Ch. 36

1995 LAWS OF MARYLAND

"Insurer" § 1-101
"Life insurance" § 1-101
"Policy" § 1-101
"Premium" § 1-101

5-307. SAME — RESERVE VALUATION METHOD FOR LIFE INSURANCE AND
ENDOWMENT BENEFITS.

(A) LIFE INSURANCE AND ENDOWMENT BENEFITS — UNIFORM AMOUNT OF
INSURANCE — UNIFORM PREMIUMS.

(1) IN THIS SUBSECTION, "GUARANTEED BENEFITS" MEANS FUTURE
GUARANTEED LIFE INSURANCE AND ENDOWMENT BENEFITS.

(2), EXCEPT AS OTHERWISE PROVIDED IN. PARAGRAPH (4) OF THIS
SUBSECTION AND IN §§ 5-308 AND 5-311 OF THIS SUBTITLE, FOR THE LIFE INSURANCE
AND ENDOWMENT BENEFITS OF A POLICY THAT PROVIDES FOR A UNIFORM
AMOUNT OF INSURANCE AND REQUIRES THE PAYMENT OF UNIFORM PREMIUMS,
THE RESERVE ACCORDING TO THE COMMISSIONERS RESERVE VALUATION METHOD
SHALL BE THE AMOUNT, IF ANY, THAT THE PRESENT VALUE, AT THE DATE OF
VALUATION, OF THE GUARANTEED BENEFITS UNDER THE POLICY EXCEEDS THE
PRESENT VALUE, AT THE DATE OF VALUATION, OF ANY FUTURE MODIFIED NET
PREMIUMS FOR THE POLICY, AS DETERMINED UNDER PARAGRAPH (3) OF THIS
SUBSECTION.

(3) (I) FOR PURPOSES OF THIS SUBSECTION, THE MODIFIED NET
PREMIUMS FOR A POLICY EQUAL A UNIFORM PERCENTAGE OF THE RESPECTIVE
CONTRACT PREMIUMS FOR THE GUARANTEED BENEFITS UNDER THE POLICY
CALCULATED SO THAT THE PRESENT VALUE, AT THE DATE OF ISSUE OF THE
POLICY, OF THE SUM OF ALL THE MODIFIED NET PREMIUMS EQUALS THE SUM OF:

1.        THE PRESENT VALUE, AT THE DATE OF ISSUE, OF THE
GUARANTEED BENEFITS UNDER THE POLICY; AND

2.        THE AMOUNT BY WHICH THE NET LEVEL ANNUAL
PREMIUM DETERMINED UNDER SUBPARAGRAPH (II) OF THIS PARAGRAPH EXCEEDS
A NET 1-YEAR TERM PREMIUM FOR THE GUARANTEED BENEFITS PROVIDED FOR IN
THE FIRST POLICY YEAR.

(II) 1. EXCEPT AS PROVIDED IN SUB-SUBPARAGRAPH 2 OF THIS
SUBPARAGRAPH, THE NET LEVEL ANNUAL PREMIUM TO BE USED IN THE
CALCULATION IN THIS PARAGRAPH EQUALS A FRACTION:

A.       THE NUMERATOR OF WHICH IS THE PRESENT VALUE, AT
THE DATE OF ISSUE, OF THE GUARANTEED BENEFITS PROVIDED FOR AFTER THE
FIRST POLICY YEAR; AND

B.       THE DENOMINATOR OF WHICH IS 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.

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