Ch. 11                                          1996 LAWS OF MARYLAND

(4)      THE NONFORFEITURE NET LEVEL PREMIUM SHALL EQUAL THE
PRESENT VALUE OF THE GUARANTEED BENEFITS, CALCULATED AS OF THE DATE
OF ISSUE, PROVIDED BY THE POLICY DIVIDED BY THE PRESENT VALUE OF AN
ANNUITY OF 1 PER YEAR, CALCULATED AS OF THE DATE OF ISSUE, PAYABLE ON THE
DATE OF ISSUE OF THE POLICY AND ON EACH ANNIVERSARY ON WHICH A PREMIUM
IS DUE.

(5)      IN APPLYING THE PERCENTAGE SPECIFIED IN PARAGRAPH (2)(III)
OF THIS SUBSECTION, A NONFORFEITURE NET LEVEL PREMIUM MAY NOT BE
CONSIDERED TO EXCEED 4% OF:

(I)      THE AMOUNT OF INSURANCE IF THE INSURANCE IS A
UNIFORM AMOUNT; OR

(II)     THE AVERAGE AMOUNT OF INSURANCE AT THE BEGINNING OF
EACH OF THE FIRST 10 POLICY YEARS.

(C)     POLICIES PROVIDING FOR CHANGES IN BENEFITS OR PREMIUMS — IN
GENERAL.

(1)      IF A POLICY PROVIDES FOR UNSCHEDULED CHANGES IN BENEFITS
OR PREMIUMS ON A BASIS GUARANTEED BY THE POLICY OR PROVIDES AN OPTION
FOR CHANGES IN BENEFITS OR PREMIUMS, OTHER THAN A CHANGE TO A NEW
POLICY, THE ADJUSTED PREMIUMS AND PRESENT VALUES INITIALLY SHALL BE
CALCULATED ON THE ASSUMPTION THAT FUTURE BENEFITS AND PREMIUMS WILL
NOT CHANGE FROM THOSE STIPULATED AT THE DATE OF ISSUE OF THE POLICY.

(2)      WHEN BENEFITS OR PREMIUMS ARE CHANGED, THE FUTURE
ADJUSTED PREMIUMS, NONFORFEITURE NET LEVEL PREMIUMS, AND PRESENT
VALUES SHALL BE RECALCULATED AS OF THE DATE OF THE CHANGE IN THE
POLICY IN ACCORDANCE WITH THIS SECTION ON THE ASSUMPTION THAT FUTURE
BENEFITS AND PREMIUMS WILL NOT CHANGE FROM THOSE STIPULATED BY THE
POLICY IMMEDIATELY AFTER THE CHANGE.

(D)     SAME — RECALCULATED FUTURE ADJUSTED PREMIUMS.

(1) EXCEPT AS PROVIDED IN SUBSECTION (G) OF THIS SECTION, THE
FUTURE ADJUSTED PREMIUMS RECALCULATED UNDER SUBSECTION (C)(2) OF THIS
SECTION SHALL BE A UNIFORM PERCENTAGE OF THE FUTURE PREMIUMS SPECIFIED
IN THE POLICY FOR EACH POLICY YEAR SO THAT THE PRESENT VALUE OF THE
FUTURE ADJUSTED PREMIUMS, CALCULATED AS OF THE TIME OF THE CHANGE TO
THE NEWLY DEFINED BENEFITS OR PREMIUMS, SHALL EQUAL THE REMAINDER OF:

(I)       THE SUM OF THE PRESENT VALUE OF THE FUTURE
GUARANTEED BENEFITS, CALCULATED AS OF THE TIME OF THE CHANGE TO THE
NEWLY DEFINED BENEFITS OR PREMIUMS, PROVIDED BY THE POLICY AND ANY
ADDITIONAL EXPENSE ALLOWANCE; LESS

(II)     ANY CASH SURRENDER VALUE OR THE PRESENT VALUE OF
ANY PAID-UP NONFORFEITURE BENEFIT UNDER THE POLICY, CALCULATED AS OF
THE TIME OF THE CHANGE TO THE NEWLY DEFINED BENEFITS OR PREMIUMS.

- 418 -