C.R.S. Section 10-7-309.5
Minimum standards of valuation for new policies

  • definition

(1)

The calendar year statutory valuation interest rates, as defined in this section, must be the interest rates used in determining the minimum standard for the valuation of:

(a)

Life insurance policies issued in a particular calendar year, on or after the operative date of section 10-7-305.1;

(b)

Individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982;

(c)

Annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts; and

(d)

The net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts.

(2)

The calendar year statutory valuation interest rates (“I”) shall be determined as follows, and the results rounded to the nearer one-quarter of one percent:

(a)

For life insurance:
I = .03 + W (R1 - .03) + W/2 (R2 - .09).

(b)

Intentionally left blank —Ed.

(I)

For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:
I = .03 + W (R - .03).

(II)

In the formulas used in paragraph (a) of this subsection (2) and this paragraph (b), “R1” is the lesser of R and .09, “R2” is the greater of R and .09, “R” is the reference interest rate defined in this section, and “W” is the weighting factor defined in this section.

(c)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in paragraph (b) of this subsection (2), the formula for life insurance stated in paragraph (a) of this subsection (2) shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single-premium immediate annuities stated in said paragraph (b) shall apply to annuities and guaranteed interest contracts with guarantee durations of ten years or less.

(d)

For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single-premium immediate annuities stated in paragraph (b) of this subsection (2) shall apply.

(e)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single-premium immediate annuities stated in paragraph (b) of this subsection (2) shall apply.

(3)

Intentionally left blank —Ed.

(a)

If the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this paragraph (a) differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one-half of one percent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year.

(b)

For purposes of applying the provision of paragraph (a) of this subsection (3), the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 (using the reference interest rate defined for 1979) and shall be determined for each subsequent calendar year regardless of when section 10-7-305.1 becomes operative.

(4)

The weighting factors referred to in the formulas stated in subsection (2) of this section are given in the following tables:

(a)

Intentionally left blank —Ed.

(I)

The weighting factors for life insurance:
GUARANTEE DURATION
WEIGHTING

(YEARS)

FACTORS
10 or less
.50
More than 10 but not more than 20
.45
More than 20
.35

(II)

For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.

(b)

The weighting factor for single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:
.80

(c)

The weighting factors for other annuities and for guaranteed interest contracts, except as stated in paragraph (b) of this subsection (4), shall be as specified in the following tables (subparagraphs (I), (II), and (III)) and according to the following rules and definitions (subparagraphs (IV), (V), and (VI)):

(I)

For annuities and guaranteed interest contracts valued on an issue year basis:
WEIGHTING
GUARANTEE DURATION
FACTORS

(YEARS)

FOR PLAN TYPE
A
B
C
5 or less
.80
.60
.50
More than 5 but not more than 10
.75
.60
.50
More than 10 but not more than 20
.65
.50
.45
More than 20
.45
.35
.35

(II)

For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in subparagraph (I) of this paragraph (c) increased by:
PLAN TYPE
A
B
C
.15.25.05

(III)

For annuities and guaranteed interest contracts valued on an issue year basis (other than those with no cash settlement options) which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in subparagraph (I) or derived in subparagraph (II) of this paragraph (c) increased by:
PLAN TYPE
A
B
C
.05.05.05

(IV)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(V)

“Plan type”, as used in the tables in subparagraphs (I), (II), and (III) of this paragraph (c), is defined as follows:

(A)

Plan type A:
At any time policyholder may withdraw funds only: (i) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or (ii) without such adjustment but in installments over five years or more; or (iii) as an immediate life annuity; or (iv) no withdrawal permitted.

(B)

Plan type B:
Before expiration of the interest rate guarantee, policyholder may withdraw funds only: (i) with adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or (ii) without such adjustment but in installments over five years or more; or (iii) no withdrawal permitted. At the end of interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.

(C)

Plan type C:
Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either:
(i)
without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company; or (ii) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

(VI)

A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this section, “issue year basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract, and “change in fund basis of valuation” refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

(5)

The “reference interest rate” referred to in subsection (2) of this section shall be defined as follows:

(a)

For all life insurance, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June 30 of the calendar year next preceding the year of issue, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.;

(b)

For single-premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve months, ending on June 30 of the calendar year of issue or year of purchase, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.;

(c)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (b) of this subsection (5), with guarantee duration in excess of ten years, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.;

(d)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in paragraph (b) of this subsection (5), with guarantee duration of ten years or less, the average over a period of twelve months, ending on June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.;

(e)

For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve months, ending on June 30 of the calendar year of issue or purchase, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.;

(f)

For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in paragraph (b) of this subsection (5), the average over a period of twelve months, ending on June 30 of the calendar year of the change in the fund, of Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc.

(6)

In the event that Moody’s corporate bond yield average - monthly average corporates is no longer published by Moody’s Investors Service, Inc., or in the event that the NAIC determines that Moody’s corporate bond yield average - monthly average corporates, as published by Moody’s Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the NAIC and approved by rule promulgated by the commissioner, may be substituted.

Source: Section 10-7-309.5 — Minimum standards of valuation for new policies - definition, https://leg.­colorado.­gov/sites/default/files/images/olls/crs2023-title-10.­pdf (accessed Oct. 20, 2023).

10‑7‑101
Valuation of life policies 10‑7‑102
Life insurance policies - requirements 10‑7‑103
Life insurance policies - prohibition 10‑7‑104
Exceptions 10‑7‑105
Violation 10‑7‑105.5
Lapse of life insurance policy - notice - affidavit of mailing or electronic transmission - legislative declaration 10‑7‑106
Exclusive right of insured in proceeds 10‑7‑107
Nonforfeiture benefits - applicability 10‑7‑108
Regulating vouchers for disbursements 10‑7‑109
Suicide no defense for nonpayment 10‑7‑112
Interest payable on benefits or proceeds 10‑7‑113
Acceleration of benefits 10‑7‑114
Actuarial opinion of reserves - definition - rules 10‑7‑115
Insurable interest - 170 (c) organizations 10‑7‑116
Military sales - rules 10‑7‑201
Group life insurance 10‑7‑202
Policy provisions 10‑7‑203
Employer defined 10‑7‑204
Reciprocal provisions 10‑7‑205
Exemption from execution 10‑7‑206
Issuance and valuation of policies - annual statement 10‑7‑207
Assignment 10‑7‑301
Short title 10‑7‑301.5
Definitions 10‑7‑302
Compulsory policy provisions 10‑7‑303
Computation of cash surrender value 10‑7‑304
Computation of nonforfeiture benefit 10‑7‑305
Adjusted premiums 10‑7‑305.1
Adjusted premiums for new policies 10‑7‑305.2
Future premium determination - standards 10‑7‑306
Calculation of values - supplemental rules 10‑7‑306.1
Calculation of values - new policies 10‑7‑307
Exemptions 10‑7‑308
Waiver prohibited 10‑7‑309
Minimum standard of valuation - rules 10‑7‑309.5
Minimum standards of valuation for new policies - definition 10‑7‑310
Life and endowment reserves 10‑7‑310.5
Individual annuity and pure endowment reserves 10‑7‑311
Minimum aggregate reserves 10‑7‑312
Optional standards 10‑7‑313
Minimum reserves 10‑7‑313.1
Minimum reserves - exceptions 10‑7‑313.2
Minimum standards for other coverages including accident and health insurance contracts - rules 10‑7‑313.3
Valuation manual for policies issued on or after the operative date of the valuation manual - rules 10‑7‑313.4
Requirements of a principle-based valuation 10‑7‑313.6
Experience reporting for policies in force on or after the operative date of the valuation manual 10‑7‑313.8
Confidentiality - definitions 10‑7‑313.9
Single state exemption 10‑7‑314
Automatic premium loans 10‑7‑315
Operative date 10‑7‑316
Effect on existing policies 10‑7‑401
Sales not prohibited 10‑7‑402
Investment contract funds - separate accounts 10‑7‑403
Where benefits are payable in variable amounts 10‑7‑404
Authority to issue variable contracts 10‑7‑405
Construction 10‑7‑501
Short title 10‑7‑502
Exemptions 10‑7‑503
Compulsory contract provisions 10‑7‑504
Minimum nonforfeiture amounts - rules 10‑7‑505
Computation of annuity benefit 10‑7‑506
Computation of cash surrender benefit 10‑7‑507
Computation of paid-up annuity nonforfeiture benefit 10‑7‑508
Determination of maturity date 10‑7‑509
Calculations of values - supplemental rules 10‑7‑510
Effective date - applicability of part 10‑7‑511
Rule-making authority 10‑7‑601
Short title 10‑7‑602
Definitions 10‑7‑603
Licensing 10‑7‑604
Licensure - refusal to issue - suspension - revocation - refusal to renew 10‑7‑605
Forms approval 10‑7‑606
Annual reports 10‑7‑607
Examinations 10‑7‑608
Disclosures 10‑7‑609
General requirements 10‑7‑610
Limited purchase in incontestability period 10‑7‑611
Advertising - legislative intent 10‑7‑612
Fraudulent acts 10‑7‑613
Penalties 10‑7‑614
Unfair trade practices 10‑7‑615
Rules 10‑7‑616
No preemption - Colorado Securities Act - authority of division of securities 10‑7‑617
Application 10‑7‑618
Continuation of business 10‑7‑619
Viatical settlements cash fund - created 10‑7‑620
Severability 10‑7‑701
Short title 10‑7‑702
Definitions 10‑7‑703
Insurance on the life of another 10‑7‑704
Insurable interest 10‑7‑705
Insured’s own life 10‑7‑706
Reliance on statements 10‑7‑707
Consent of insured 10‑7‑708
Prohibited practices 10‑7‑709
Actions to recover death benefits 10‑7‑710
Legitimate insurance transactions 10‑7‑801
Short title 10‑7‑802
Definitions 10‑7‑803
Insurers - duty to compare names of insureds with death master file and to locate beneficiaries
Green check means up to date. Up to date

Current through Fall 2024

§ 10-7-309.5’s source at colorado​.gov