Maximum Reserve Valuation and Nonforfeiture Values

Bulletin No. 97- Bulletin No. 02-15 To: All Domestic Life Insurance Companies and Charitable Annuity Societies From: Holly C. Bakke Commissioner Subject: Maximum Reserve Valuation and Nonforfeiture Rates In accordance with N.J.S.A. 17B:19-8 and N.J.S.A. 17B:25-19, the attached table shows the rates of interest to be used for determining minimum valuation standards and nonforfeiture values applicable to life insurance policies issued in 1982 through 2003 and the annuity contracts issued or undergoing a change in fund in 1981 through 2002. With respect to benefits which are subject to the provisions of N.J.S.A. 17B:25-19, the rates shown are applicable for those benefits under life insurance policies issued in a particular calendar year on or after the operative date provided for at N.J.S.A. 17B:25-19.h(xi). Requests for additional copies of the table should be directed to: Nancy Hritz Chief, Valuation Bureau Life and Health Division Department of Banking and Insurance PO Box 325 Trenton, New Jersey 08625-0325 Phone: (609) 292-5427 ext. 50319 Fax: (609) 633-0527 E-Mail: nancy.hritz@dobi.state.nj.us The bulletin can also be found at the Department's web site: www.state.nj.us/dobi/insmnu.shtml 8/16/02 /s/Holly C. Bakke Date Holly C. Bakke Commissioner Statutory Calendar Year Valuation and Nonforfeiture Interest Rates A. Life Insurance Guarantee Duration (Years) Calendar Year Valuation Interest Rates Nonforfeiture Interest Rate 10 or less 82 6.75 8.50 83 - 86 7.25 9.00 87 6.50 8.25 88 - 93 6.00 7.50 94 - 98 5.50 7.00 99 - 03 5.00 6.25 More than 10, not 82 6.25 7.75 more than 20 83 - 86 6.75 8.50 87 - 93 6.00 7.50 94 - 98 5.25 6.50 99 � 03 4.75 6.00 More than 20 82 5.50 7.00 83 � 86 6.00 7.50 87 � 92 5.50 7.00 93 � 94 5.00 6.25 95 � 03 4.50 5.75 B. Single stipulated payment 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. Calendar Year Valuation Interest Rates 81 11.50 82 13.25 83 � 84 11.25 85 11.00 86 9.25 87 8.00 88 � 89 8.75 90 � 91 8.25 92 7.75 93 7.00 94 6.50 95 7.25 96 � 97 6.75 98 � 99 6.25 2000 7.00 2001 6.75 2002 6.50 C. Other Annuities and Guaranteed Interest Contracts Contracts issued on an Issue Year Basis Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes Yes 5 or less 81 11.50 9.50 8.25 82 13.25 10.50 9.25 83 11.25 9.25 8.25 84 11.25 9.25 8.00 85 11.00 7.00 8.00 86 9.25 7.75 6.75 87 8.00 6.75 6.25 88 8.75 7.50 6.75 89 8.75 7.25 6.50 90 � 91 8.25 7.00 6.25 92 7.75 6.50 6.00 93 7.00 6.00 5.50 94 6.50 5.75 5.25 95 7.25 6.25 5.75 96 � 97 6.75 5.75 5.25 98 � 99 6.25 5.50 5.00 2000 7.00 6.00 5.50 2001 6.75 5.75 5.25 2002 6.50 5.75 5.25 more than 81 11.00 9.50 8.25 5 but not 82 12.50 10.50 9.25 more than 83 10.75 9.25 8.25 10 84 10.75 9.25 8.00 85 10.50 9.00 8.00 86 8.75 7.75 6.75 87 7.75 6.75 6.25 88 8.50 7.50 6.75 89 8.25 7.25 6.50 90 � 91 8.00 7.00 6.25 92 7.50 6.50 6.00 93 6.75 6.00 5.50 94 6.50 5.75 5.25 95 7.00 6.25 5.75 96 � 97 6.50 5.75 5.25 98 � 99 6.00 5.50 5.00 2000 6.75 6.00 5.50 2001 6.50 5.75 5.25 2002 6.25 5.75 5.25 more than 81 7.75 6.75 6.25 10 but not 82 8.50 7.25 6.75 more than 83 � 84 8.25 7.00 6.75 20 85 8.25 7.00 6.50 86 7.50 6.50 6.00 87 7.00 6.00 5.75 88 � 89 7.25 6.25 6.00 C. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts issued on an Issue Year Basis Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes Yes more than 90 � 91 7.00 6.25 5.75 10 but not 92 6.75 6.00 5.75 more than 93 6.25 5.50 5.25 20 94 6.00 5.25 5.00 95 6.25 5.50 5.25 96 6.00 5.25 5.00 97 6.00 5.25 5.25 98 5.75 5.00 4.75 99 5.50 5.00 4.75 2000 5.75 5.25 5.00 01 - 02 6.00 5.25 5.00 more than 81 6.25 5.50 5.50 20 82 6.75 6.00 6.00 83 - 84 6.75 5.75 5.75 85 6.50 5.75 5.75 86 6.00 5.50 5.75 87 5.75 5.25 5.50 88 - 89 6.00 5.25 5.25 90 - 91 5.75 5.25 5.25 92 5.75 5.00 5.00 93 5.25 4.75 4.75 94 5.00 4.50 4.50 95 5.25 4.75 4.75 96 5.00 4.50 4.50 97 5.25 4.75 4.75 98 � 99 4.75 4.50 4.50 2000-02 5.00 4.50 4.50 Yes No 5 or less 81 12.00 10.00 9.00 82 13.75 11.25 10.00 83 11.75 9.75 8.75 84 11.75 9.75 8.50 85 11.50 9.50 8.50 86 9.50 8.00 7.25 87 8.50 7.25 6.50 88 9.25 7.75 7.00 89 9.00 7.50 7.00 90 8.50 7.25 6.50 91 8.75 7.25 6.75 92 8.00 6.75 6.25 93 7.25 6.25 5.75 94 6.75 6.00 5.50 95 7.50 6.50 6.00 96 6.75 6.00 5.50 97 7.00 6.00 5.50 98 � 99 6.50 5.75 5.25 2000 7.25 6.25 5.75 2001 7.00 6.00 5.50 2002 6.75 6.00 5.50 C. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts issued on an Issue Year Basis Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes No more than 81 11.50 10.00 9.00 5 but not 82 13.25 11.25 10.00 more than 83 11.25 9.75 8.75 10 84 11.25 9.75 8.50 85 11.00 9.50 8.50 86 9.25 8.00 7.25 87 8.00 7.25 6.50 88 8.75 7.75 7.00 89 8.75 7.50 7.00 90 8.25 7.25 6.50 91 8.25 7.25 6.75 92 7.75 6.75 6.25 93 7.00 6.25 5.75 94 6.50 6.00 5.50 95 7.25 6.50 6.00 96 � 97 6.75 6.00 5.50 98 6.25 5.75 5.25 99 6.25 5.50 5.25 2000 7.00 6.25 5.75 2001 6.75 6.00 5.50 2002 6.50 6.00 5.50 more than 81 8.00 7.00 6.75 10 but not 82 8.75 7.50 7.25 more than 83 - 84 8.75 7.50 7.00 20 85 8.50 7.50 7.00 86 7.75 6.75 6.50 87 7.25 6.50 6.00 88 - 91 7.50 6.50 6.25 92 7.00 6.25 6.00 93 6.50 5.75 5.50 94 6.25 5.50 5.25 95 6.50 5.75 5.50 96 - 97 6.25 5.50 5.25 98 6.00 5.25 5.00 99 5.75 5.25 5.00 2000 6.00 5.50 5.25 2001 6.25 5.50 5.25 2002 6.00 5.50 5.25 more than 81 6.75 6.00 6.00 20 82 7.25 6.25 6.25 83- 85 7.00 6.25 6.25 86 6.50 5.75 5.75 87 6.00 5.50 5.50 88 6.25 5.75 5.75 89 - 91 6.25 5.50 5.50 92 6.00 5.25 5.25 93 5.50 5.00 5.00 C. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts issued on an Issue Year Basis Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes No more than 94 5.25 4.75 4.75 20 95 5.50 5.00 5.00 96 5.25 4.75 4.75 97 5.25 5.00 5.00 98 5.00 4.75 4.75 99 5.00 4.50 4.50 2000-02 5.25 4.75 4.75 No Yes or 5 or less 81 11.50 NOT No 82 13.25 APPLICABLE 83 - 84 11.25 FOR ANY 85 11.00 GUARANTEE 86 9.25 DURATION 87 8.00 FOR PLAN 88 - 89 8.75 TYPES 90 - 91 8.25 B AND C 92 7.75 93 7.00 94 6.50 95 7.25 96- 97 6.75 98 � 99 6.25 2000 7.00 2001 6.75 2002 6.50 more than 81 11.00 5 but not 82 12.50 more than 83 � 84 10.75 10 85 10.50 86 8.75 87 7.75 88 8.50 89 8.25 90 � 91 8.00 92 7.50 93 6.75 94 6.50 95 7.00 96 � 97 6.50 98 � 99 6.00 2000 6.75 2001 6.50 2002 6.25 more than 81 10.00 10 but not 82 11.25 more than 83 � 84 9.75 20 85 9.50 86 8.00 C. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts issued on an Issue Year Basis Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C No Yes or more than 87 7.25 No 10 but not 88 7.75 more than 89 7.50 20 90 � 91 7.25 92 6.75 93 6.25 94 6.00 95 6.50 96 � 97 6.00 98 5.75 99 5.50 2000 6.25 2002 6.00 more than 81 7.75 NOT 20 82 8.75 APPLICABLE 83 - 84 7.75 FOR ANY 85 7.50 GUARANTEE 86 6.50 DURATION 87 6.00 FOR PLAN 88 - 89 6.25 TYPES 90 - 91 6.00 B AND C 92 5.75 93 5.25 94 5.00 95 5.50 96 5.00 97 5.25 98 � 99 4.75 2000 5.25 2002 5.00 D. Other Annuities and Guaranteed Interest Contracts Contracts Valued on a Change in Fund Basis (Only contracts with cash settlement options may be valued on change in fund basis) Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes Yes 5 or less 81 13.25 12.00 9.00 82 15.00 13.75 10.00 83 12.75 11.75 8.75 84 12.75 11.75 8.50 85 12.50 11.50 8.50 86 10.25 9.50 7.25 87 9.00 8.50 6.50 88 10.00 9.25 7.00 D. Other Annuities and Guaranteed Interest Contracts Contracts Valued on a Change in Fund Basis (Only contracts with cash settlement options may be valued on change in fund basis) Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes Yes 5 or less 89 9.75 9.00 7.00 90 9.25 8.50 6.50 91 9.25 8.75 6.75 92 8.50 8.00 6.25 93 7.75 7.25 5.75 94 7.25 6.75 5.50 95 8.25 7.50 6.00 96 7.25 6.75 5.50 97 7.50 7.00 5.50 98 7.00 6.50 5.25 99 6.75 6.25 5.25 2000 7.75 7.25 5.75 2001 7.50 7.00 5.50 2002 7.25 6.75 5.50 more than 81 12.75 12.00 9.00 5 but not 82 14.50 13.75 10.00 more than 83 12.25 11.75 8.75 10 84 12.25 11.75 8.50 85 12.00 11.50 8.50 86 10.00 9.50 7.25 87 8.75 8.50 6.50 88 9.50 9.25 7.00 89 9.50 9.00 7.00 90 8.75 8.50 6.50 91 9.00 8.75 6.75 92 8.25 8.00 6.25 93 7.50 7.25 5.75 94 7.00 6.75 5.50 95 8.00 7.50 6.00 96 7.00 6.75 5.50 97 7.25 7.00 5.50 98 6.75 6.50 5.25 99 6.50 6.25 5.25 2000 7.50 7.25 5.75 2001 7.25 7.00 5.50 2002 7.00 6.75 5.50 more than 81 11.50 11.00 8.25 10 but not 82 13.25 12.50 9.25 more than 83 11.25 10.75 8.25 20 84 11.25 10.75 8.00 85 11.00 10.50 8.00 86 9.25 8.75 6.75 87 8.00 7.75 6.25 88 8.75 8.50 6.75 89 8.75 8.25 6.50 90 - 91 8.25 8.00 6.25 92 7.75 7.50 6.00 D. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts Valued on a Change in Fund Basis (Only contracts with cash settlement options may be valued on change in fund basis) Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes Yes more than 93 7.00 6.75 5.50 10 but not 94 6.50 6.50 5.25 more than 95 7.25 7.00 5.75 20 96 - 97 6.75 6.50 5.25 98 � 99 6.25 6.00 5.00 2000 7.00 6.75 5.50 2001 6.75 6.50 5.25 2002 6.50 6.25 5.25 more than 81 9.50 9.50 7.25 20 82 10.50 10.50 8.00 83 9.25 9.25 7.25 84 9.25 9.25 7.00 85 9.00 9.00 7.00 86 7.75 7.75 6.00 87 6.75 6.75 5.50 88 7.50 7.50 6.00 89 7.25 7.25 5.75 90 7.00 7.00 5.50 91 7.00 7.00 5.75 92 6.50 6.50 5.25 93 6.00 6.00 5.00 94 5.75 5.75 4.75 95 6.25 6.25 5.25 96 5.75 5.75 4.75 97 5.75 5.75 5.00 98 5.50 5.50 4.75 99 5.50 5.50 4.50 2000 6.00 6.00 5.00 2001 5.75 5.75 5.00 2002 5.75 5.75 4.75 Yes No 5 or less 81 13.75 12.75 9.50 82 15.75 14.50 10.50 83 13.50 12.25 9.25 84 13.25 12.25 9.25 85 13.00 12.00 9.00 86 10.75 10.00 7.75 87 9.50 8.75 6.75 88 10.25 9.50 7.50 89 10.00 9.50 7.25 90 9.50 8.75 7.00 91 9.75 9.00 7.00 92 9.00 8.25 6.50 93 8.25 7.50 6.00 94 7.50 7.00 5.75 95 8.50 8.00 6.25 96 7.50 7.00 5.75 97 7.75 7.25 5.75 D. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts Valued on a Change in Fund Basis (Only contracts with cash settlement options may be valued on change in fund basis) Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes No 5 or less 98 7.00 6.75 5.50 99 7.00 6.50 5.50 2000 8.00 7.50 6.00 2001 7.75 7.25 5.75 2002 7.50 7.00 5.75 more than 81 13.25 12.00 9.00 5 but not 82 15.00 14.50 10.50 more than 83 - 84 12.75 12.25 9.25 10 85 12.50 12.00 9.00 86 10.25 10.00 7.75 87 9.00 8.75 6.75 88 10.00 9.50 7.50 89 9.75 9.50 7.25 90 9.25 8.75 7.00 91 9.25 9.00 7.00 92 8.50 8.25 6.50 93 7.75 7.50 6.00 94 7.25 7.00 5.75 95 8.25 8.00 6.25 96 7.25 7.00 5.75 97 7.50 7.25 5.75 98 7.00 6.75 5.50 99 6.75 6.50 5.50 2000 7.75 7.50 6.00 2001 7.50 7.25 5.75 2002 7.25 7.00 5.75 more than 81 12.00 11.50 9.00 10 but not 82 13.75 13.25 10.00 more than 83 11.75 11.25 8.75 20 84 11.75 11.25 8.50 85 11.50 11.00 8.50 86 9.50 9.25 7.25 87 8.50 8.00 6.50 88 9.25 8.75 7.00 89 9.00 8.75 7.00 90 8.50 8.25 6.50 91 8.75 8.25 6.75 92 8.00 7.75 6.25 93 7.25 7.00 5.75 94 6.75 6.50 5.50 95 7.50 7.25 6.00 96 6.75 6.75 5.50 97 7.00 6.75 5.50 98 6.50 6.25 5.25 99 6.25 6.25 5.25 2000 7.25 7.00 5.75 2001 7.00 6.75 5.50 2002 6.75 6.50 5.50 D. Other Annuities and Guaranteed Interest Contracts - cont'd Contracts Valued on a Change in Fund Basis (Only contracts with cash settlement options may be valued on change in fund basis) Cash Settlement Options? Future Interest Guarantee? Guarantee Duration (Years) Calendar Year Valuation Interest Rate For Plan Type A B C Yes No more than 81 10.00 10.00 7.75 20 82 11.25 11.25 8.75 83 9.75 9.75 7.75 84 9.75 9.75 7.50 85 9.50 9.50 7.50 86 8.00 8.00 6.50 87 7.25 7.25 6.00 88 7.75 7.75 6.25 89 7.50 7.50 6.25 90 - 91 7.25 7.25 6.00 92 6.75 6.75 5.75 93 6.25 6.25 5.25 94 6.00 6.00 5.00 95 6.50 6.50 5.50 96 6.00 6.00 5.00 97 6.00 6.00 5.25 98 5.75 5.75 4.75 99 5.50 5.50 4.75 2000 6.25 6.25 5.25 01 - 02 6.00 6.00 5.00 Definitions Guarantee Duration: 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. For annuities with cash settlement options and guaranteed interest contracts with cash settlement options other than single stipulated payment immediate annuities and annuity benefits involving life contingencies arising from 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 durations in excess of 20 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. Plan Type: Type A - At any time policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer, or (2) without such adjustment but in installments over 5 years or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted. Type B - Before expiration of the interest rate guarantee, policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer, or (2) without such adjustment but in installments over 5 years or more, or (3) 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 5 years. Type C - Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than 5 years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund. Issue Year Basis An 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. Change in Fund Basis The 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 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. An insurer 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.