3 AAC 28.849. Definitions

For the purposes of 3 AAC 28.800 - 3 AAC 28.849,

(1) "Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and adopt standards of actuarial practice;

(2) "basic illustration" means a presentation or depiction used in the sale of a life insurance policy that includes both guaranteed and non-guaranteed elements;

(3) "contract premium" means the gross premium that is required to be paid under a fixed premium policy, and includes the premium for any rider for which benefits are shown in the illustration;

(4) "currently payable scale" means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days;

(5) "disciplined current scale" means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer;

(6) "generic name" means a short title descriptive of the type of policy being illustrated, such as "whole life," "term life," or "flexible premium adjustable life";

(7) "guaranteed element" means a premium, benefit, value, credit, or charge under a policy of life insurance that is guaranteed and determined at the time of issue;

(8) "illustrated scale" means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of the disciplined current scale or the currently payable scale;

(9) "illustration" means a presentation or depiction that includes non-guaranteed elements of a policy or certificate of life insurance over a period of years that is either a basic illustration, a supplemental illustration, or an in force illustration;

(10) "illustration actuary" means an actuary appointed by the board of directors of an insurer under 3 AAC 28.840(a) , who meets the requirements of 3 AAC 28.840(b) ;

(11) "in force illustration" means a presentation or depiction furnished to a policy holder at any time after the policy it depicts has been in force for at least one year;

(12) "lapse-supported illustration" means an illustration of a policy form that is not a self-supporting illustration under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100 percent persistency rate after the fifth year;

(13) "non-guaranteed element" means a premium, benefit, value, credit, or charge under a policy or certificate of life insurance that is not guaranteed or determined at the time of issue;

(14) "non-term group life" means a group policy or individual policies of life insurance issued to members of an employer group or other group for which each plan of coverage was selected by the employer or plan sponsor; a portion of the premium is paid by the group or through payroll deduction; and group or simplified underwriting is used;

(15) "persistency rate" means the ratio of the number of policies that continue coverage to a particular date in a period to the number of policies that were in force on the same date in the preceding period;

(16) "policy owner" means the person named as owner of an insurance policy or the certificate holder in the case of a group insurance policy;

(17) "premium outlay" means the amount of premium to be paid out-of-pocket by the policy owner or other person responsible for paying the policy premium;

(18) "second-or-later-to-die policy" means a policy on two or more people that pays death proceeds only upon the death of the second or later person alive;

(19) "self-supporting illustration" means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary, or on or after the 20th policy anniversary for a second-or-later-to-die policy, or upon policy expiration, if sooner, the accumulated value of all policy cash flows equals or exceeds the total policy owner value available; for this purpose, the policy owner value includes cash surrender values and any other illustrated benefit amounts available at the policy owner's election;

(20) "supplemental illustration" means a presentation or depiction furnished in addition to a basic illustration showing special features or variations applicable to the basic policy and that may be presented in a format differing from the basic illustration, but only depicts the scale of non-guaranteed elements that is permitted in a basic illustration.

History: Eff. 9/1/98, Register 147

Authority: AS 21.06.090

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