CHAPTER 4 ‑ CONSUMER SERVICES DIVISION
SECTION .0500 ‑ LIFE INSURANCE ILLUSTRATIONS
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
(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
(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
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.
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.