Texas Insurance Code - Section 425.068. Reserve Computation: Gross Premium Charged Less Than Valuation Net Premium
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§ 425.068. RESERVE COMPUTATION: GROSS PREMIUM CHARGED
LESS THAN VALUATION NET PREMIUM. (a) If in a contract year the
gross premium charged by a life insurance company on a policy or
contract is less than the valuation net premium for the policy or
contract computed by the method used in computing the reserve on the
policy or contract but using the minimum valuation mortality
standards and interest rate, the minimum reserve required for the
policy or contract is the greater of:
(1) the reserve computed according to the mortality
table, interest rate, and method actually used for the policy or
contract; or
(2) the reserve computed by the method actually used
for the policy or contract but using the minimum valuation
mortality standards and interest rate and replacing the valuation
net premium with the actual gross premium in each contract year for
which the valuation net premium exceeds the actual gross premium.
(b) The minimum valuation mortality standards and interest
rate under Subsection (a) are the standards and rate provided by
Sections 425.058, 425.061, 425.062, and 425.063.
(c) This subsection applies only to a life insurance policy
issued on or after January 1, 1985, for which the gross premium for
the first policy year exceeds the gross premium for the second
policy year, for which a comparable additional benefit is not
provided in the first year for the excess premium, and that provides
an endowment benefit, a cash surrender value, or a combination of an
endowment benefit and cash surrender value, in an amount greater
than the excess premium. For a policy to which this subsection
applies, Subsections (a) and (b) shall be applied as if the method
actually used in computing the reserve for the policy were the
method described in Section 425.064, ignoring Section 425.064(c).
The minimum reserve at each policy anniversary is the greater of:
(1) the minimum reserve computed in accordance with
Section 425.064, including Section 425.064(c); or
(2) the minimum reserve computed in accordance with
this section.
Added by Acts 2005, 79th Leg., ch. 727, § 1, eff. April 1, 2007.
Section: 425.061 425.062 425.063 425.064 425.065 425.066 425.067 425.068 425.069 425.070 425.101 425.102 425.103 425.104 425.105
Last modified: August 11, 2007
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