopted after 1980 by 
the National Association of Insurance Commissioners that is 
approved by commissioner rule for use in determining the minimum 
standard valuation for a policy to which this subdivision applies.
	(d)  For an industrial life insurance policy issued on the 
standard basis, excluding any disability or accidental death 
benefits in the policy, the applicable table is:
		(1)  the 1941 Standard Industrial Mortality Table, if 
the policy was issued before the date on which Section 1105.153 
would apply to the policy as determined under Section 1105.153(a) 
or (b);  or
		(2)  if Section 1105.153 applies to the policy:                               
			(A)  the Commissioners 1961 Standard Industrial 
Mortality Table;  or       
			(B)  any industrial mortality table adopted after 
1980 by the National Association of Insurance Commissioners that is 
approved by commissioner rule for use in determining the minimum 
standard of valuation for a policy to which this subdivision 
applies.
	(e)  For an individual annuity or pure endowment contract, 
excluding any disability or accidental death benefits in the 
policy, the applicable table is the 1937 Standard Annuity Mortality 
Table, or at the insurer's option, the Annuity Mortality Table for 
1949, Ultimate, or a modification of either table that is approved 
by the commissioner.
	(f)  For a group annuity or pure endowment contract, 
excluding any disability or accidental death benefits in the 
policy, the applicable table is:
		(1)  the Group Annuity Mortality Table for 1951;                              
		(2)  a modification of that table approved by the 
commissioner;  or         
		(3)  at the insurance company's option, a table or a 
modification of a table prescribed for an individual annuity or 
pure endowment contract by Subsection (e).
	(g)  For total and permanent disability benefits in or 
supplementary to an ordinary policy or contract, the applicable 
tables are:
		(1)  for a policy or contract issued on or after January 
1, 1966:           
			(A)  the tables of Period 2 disablement rates and 
the 1930 to 1950 termination rates of the 1952 Disability Study of 
the Society of Actuaries, with due regard to the type of benefit;  
or
			(B)  any table of disablement rates and 
termination rates adopted after 1980 by the National Association of 
Insurance Commissioners that are approved by commissioner rule for 
use in determining the minimum standard of valuation for a policy to 
which this subdivision applies;
		(2)  for a policy or contract issued on or after January 
1, 1961, and before January 1, 1966:
			(A)  a table described by Subdivision (1);  or                               
			(B)  at the insurance company's option, the Class 
(3) Disability Table (1926);  or
		(3)  for a policy issued before January 1, 1961, the 
Class (3) Disability Table (1926).
	(h)  A table described by Subsection (g) must, for an active 
life, be combined with a mortality table permitted for computing 
the reserves for a life insurance policy.
	(i)  For accidental death benefits in or supplementary to a 
policy, the applicable table is:
		(1)  for a policy issued on or after January 1, 1966:                         
			(A)  the 1959 Accidental Death Benefits Table;  or                           
			(B)  any accidental death benefits table adopted 
after 1980 by the National Association of Insurance Commissioners 
that is approved by commissioner rule for use in determining the 
minimum standard of valuation for a policy to which this 
subdivision applies;
		(2)  for a policy issued on or after January 1, 1961, 
and before January 1, 1966:
			(A)  a table described by Subdivision (1);  or                               
			(B)  at the insurance company's option, the 
Inter-Company Double Indemnity Mortality Table;  or
		(3)  for a policy issued before January 1, 1961, the 
Inter-Company Double Indemnity Mortality Table.
	(j)  A table described by Subsection (i) must be combined 
with a mortality table permitted for computing the reserves for a 
life insurance policy.
	(k)  For group life insurance, life insurance issued on the 
substandard basis and other special benefits, the applicable table 
is a table approved by the commissioner.

Text of subsection effective until September 1, 2013
	(l)  Notwithstanding any other law, the minimum reserve 
requirements applicable to a policy issued under Chapter 1153 are 
met if, in the aggregate, the reserves are maintained at 100 percent 
of the 1980 Commissioner's Standard Ordinary Mortality Table, with 
interest that does not exceed 5.5 percent.  This subsection expires 
September 1, 2013. 

Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.           

Last modified: August 11, 2007