KRS 304.15-340: Adjusted premiums.

(1) How calculated. This section shall not apply to policies issued on or after the

operative date of KRS 304.15 -342 as defined therein. Except as provided in

subsection (4) of this section, the adjusted premiums for any policy shall be

calculated on an annual basis and shall be such uniform percentage of the respective

premiums specified in the policy for each policy year, excluding any extra

premiums charged because of impairment or special hazards, that the present value,

at the date of issue of the policy, of all such adjusted premiums shall be equal to the

sum of:

(a) The then present value of the future guaranteed benefits provided for by the

policy;

(b) Two percent (2%) of the amount of insurance, if the insurance be uniform in

amount, or of the equivalen t uniform amount, as hereinafter defined, if the

amount of insurance varies with duration of the policy;

(c) Forty percent (40%) of the adjusted premium for the first policy year; and

(d) Twenty-five percent (25%) of either the adjusted premium for the fir st policy

year or the adjusted premium for a whole life policy of the same uniform or

equivalent uniform amount with uniform premiums for the whole of life

issued at the same age for the same amount of insurance, whichever is less.

(2) In applying the perc entages specified in paragraphs (c) and (d) of subsection (1) of

this section, no adjusted premium shall be deemed to exceed four percent (4%) of

the amount of insurance or uniform amount equivalent thereto. Whenever the plan

or term of a policy has been c hanged, either by request of the insured or

automatically in accordance with the provisions of the policy, the date of issue of

the changed policy for the purposes of determining a nonforfeiture benefit or cash

surrender value shall be the date as of which the age of the insured is determined for

the purposes of the changed policy. The date of issue of a policy for the purpose of

this section shall be the date as of which the rated age of the insured is determined.

(3) In the case of a policy providing an a mount of insurance varying with duration of

the policy, the equivalent uniform amount thereof for the purpose of this section

shall be deemed to be the uniform amount of insurance provided by an otherwise

similar policy, containing the same endowment benef it or benefits, if any, issued at

the same age and for the same term, the amount of which does not vary with

duration and the benefits under which have the same present value at the date of

issue as the benefits under the policy; provided that in the case of a policy providing

a varying amount of insurance issued on the life of a child under age ten (10), the

equivalent uniform amount may be computed as though the amount of insurance

provided by the policy prior to the attainment of age ten (10) were the am ount

provided by such policy at age ten (10).

(4) The adjusted premiums for any policy providing term insurance benefits by rider or

supplemental policy provision shall be equal to:

(a) The adjusted premiums for an otherwise similar policy issued at the sa me age

without such term insurance benefits, increased, during the period for which

premiums for such term insurance benefits are payable, by

(b) The adjusted premiums for such term insurance, paragraphs (a) and (b) of this

subsection being calculated sepa rately and as specified in subsections (1), (2)

and (3) of this section, except that, for the purposes of paragraphs (b), (c), and

(d) of subsection (1) of this section, the amount of insurance or equivalent

uniform amount of insurance used in the calculation of the adjusted premiums

referred to in paragraph (b) of this subsection shall be equal to the excess of

the corresponding amount determined for the entire policy over the amount

used in the calculation of the adjusted premiums in paragraph (a) of this

subsection.

(5) All adjusted premiums and present values referred to in KRS 304.15-310 to 304.15-

360, inclusive, but not including KRS 304.15 -342 and 304.15 -344 shall for all

policies of ordinary insurance be calculated on the basis of the Commissioners 1958

Standard Ordinary Mortality Table, provided that for any category of ordinary

insurance issued on female risks, adjusted premiums and present values may be

calculated according to an age not more than six (6) years younger than the actual

age of the insured, and such calculations for all policies of industrial insurance shall

be made on the basis of the Commissioners 1961 Standard Industrial Mortality

Table. All calculations shall be made on the basis of the rate of interest specified in

the policy for calculating cash surrender values and paid -up nonforfeiture benefits

provided that such rate of interest shall not exceed four percent (4%) per year except

that a rate of interest not exceeding five and one -half percent (5.5%) per year may

be used for policies issued on or after June 17, 1978. In calculating the present value

of any paid-up term insurance with accompanying pure endowment, if any, offered

as a nonforfeiture benefit for ordinary insurance, the rates of mortality assumed may

not be more than t hose shown in the Commissioners 1958 Extended Term

Insurance Table and for industrial insurance the rates of mortality may not be more

than those shown in the Commissioners 1961 Industrial Extended Term Insurance

Table. For insurance issued on a substandar d basis, the calculation of any such

adjusted premiums and present values may be based on such other table of mortality

as may be specified by the insurer and approved by the commissioner.