- The initial expense allowance shall be the allowance provided by [insert reference to Section 5 or 5cA of the Standard Nonforfeiture Law for Life Insurance] for a fixed premium, fixed benefit endowment policy with a face amount equal to the initial face amount of the flexible premium universal life insurance policy, with level premiums paid annually until the highest attained age at which a premium may be paid under the flexible premium universal life insurance policy, and maturing on the latest maturity date permitted under the policy, if any, otherwise at the highest age in the valuation mortality table.
- The unused initial expense allowance shall be the excess, if any, of the initial expense allowance over the initial acquisition expense charges as defined above.
Universal Life Model Regulation (MDL-585)
- 1979 - ADJUSTABLE LIFE EXPENSE ALLOWANCES UNDER THE COMMISSIONERS RESERVE VALUATION METHOD - Society of Actuaries
- Universal Life Model Regulation (MDL-585)
- 1977-1 (p660) - ATTACHMENT 4 - Statement by Industry Advisory Committee on Art. VI, Sec. 21 - August 6, 1973 <7?>
- At age 25, for example, on the whole life plan the initial expense allowance provided under the Standard Nonforfeiture Law is $28 per $1,000 of coverage.
Initial Expense Allowance
1977-1, NAIC Proceedings
- ATTACHMENT D
Linkage of Nonforfeiture Values With Valuation Reserves - Prepared By The Society of Actuaries Special Committee on Nonforfeiture Values
- 6. Recommendation. Base excess initial expense allowances on levelized net premiums rather than first year adjusted premium. Reason. To produce identical excess initial expense allowances for policies with identical benefits and identical premium paying periods. Arguments and Positions. NAIC recognizes the need for special treatment of unusual products both good and bad. NAIC feels further testing of such products is needed with provision for approval or disapproval under some other section of the law such as the Fair Trade Act and disclosure legislation. Change Law Section. Section S-c.
- 8. Recommendation. Basic excess initial expense allowance on the automatic track for multi-track policies. Allow for additional initial expense allowance on increase in premium at point of increase. Reason. It would be unfair to force all companies into lowest possible expense posture to control a limited number of abuses. At time of premium increase there are additional sales and underwriting expenses. Arguments and Positions. NAIC will test examples of multi-track policies
using conclusions 5 and 6. Change Law Section. Section 5-c.
- 9A. Recommendation. Base excess initial expense allowance for life-cycle and open policies on similar approach to that used for multi-track policies with additional allowances on increases. Reason. See 8 above. Arguments and Positions. NAIC notes that individual policy pension trust and key man insurance are-otQ.er kinds of policies to be considered in the open category. Change Law Section. Section 5-c.
The problem is that it is not possible under the CRVM method to predict a pattern of initial expense allowances because they are dependent upon the plan of insurance, premium, and age.
The ideas underlying an alternative are as follows:
- The policyholder would select the level face amount and specify the initial premium which would apply for a predetermined period of, say, 10-15 years.
- The plan of insurance would always be modified-premium whole life.
- The Company would solve for the premium required beyond the initial period.
- At a subsequent adjustment date, a new initial premium would be payable for a similar predetermined period beyond the date of adjustment.
- Thus, the plan would always be modified premium whole life at issue, and there are three possible premiums -- the selected premium, the completion premium, and, of course, the unscheduled premium.
1978 - Adjustable Life Products, SOA, Moderator: Samuel H. Turner