RESERVE COMPUTATION: GROSS PREMIUM CHARGED LESS THAN VALUATION NET PREMIUM.
Tex. INS Code § 425.068.
in effect(a) If in a contract year the gross premium charged by a life insurance company on a policy or contract is less than the valuation net premium for the policy or contract computed by the method used in computing the reserve on the policy or contract but using the minimum valuation mortality standards and interest rate, the minimum reserve required for the policy or contract is the greater of:
(1) the reserve computed according to the mortality table, interest rate, and method actually used for the policy or contract; or
(2) the reserve computed by the method actually used for the policy or contract but using the minimum valuation mortality standards and interest rate and replacing the valuation net premium with the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium.
(b) The minimum valuation mortality standards and interest rate under Subsection (a) are the standards and rate provided by Sections 425.058 , 425.061 , 425.062 , and 425.063 .
(c) This subsection applies only to a life insurance policy issued on or after January 1, 1985, for which the gross premium for the first policy year exceeds the gross premium for the second policy year, for which a comparable additional benefit is not provided in the first year for the excess premium, and that provides an endowment benefit, a cash surrender value, or a combination of an endowment benefit and cash surrender value, in an amount greater than the excess premium. For a policy to which this subsection applies, Subsections (a) and (b) shall be applied as if the method actually used in computing the reserve for the policy were the method described in Section 425.064 , ignoring Section 425.064 (c). The minimum reserve at each policy anniversary is the greater of:
(1) the minimum reserve computed in accordance with Section 425.064 , including Section 425.064 (c); or
(2) the minimum reserve computed in accordance with this section.
Added by Acts 2005, 79th Leg., Ch. 727 (H.B. 2017 ), Sec. 1, eff. April 1, 2007.