Does your company's whole life policy mature?
The guidance posted on the NY Insurance Department's website has 4 items that appear to be mandates for policy forms, expressed as expectations:
1) The policy must become paid-up at some age not later than the last age in the mortality table that underlies the nonforfeiture values;
2) The cash values after the last age in the mortality table underlying the nonforfeiture values increase annually at an interest rate not less than a reasonable current interest rate. The cite, as an example, the settlement option interest rate;
3) The policy's death benefit is always at least equal to the cash value; and
4) There are no restrictions on any statutory rights/benefits once paid-up status is reached;
Then there is a fifth point, which appears to be permissive. That would allow a policy to include a tax warning and suggestion that a tax advisor should be consulted. Sample language is included in the guidance.
Based on similar issues (and more often in post approval reviews were additional information is required for the policy) it seems likely that the Department's basis for requiring the policy provisions would be the entire contract subsection of the Insurance Law. That seems difficult to reconcile though with the expectation that in-force and previously approved policies be administered consistent with these guidelines. Companies who have whole life policies approved on a CL6 basis should anticipate being asked to make these changes on post-approval review even though they were not posted at the time the policies were approved.
