Section .0500 ‑ Life Insurance Illustrations

Link to law: 11 - insurance/chapter 04 - consumer services division/11 ncac 04 .0501.html
Published: 2015

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now





11 NCAC 04 .0501             SCOPE AND DEFINITIONS

(a)  These Rules apply to all policies sold on and after the

effective dates of these Rules and to all certificates issued under those


(b)  As used in this Section, the following terms have the

following meanings:

(1)           "Actuarial Standards Board" means

the board established by the American Academy of Actuaries to develop and

promulgate standards of actuarial practice.

(2)           "Basic illustration" means a

ledger or proposal used in the sale of a policy that shows both guaranteed and

non‑guaranteed elements.

(3)           "Contract premium" means the

gross premium that is required to be paid under a fixed premium policy,

including the premium for a rider for which benefits are shown in the


(4)           "Currently payable scale" means a

scale of non‑guaranteed elements in effect for a policy 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)           "Guaranteed elements" means the

premiums, benefits, values, credits, or charges under a policy that are

guaranteed and determined at issue.

(7)           "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:

(A)          The disciplined current scale; or

(B)          The currently payable scale.

(8)           "Illustration" means a

presentation or depiction that includes non‑guaranteed elements of a

policy over a period of years and that is either a basic illustration, in‑force

illustration, or a supplemental illustration.

(9)           "In force illustration" means an

illustration furnished at any time after the policy that it depicts has been in

force for one year or more.

(10)         "Illustration actuary" means an

actuary meeting the requirements of 11 NCAC 4 .0509 who certifies to

illustrations based on the standard of practice promulgated by the Actuarial

Standards Board.

(11)         "Lapse‑supported

illustration" means an illustration of a policy failing the test of self‑supporting

as defined in this Section, under a modified persistency rate assumption using

persistency rates underlying the disciplined current scale for the first five

years and 100 percent policy persistency thereafter.

(12)         "Non‑guaranteed elements"

means the premiums, benefits, values, credits, or charges under a policy that

are not guaranteed or not determined at issue.

(13)         "Policy" means a group or

individual life insurance policy or certificate.  "Policy" does not


(A)          A variable life insurance policy or certificate.

(B)          An annuity contract.

(C)          A credit life insurance policy or certificate.

(D)          A life insurance policy with no illustrated death

benefit on any individual exceeding ten thousand dollars ($10,000).

(14)         "Policy owner" means the owner

named in a policy or the certificate holder in the case of a group policy.

(15)         "Premium outlay" means the amount

of premium assumed to be paid by the policy owner or other premium payer out‑of‑pocket.

(16)         "Self‑supporting

illustration" means an illustration of a policy 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 fifteenth policy

anniversary or the twentieth policy anniversary for second‑or‑later‑to‑die

policies (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, policy owner value will include cash surrender values and any

other illustrated benefit amounts available at the policy owner's election.

(17)         "Supplemental illustration" means

an illustration furnished in addition to a basic illustration that meets the

applicable requirements of this Section, and that may be presented in a format

differing from the basic illustration, but may only depict a scale of non‑guaranteed

elements that is permitted in a basic illustration.


History Note:        Authority G.S. 58-2-40; 58-58-1;

58-58-40; 58-60-15; 58-60-20; 58-63-15; 58-63-65;

Eff. January 1, 1997.