N.Y. Insurance Law § 4218: When actual premium is less than net premium; minimum reserve

§ 4218. When actual premium is less than net premium; minimum reserve.

(a) (1) When the actual premium or consideration charged for life

insurance under any life insurance policy, issued by any life insurance

company doing business in this state, is less than the modified net

premium calculated on the basis of the commissioners reserve valuation

method as defined in paragraph six of subsection (c) of section four

thousand two hundred seventeen of this article and using the rate of

interest and mortality tables contained in the minimum valuation

standards in paragraphs two and four of such subsection, or in the case

of future renewals under a renewable term insurance policy issued prior

to the operative date of subsection (k) of section four thousand two

hundred twenty-one of this article, the Modern CSO Mortality Table

published in the Transactions of the Society of Actuaries, Vol. XXVII

(1975), the minimum reserve required for such policy shall be the

greater of either the reserve calculated according to the mortality

table, rate of interest, and method actually used for such policy, or

the reserve calculated by the commissioners reserve valuation method as

defined in paragraph six of subsection (c) of section four thousand two

hundred seventeen of this article and using the mortality table and rate

of interest prescribed in this section for calculating the commissioners

reserve valuation method modified net premium and replacing such

modified net premium by the actual premium charged for the policy in

each contract year for which such modified net premium exceeds the

actual premium.

(2) This section shall not authorize any such company to issue any

policy or contract in violation of any other provision of this chapter.

(b) (1) In the case of any life insurance policy issued on or after

January first, nineteen hundred eighty-six, for which the actual premium

in the first policy year exceeds that of the second year and for which

no comparable additional benefit is provided in the first year for such

excess and which provides an endowment benefit or a cash surrender value

or a combination thereof in an amount greater than such excess premium,

the foregoing provisions of subsection (a) hereof shall be applied as if

the method actually used in calculating the reserve for such policy were

the method described in paragraph six of subsection (c) of section four

thousand two hundred seventeen of this article, ignoring the proviso of

such paragraph.

(2) The minimum reserve at each policy anniversary of such a policy

shall be the greater of the minimum reserve calculated in accordance

with paragraph six of subsection (c) of section four thousand two

hundred seventeen of this article, including the proviso of that

paragraph, and the minimum reserve calculated in accordance with this

section.