KRS 304.15-352: Cash surrender value -- Nonforfeiture factor.

(1) This section, in addition to all other applicable sections of KRS 304.15 -310 to

304.15-360, shall apply to all policies issued on or after January 1, 1986. Any cash

surrender value available under the policy in the event of default in a premium

payment due on any policy anniversary shall be in an amount which does not differ

by more than two-tenths of one percent (0.2%) of either the amount of insurance, if

the insurance be uniform in amount, or the average amount of insurance at the

beginning of each of th e first ten (10) policy years, from the sum of the greater of

zero (0) and the basic cash value hereinafter specified and the present value of any

existing paid-up additions less the amount of any indebtedness to the insurer under

the policy.

(2) The basic cash value shall be equal to the present value, on such anniversary, of the

future guaranteed benefits which would have been provided for by the policy,

excluding any existing paid -up additions and before deduction of any indebtedness

to the insurer, if t here had been no default, less the then present value of the

nonforfeiture factors, as hereinafter defined, corresponding to premiums which

would have fallen due on and after such anniversary. Provided, however, that the

effects on the basic cash value of supplemental life insurance or annuity benefits or

of family coverage, as described in KRS 304.15 -320, 304.15-340, or 304.15-342 is

applicable, shall be the same as are the effects specified in KRS 304.15 -320,

304.15-340, or 304.15 -342, whichever is applic able, on the cash surrender values

defined in that section.

(3) The nonforfeiture factor for each policy year shall be an amount equal to a

percentage of the adjusted premium for the policy year, as defined in KRS 304.15 -

340 or 304.15 -342, whichever is app licable. Except as required in this subsection,

such percentage:

(a) Must be the same percentage for each policy year between the second policy

anniversary and the later of the fifth policy anniversary and the first policy

anniversary at which there is available under the policy a cash surrender value

in an amount, before including any paid -up additions and before deducting

any indebtedness, of at least two -tenths of one percent (0.2%) of either the

amount of insurance, if the insurance be uniform in amount , or the average

amount of insurance at the beginning of each of the first ten (10) policy years;

and

(b) Must be such that no percentage after the later of the two (2) policy

anniversaries specified in paragraph (a) of this subsection may apply to fewer

than five (5) consecutive policy years. Provided, that no basic cash value may

be less than the value which would be obtained if the adjusted premiums for

the policy, as defined in KRS 304.15 -340 or 304.15 -342, whichever is

applicable, were substituted for the nonforfeiture factors in the calculation of

the basic cash value.

(4) All adjusted premiums and present values referred to in this section shall for a

particular policy be calculated on the same mortality and interest bases as are used

in demonstrating the policy's compliance with the other sections of KRS 304.15-310

to 304.15-360. The cash surrender values referred to in this section shall include any

endowment benefits provided for by the policy.

(5) Any cash surrender value available other than in th e event of default in a premium

payment due on a policy anniversary, and the amount of any paid -up nonforfeiture

benefit available under the policy in the event of default in a premium payment,

shall be determined in manners consistent with the manners spe cified for

determining the analogous minimum amounts in KRS 304.15 -310, 304.15 -320,

304.15-330, 304.15-342 and 304.15-350. The amounts of any cash surrender values

and of any paid -up nonforfeiture benefits granted in connection with additional

benefits suc h as those listed as paragraphs (a) to (f) of KRS 304.15 -350 shall

conform with the principles of this section.