Section 1414.10  Scope

 

This Part applies to preneed insurance contracts issued on or after January 1, 2009 and before January 1, 2017, as defined in Section 1414.30, and to similar policies and certificates.  The determination shall be based, in part, on the use of various types of insurance policies to accomplish goals similar to preneed contracts, as well as policies with characteristics and benefits that resemble those found in preneed contracts.  The Director shall have the authority to determine what constitutes similar policies and certificates.

 

(Source:  Amended at 42 Ill. Reg. 14257, effective July 12, 2018)

 

Section 1414.20  Purpose

 

The purpose of this Part is to establish for preneed insurance products minimum mortality standards for reserves and nonforfeiture values, and to require the use of the 1980 Commissioner's Standard Ordinary (CSO) Life Valuation Mortality Table for use in determining the minimum standard of valuation of reserves and the minimum standard nonforfeiture values for preneed insurance products. 

 

Section 1414.30  Definitions

 

1980 CSO Valuation Table means the Commissioner's 1980 Standard Ordinary Mortality Tables (1980 CSO) without 10 year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and the smoker and nonsmoker variations of the 1980 CSO Table approved by the NAIC in December 1983, as published in the 1984 Proceedings for the NAIC, Vol. 1, p. 31 and approved by the Director for use in determining the minimum standards of valuation pursuant to 50 Ill. Adm. Code 934.

 

2001 CSO Mortality Table means that mortality table, consisting of separate rates of mortality for male and female lives found in 50 Ill. Adm. Code 1412.Appendix A, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. Unless the context indicates otherwise, the 2001 CSO Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table, and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. 

 

Code means the Illinois Insurance Code [215 ILCS 5].

 

Department means the Department of Insurance.

 

Director means the Director of the Department of Insurance.

 

                        NAIC means the National Association of Insurance Commissioners.

 

Preneed Insurance is any life insurance policy or certificate, or any series or combination of agreements or contracts, issued in combination with, in support of, with an assignment to, or as a guarantee for a prearrangement agreement for goods and services to be provided at the time of and immediately following the death of the insured. Goods and services may include, but are not limited to, embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased. The status of the policy or contract as preneed insurance is determined at the time of issue in accordance with the policy form filing.

 

Section 1414.40  Minimum Valuation Mortality Standards

 

For preneed insurance contracts, as defined in Section 1414.30 of this Part, and similar policies and contracts, the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds shall be the 1980 CSO Valuation Tables.

 

Section 1414.50  Transition Rules

 

a)         For preneed insurance policies issued on or after January 1, 2009, and before January 1, 2012, the 2001 CSO may be used as the minimum standard for reserves and minimum standard for nonforfeiture benefits for both male and female insureds.

 

b)         If an insurer elects to use the 2001 CSO as a minimum standard for any policy issued on or after January 1, 2009, and before January 1, 2012, the insurer shall provide, as a part of the actuarial opinion memorandum submitted in support of the company's asset adequacy testing, an annual written notification to the insurance supervisory official of the state or jurisdiction in which the company is domiciled. The notification shall include:

 

1)         A complete list of all preneed policy forms that use the 2001 CSO as a minimum standard;

 

2)         A certification signed by the appointed actuary stating that the reserve methodology employed by the company in determining reserves for the preneed policies issued after the effective date, and using the 2001 CSO as a minimum standard, develops adequate reserves (For the purposes of this certification, the preneed insurance policies using the 2001 CSO as a minimum standard cannot be aggregated with any other policies.); and

 

3)         Supporting information regarding the adequacy of reserves for preneed insurance policies issued after January 1, 2009 and using the 2001 CSO as a minimum standard for reserves.

 

c)         Preneed insurance policies issued on or after January 1, 2012 and before January 1, 2017 must use the 1980 CSO Valuation Tables in the calculation of minimum nonforfeiture values and minimum reserves.

 

(Source:  Amended at 42 Ill. Reg. 14257, effective July 12, 2018)