Section 4517. Standard of valuation reserves

(a) The legal minimum standard
  of valuation for all life insurance certificates issued by an authorized
  society prior to January first, nineteen hundred fifty-seven shall be in
  accordance  with  provisions  of  law  applicable thereto as of December
  thirty-first, nineteen hundred fifty-six, including  the  setting  aside
  and maintenance of the required statutory contingency reserve on such of
  its  certificates  as  are valued on an interest assumption in excess of
  three and one-half percent per annum.  The  legal  minimum  standard  of
  valuation  for  all  annuity  contracts,  and  disability  benefits  and
  accident and sickness benefits in all certificates and  contracts  shall
  be  in  accordance  with  the provisions of law applicable thereto as of
  December thirty-first, nineteen hundred fifty-six.
    (b) In every valuation report of every authorized society and in every
  valuation of reserves made or caused to be made by the superintendent or
  accepted by him in lieu of such valuation, the reserve liability on  all
  certificates  issued  on  and  after  January  first,  nineteen  hundred
  fifty-seven shall be determined on a basis of the net tabular  value  of
  the reserves on such certificates, not including any value for the right
  to make extra payments or to require additional insurance contributions.
  Such  tabular  values  shall  not  be  less  than the reserve determined
  according to the commissioners reserve valuation method  as  defined  in
  this  subsection.  If  the  premium charged is less than the tabular net
  premium according to the basis of valuation used, an additional  reserve
  equal  to  the  present  value  of  the  deficiency in such premiums, as
  determined in the manner prescribed in section four thousand two hundred
  eighteen of this chapter, shall be set up and maintained as a liability;
  provided that, in the case of any society which is not  qualifying  with
  the  provisions  of  section  four thousand five hundred fifteen of this
  article, the deficiency reserve shall be determined on the basis of  the
  difference  between  the  net  insurance  contribution,  as  in practice
  actually collected for life insurance  benefits,  and  the  tabular  net
  premium.   The reserve liability shall be properly adjusted in the event
  that the mid-year or tabular values are not appropriate.
    (1) Reserves according to the commissioners reserve valuation  method,
  for  the life insurance and endowment benefits of certificates providing
  for a uniform amount of insurance and requiring the payment  of  uniform
  premiums  shall be the excess, if any, of the present value, at the date
  of valuation, of such future guaranteed benefits provided  for  by  such
  certificates,  over  the  then  present value of any future modified net
  premiums therefor. The modified net premiums for  any  such  certificate
  shall be such uniform percentage of the respective contract premiums for
  such  benefits  that  the  present  value,  at  the date of issue of the
  certificate, of all such modified net premiums shall be equal to the sum
  of the  then  present  value  of  such  benefits  provided  for  by  the
  certificate and the excess of:
    (A)  a  net  level  premium equal to the present value, at the date of
  issue, of such benefits provided for after the first  certificate  year,
  divided by the present value, at the date of issue, of an annuity of one
  dollar per annum payable on the first and each subsequent anniversary of
  such  certificate  on  which a premium falls due; provided however, that
  such net level annual premium shall not  exceed  the  net  level  annual
  premium  on  the  nineteen year premium whole life plan for insurance of
  the same amount at an age one year higher than the age at issue of  such
  certificate, over
    (B)  a net one-year term premium for such benefits provided for in the
  first certificate year.
    (2) Reserves according to the commissioners reserve  valuation  method
  for  (i)  life  insurance  certificates providing for varying amounts of

  benefits or requiring the payment of varying premiums, (ii) annuity  and
  pure  endowment benefits, (iii) disability and accidental death benefits
  in all certificates and contracts, and (iv) all other  benefits,  except
  life  insurance  and endowment benefits, shall be calculated by a method
  consistent with the principles of this subsection (b), except  that  any
  extra  premiums  charged because of impairments or special hazards shall
  be disregarded in the determination of modified net premiums.
    (c) (1) The minimum standard for the valuation of life  insurance  and
  annuity certificates issued on and after January first, nineteen hundred
  fifty-seven,  but  prior  to  July  first, nineteen hundred seventy-two,
  shall be three percent interest  and  for  life  insurance  and  annuity
  certificates   issued   on   and  after  July  first,  nineteen  hundred
  seventy-two, but prior to January first, nineteen hundred eighty,  shall
  be three and one-half percent interest, and the following tables:
    (A)  for certificates of life insurance issued prior to January first,
  nineteen  hundred  seventy-five  --  American  Men  Ultimate  Table   of
  Mortality,  with  Bowerman's  or  Davis'  Extension thereof or, with the
  consent of the superintendent, the Commissioners 1941 Standard  Ordinary
  Mortality  Table,  the  Commissioners  1958  Standard Ordinary Mortality
  Table or the Commissioners 1941 Standard Industrial Table of  Mortality;
  provided  that  for  any category of ordinary insurance issued on female
  risks, all modified net premiums and present values  may  be  calculated
  according  to  an  age not more than three years younger than the actual
  age of the insured; and for certificates issued  on  and  after  January
  first, nineteen hundred seventy-five, -- the Commissioners 1941 Standard
  Ordinary  Mortality  Table,  the  Commissioners  1958  Standard Ordinary
  Mortality Table or the Commissioners 1961 Standard Industrial  Table  of
  Mortality;
    (B)  for  annuity  certificates,  including life annuities provided or
  available under optional modes of settlement in such certificates -- the
  1937 Standard Annuity Table or,  at  the  option  of  the  society,  the
  Annuity  Mortality  Table  for  1949,  Ultimate,  or any modification of
  either table approved by the superintendent;
    (C) for disability benefits issued in  connection  with  life  benefit
  certificates  --  Hunter's  Disability  Table,  which, for active lives,
  shall be combined with a mortality table permitted for  calculating  the
  reserves  on life insurance certificates, except that the table known as
  Class III Disability Table (1926) modified to conform to the contractual
  waiting period, or, at the option of the society, the tables of Period 2
  disablement rates and the 1930 to 1950 termination  rates  of  the  1952
  Disability  Study  of  the  Society of Actuaries, with due regard to the
  type of benefits, shall be used in  computing  reserves  for  disability
  benefits  under a contract which presumes that total disability shall be
  considered to be permanent after a specified period; and
    (D) for accidental death  benefits  issued  in  connection  with  life
  benefit  certificate  --  the  Inter-Company  Double Indemnity Mortality
  Table or, at the option  of  the  society,  the  1959  Accidental  Death
  Benefits  Table.    Either such table shall be combined with a mortality
  table  permitted  for  calculating  the  reserves  for  life   insurance
  certificates.
    (2)  The  minimum  standard  for  the  valuation of life insurance and
  annuity certificates issued on and after January first, nineteen hundred
  eighty, shall be subject to the requirements and exceptions  of  section
  four  thousand  two  hundred  seventeen of this chapter, provided that a
  society may also elect to use the Commissioners 1941  Standard  Ordinary
  Mortality Table or the Commissioners 1961 Standard Industrial Table.
    (3)  The superintendent may, in his discretion, accept other standards
  for valuation if he finds that the reserves produced thereby will not be

  less  in  the  aggregate  than  reserves computed in accordance with the
  minimum valuation standard herein prescribed. The superintendent may, in
  his discretion, vary  the  standards  of  mortality  applicable  to  all
  certificates  of  insurance on substandard lives or other extrahazardous
  lives by any society authorized to do business in this  state.  Whenever
  the  mortality  experience  under  all  certificates  valued on the same
  mortality table is in excess of the expected mortality according to such
  table for a period of three consecutive years,  the  superintendent  may
  require  additional  reserves  when  deemed necessary in his judgment on
  account of such certificates.
    (4)  Any society, with the consent of the superintendent and under any
  conditions he may impose, may establish and  maintain  reserves  on  its
  certificates  in  excess  of  the  reserves required thereunder, but the
  contractual rights of any insured member shall not be affected thereby.
    (d) Every society shall maintain reserves for all individual  accident
  and health insurance certificates which shall place a sound value on its
  liabilities under such certificates and which shall not be less than the
  reserves  according  to the standards set forth in regulations issued by
  the superintendent and, in no  event,  less  than  the  pro  rata  gross
  unearned  premium  reserve for such certificates.  Prior to the issuance
  of any regulation provided for in  this  subsection  the  superintendent
  shall  give at least ten days notice thereof to each society licensed to
  write accident and health insurance in  this  state,  by  ordinary  mail
  addressed to its principal place of business, and provide an opportunity
  for hearing on such proposed action.
    (e)  All of the foregoing valuations, in any valuation report filed by
  a society as required by the provisions of this article, shall either be
  certified by a competent actuary, or, at the request and expense of  the
  society  be  verified  by  an actuary of the insurance department of the
  state, province or country in which the society is domiciled.
    (f)  Any  authorized  society  which  issues  certificates  or   other
  obligations  providing  for  benefits  in  case  of  death or disability
  resulting solely from accident,  or  in  case  of  temporary  disability
  resulting  from  sickness,  or  hospital expense or surgical and medical
  expense benefits shall maintain reserves for unearned premiums  and  for
  disabled lives in accordance with standards prescribed from time to time
  by  the  superintendent,  which  standards  shall  conform  as nearly as
  practicable to those required  for  similar  reserves  of  accident  and
  health insurance companies under the laws of this state.