State Codes and Statutes

Statutes > New-york > Isc > Article-42 > 4221

§ 4221. Standard nonforfeiture law. (a) In the case of policies issued  on  or after the operative date of this section as defined in subsection  (p) hereof, no policy of life insurance, except as stated in  subsection  (o)  hereof,  shall  be  delivered  or issued for delivery in this state  unless it shall  contain  in  substance  the  following  provisions,  or  corresponding  provisions which in the opinion of the superintendent are  at least as favorable to the defaulting or surrendering policyholder  as  are  minimum  requirements  hereinafter specified and are essentially in  compliance with subsection (n) hereof:    (1) That, in the event of default in any premium payment, the  company  will  grant, upon proper request not later than sixty days after the due  date of the premium in default, a paid-up  nonforfeiture  benefit  on  a  plan  stipulated  in  the policy, effective as of such due date, of such  value as may be  hereinafter  specified.  In  lieu  of  such  stipulated  paid-up  nonforfeiture  benefit, the company may substitute, upon proper  request not later than sixty days after the due date of the  premium  in  default,  a  more  favorable  alternative  paid-up nonforfeiture benefit  which provides a greater amount or longer period of death  benefits  or,  if  applicable,  a  greater  amount  or  earlier  payment  of  endowment  benefits.    (2) That, upon surrender of the policy within sixty days after the due  date of any premium payment in default after premiums have been paid for  at least three full years, the company will pay, in lieu of any  paid-up  nonforfeiture  benefit,  a cash surrender value of such amount as may be  hereinafter specified.    (3) That  a  specified  paid-up  nonforfeiture  benefit  shall  become  effective  as specified in the policy unless the person entitled to make  such election elects another available option not later than sixty  days  after the due date of the premium in default.    (4) That, if the policy shall have become paid up by completion of all  premium  payments  or if it is continued under any paid-up nonforfeiture  benefit which became effective on or after the third policy anniversary,  the company will pay, upon surrender of the policy  within  thirty  days  after  any  policy anniversary, a cash surrender value of such amount as  may be hereinafter specified.    (5) In the case  of  policies  which  provide  for  the  crediting  of  additional  amounts  pursuant to subsection (b) of section four thousand  two hundred thirty-two of  this  article,  under  which  cash  surrender  values  are  adjusted  in  accordance  with  a  market-value  adjustment  formula, which cause on a basis guaranteed  in  the  policy  unscheduled  changes  in benefits or premiums, or which provide an option for changes  in benefits or premiums other than a change to a new policy, a statement  of the mortality table, interest rate, and method  used  in  calculating  cash  surrender  values and any paid-up nonforfeiture benefits available  under the policy. In the case of all other policies, a statement of  the  mortality table and interest rate used in calculating the cash surrender  values  and  any  paid-up  nonforfeiture  benefits  available  under the  policy, together with a table showing the cash surrender value, if  any,  and paid-up nonforfeiture benefit, if any, available under the policy on  each  policy  anniversary either during the first twenty policy years or  during the term of the policy, whichever is  shorter,  such  values  and  benefits  to  be  calculated  upon  the  assumption  that  there  are no  dividends or paid-up additions credited to the policy and that there  is  no indebtedness to the company on the policy.    (5-a)  In  the  case  of  policies  which provide for the crediting of  additional amounts pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two of this article and which provide for surrendercharges in accordance with subsection (n-1) of this section, a statement  as to any charges that will be imposed upon surrender of the policy.    (5-b)  In  the case of policies that provide for the adjustment of any  cash surrender values  in  accordance  with  a  market-value  adjustment  formula, a statement as to the times (which shall not be less frequently  than  once  every  ten years after issuance of the policy) on which cash  surrender values will be determined without the use of such a formula.    (6) A statement  that  the  cash  surrender  values  and  the  paid-up  nonforfeiture  benefits available under the policy are not less than the  minimum values and benefits required by any  statute  of  the  state  in  which the policy is delivered; an explanation of the manner in which the  cash surrender values and the paid-up nonforfeiture benefits are altered  by  the existence of any paid-up additions credited to the policy or any  indebtedness to the company on the policy; if a  detailed  statement  of  the method of computation of the values and benefits shown in the policy  is  not  stated therein, a statement that such method of computation has  been filed with the insurance supervisory official of the state in which  the policy is delivered; and a statement of the method  to  be  used  in  calculating  the  cash surrender value and paid-up nonforfeiture benefit  available under the policy on any policy  anniversary  beyond  the  last  anniversary  for  which such values and benefits are consecutively shown  in the policy.    (7) That the company shall deliver at issue to each holder of a policy  under which additional amounts may be credited  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this article, or  under which cash surrender values and policy loan values are adjusted in  accordance  with  a  market-value  adjustment   formula,   a   statement  containing  such information as the superintendent prescribes, and shall  mail to each such holder at least once each policy year or within  sixty  days after the end of a policy year a statement as of a date during such  year  as to the death benefit, cash surrender value and loan value under  the policy (and any amount by which such cash surrender value  and  loan  value  were  adjusted  in  accordance  with  a  market-value  adjustment  formula) on such date  as  well  as  such  further  information  as  the  superintendent  requires.  The  statement shall be addressed to the last  post-office address of the policyholder known to the company.    (8) Any of the foregoing provisions or portions of this subsection not  applicable by reason of  the  plan  of  insurance  may,  to  the  extent  inapplicable, be omitted from the policy.    The  company  shall reserve the right to defer the payment of any cash  surrender value for a period of six months after  demand  therefor  with  surrender of the policy.    (b) (1) In the case of contracts issued on or after the operative date  of  this  section  as  defined in subsection (p) hereof and prior to the  operative date of section four thousand two hundred twenty-three of this  article, no contract of annuity or pure endowment, except as  stated  in  subsection (o) hereof, shall be delivered or issued for delivery in this  state  unless  it  contains  in  substance  the following provisions, or  corresponding provisions which in the opinion of the superintendent  are  at least as favorable to the defaulting or surrendering contract holder:    (A) That in the event of default in any stipulated payment the company  will  grant  a paid-up nonforfeiture benefit on a plan stipulated in the  contract, effective as of such  due  date,  of  such  value  as  may  be  hereinafter specified.    (B) A statement of the mortality table, if any, and interest rate used  in  calculating  the  paid-up nonforfeiture benefits available under the  contract, together with a table showing either the cash surrender  value  or  the  paid-up  nonforfeiture  benefit,  if  any,  available  on  eachanniversary of the contract either  during  the  first  twenty  contract  years  or  during the term of stipulated payments, whichever is shorter,  such benefits to be calculated upon the assumption  that  there  are  no  dividends  or  paid-up additions credited to the contract and that there  is no indebtedness to the company on the contract.    (C) A statement that  the  paid-up  nonforfeiture  benefits  available  under  the  contract  are not less than the minimum benefits required by  any statute of  the  state  in  which  the  contract  is  delivered;  an  explanation  of  the  manner in which the paid-up nonforfeiture benefits  are altered by the existence of any paid-up additions  credited  to  the  contract  or  any  indebtedness  to  the  company  on the contract; if a  detailed statement of the method of computation of the benefits shown in  the contract is not stated therein, a  statement  that  such  method  of  computation  has  been  filed with the insurance supervisory official of  the state in which the contract is delivered; and  a  statement  of  the  method  to  be  used  in  calculating  the paid-up nonforfeiture benefit  available under the contract on any contract anniversary beyond the last  anniversary for which such  benefits  are  consecutively  shown  in  the  contract.    If  a company shall provide for the payment of a cash surrender value,  it shall reserve the right to defer the payment  of  such  value  for  a  period  of  six  months  after  demand  therefor  with  surrender of the  contract.    (2) Notwithstanding the requirements of this subsection, any  deferred  annuity  contract  may  provide  that  if  the annuity allowed under any  paid-up nonforfeiture benefit would be less than sixty dollars annually,  the company may at its option grant a cash surrender value  in  lieu  of  such  paid-up nonforfeiture benefit of such amount as may be required by  subsection (f) hereof.    (c) (1) Any cash surrender value available under any  policy  referred  to  in  subsection  (a)  hereof,  in  the  event of default in a premium  payment due on any policy anniversary, whether or not required  by  such  subsection,  shall be an amount not less than the excess, if any, of the  present value, on such anniversary, of the  future  guaranteed  benefits  which would have been provided for by the policy, including any existing  paid-up additions, if there had been no default, over the sum of (i) the  then  present  value  of the adjusted premiums as defined in subsections  (g), (h), (i) and (k) hereof, corresponding to premiums which would have  fallen due on and after such anniversary, and (ii)  the  amount  of  any  indebtedness  to  the  company  on the policy, including interest due or  accrued.    (2) In the case of any policy issued on or after the operative date of  subsection (k) hereof, which provides  supplemental  life  insurance  or  annuity  benefits  at  the option of the insured and for an identifiable  additional premium by rider or supplemental policy provision,  the  cash  surrender value referred to in paragraph one of this subsection shall be  in  an  amount  not  less  than  the  sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such rider or supplemental policy provision, the cash  surrender value as defined in such paragraph for a policy which provides  only the supplemental life insurance benefits otherwise provided by such  rider or supplemental policy provision, and the cash surrender value  as  defined  in  section  four  thousand  two  hundred  twenty-three of this  article for a contract which  provides  only  the  supplemental  annuity  benefits  otherwise  provided  by  such  rider  or  supplemental  policy  provision.    (3) In the case of any family policy issued on or after the  operative  date  of  subsection  (k)  hereof  as  defined  therein, which defines aprimary insured and provides term insurance on the life of the spouse of  the primary insured expiring before the spouse's  age  seventy-one,  the  cash  surrender  value  referred  to in paragraph one of this subsection  shall  be an amount not less than the sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such term insurance on the life of the spouse and the  cash surrender value as defined in such paragraph  for  a  policy  which  provides  only the benefits otherwise provided by such term insurance on  the life of the spouse.    (4) Any cash surrender value available within thirty  days  after  any  policy  anniversary  under  any such policy paid up by completion of all  premium  payments  or  any  such  policy  continued  under  any  paid-up  nonforfeiture benefit, whether or not required by subsection (a) hereof,  shall be an amount not less than the present value, on such anniversary,  of  the future guaranteed benefits provided for by the policy, including  any existing paid-up additions, decreased by  any  indebtedness  to  the  company on the policy, including interest due or accrued.    (5)  Every company must provide, to any policyowner who so requests in  writing, within twenty business days from the date the  written  request  is  received  by the company, a statement of the cash surrender value of  the policy.    (d) Any paid-up  nonforfeiture  benefit  available  under  any  policy  referred  to  in  subsection  (a)  hereof,  in the event of default in a  premium payment due on any policy anniversary shall  be  such  that  its  present value as of such anniversary shall be at least equal to the cash  surrender  value then provided for by the policy or, if none is provided  for, that cash surrender value which would have been  required  by  this  section  in  the  absence of the condition that premiums shall have been  paid for at least a specified period.    (e) (1) Any paid-up nonforfeiture benefit available under any  annuity  or  pure endowment contract referred to in subsection (b) hereof, in the  event of default in a stipulated payment due on any contract anniversary  shall be such that its present value as of such anniversary shall be not  less than the excess, if any, of the present value, on such anniversary,  of the future guaranteed benefits which would have been provided for  by  the  contract,  including  any  existing paid-up additions, if there had  been no default, over the sum of (i)  the  then  present  value  of  the  adjusted   stipulated   payments   defined   in  subsection  (g)  hereof  corresponding to stipulated payments which would have fallen due on  and  after  such  anniversary, and (ii) the amount of any indebtedness to the  company on the contract, including interest due or accrued.    (2) In determining the benefits referred to in  paragraph  one  hereof  and  in  calculating  the  adjusted  stipulated  payments referred to in  subsection (g) hereof, in the case of annuity contracts under  which  an  election  may  be  made  to  have  annuity payments commence at optional  dates, the annuity payments shall be deemed to commence at a date  which  shall  be  the  latest permitted by the contract for the commencement of  such payments but not later than the contract  anniversary  nearest  the  annuitant's   seventieth  birthday  or  the  tenth  anniversary  of  the  contract, whichever is later;  and  the  stipulated  payments  shall  be  deemed  to  be payable for the longest period during which they would be  payable if election were made to have the annuity payments  commence  at  such date.    (f)  Any cash surrender value allowed by any annuity or pure endowment  contract referred to in subsection (b) hereof  and  the  present  value,  under  any  optional provision, of future benefits commencing on the due  date of the stipulated payment in default shall each be at  least  equalto  the  then present value of the minimum paid-up nonforfeiture benefit  required by subsection (e) hereof.    (g) (1) This subsection shall not apply to policies issued on or after  the operative date of subsection (k) as defined herein.    (2) Except as provided in paragraph four hereof, the adjusted premiums  for  any policy referred to in subsection (a) hereof shall be calculated  on an  annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified  in  the  policy  for  each policy year,  excluding amounts stated in  the  policy  as  extra  premiums  to  cover  impairments  or  special hazards, that the present value, at the date of  issue of the policy, of all such adjusted premiums shall be equal to the  sum of (i) the then present value  of  the  future  guaranteed  benefits  provided for by the policy; (ii) two percent of the amount of insurance,  if  the  insurance  be  uniform  in amount, or of the equivalent uniform  amount, as hereinafter defined, if the amount of insurance  varies  with  duration  of the policy; (iii) forty percent of the adjusted premium for  the first policy year; (iv) twenty-five percent of either  the  adjusted  premium  for  the  first policy year or the adjusted premium for a whole  life policy of the  same  uniform  or  equivalent  uniform  amount  with  uniform  premiums  for  the whole of life issued at the same age for the  same amount of insurance, whichever is less. Provided, however, that  in  applying  the  percentages  specified in items (iii) and (iv) hereof, no  adjusted premium shall be deemed to exceed four percent of the amount of  insurance or uniform amount equivalent thereto. The date of issue  of  a  policy  for the purpose of this subsection shall be the date as of which  the rated age of the insured is determined.    (3) In the case of a policy providing an amount of  insurance  varying  with  duration  of the policy, the equivalent uniform amount thereof for  the purpose of this subsection shall be deemed to be the uniform  amount  of  insurance  provided  by  an otherwise similar policy, containing the  same endowment benefit or benefits, if any, issued at the same  age  and  for  the  same term, the amount of which does not vary with duration and  the benefits under which have the same present  value  at  the  date  of  issue  as  the benefits under the policy, provided, however, that in the  case of a policy providing a  varying  amount  of  insurance  (including  policies  in  which  the  death benefit prior to a date specified in the  policy does not exceed the premiums paid  with  interest,  or  the  cash  value  of the policy if greater) issued on the life of a child under age  ten, the equivalent uniform amount of insurance shall be  calculated  as  though  the  amount  of  insurance  provided  by the policy prior to the  attainment of age ten were the amount provided by  such  policy  at  age  ten.    (4)  The  adjusted  premiums  for  any policy providing term insurance  benefits by rider or supplemental policy provision shall be equal to (i)  the adjusted premiums for an otherwise similar policy issued at the same  age without such term insurance benefits, increased, during  the  period  for which premiums for such term insurance benefits are payable, by (ii)  the  adjusted  premiums for such term insurance, the foregoing items (i)  and (ii) being calculated separately and as specified in paragraphs  two  and  three hereof except that, for the purposes of items (ii), (iii) and  (iv) of paragraph two hereof, the  amount  of  insurance  or  equivalent  uniform  amount  of  insurance  used  in the calculation of the adjusted  premiums referred to in item (ii) of this paragraph shall  be  equal  to  the  excess of the corresponding amount determined for the entire policy  over the amount used in the calculation of the adjusted premiums in item  (i) of this paragraph.    (5) The adjusted stipulated payments for any annuity or pure endowment  contract referred to in subsection (b) hereof shall be calculated on  anannual  basis  and  shall  be  such uniform percentage of the respective  stipulated payments specified in the contract  for  each  contract  year  that  the  present  value,  at the date of issue of the contract, of all  such  adjusted  stipulated payments shall be equal to the sum of (i) the  then present value of the future guaranteed benefits provided for by the  contract; (ii) twenty percent of the adjusted stipulated payment for the  first contract year; and (iii) two percent of  the  adjusted  stipulated  payment  for  the first contract year for each year not exceeding twenty  during which stipulated payments are payable.    (6) Except as otherwise provided  in  subsections  (h),  (i)  and  (j)  hereof, all adjusted premiums, adjusted stipulated payments, and present  values  referred  to in this section shall be calculated on the basis of  (i) the rate of interest, not exceeding three and one-half  percent  per  annum,  specified  in  the  policy  or  contract  for  calculating  cash  surrender values, if any, and paid-up nonforfeiture benefits; and (ii) a  mortality  table  which  shall   be:   for   ordinary   insurance,   the  Commissioners' 1941 Standard Ordinary Mortality Table, provided that for  any  category  of  ordinary  insurance  issued on female risks, adjusted  premiums and present values may be calculated according to  an  age  not  more  than  three  years younger than the actual age of the insured; for  industrial insurance, the 1941 Standard Industrial Mortality Table;  for  annuity  and  pure endowment contracts, either the 1937 Standard Annuity  Mortality Table, the Annuity Mortality  Table  for  1949  Ultimate,  any  modification of either of these tables approved by the superintendent or  any  other table approved by the superintendent. Provided, however, that  in calculating the present value of  any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the  rates  of  mortality  assumed  may be not more than one hundred and  thirty percent of the rates of mortality according  to  such  applicable  table.  Provided,  further,  that  for insurance issued on a substandard  basis, the calculation of any such adjusted premiums and present  values  may be based on such other table of mortality as may be specified by the  company and approved by the superintendent.    (h) (1) This subsection shall not apply to ordinary policies issued on  or after the operative date of subsection (k) hereof.    (2)  In the case of ordinary policies issued on or after the operative  date of this subsection, all adjusted premiums and present values  shall  be  calculated  on the basis of the Commissioners 1958 Standard Ordinary  Mortality Table and the rate of interest specified  in  the  policy  for  calculating cash surrender values and paid-up nonforfeiture benefits not  exceeding  three and one-half percent per annum except that four percent  per annum may be used for policies issued on or after  June  thirteenth,  nineteen  hundred  seventy-four  and  prior  to  January first, nineteen  hundred seventy-nine, and a rate of  interest  not  exceeding  five  and  one-half  percent  per annum may be used for policies issued on or after  January first, nineteen hundred  seventy-nine,  provided  that  for  any  category of ordinary insurance issued on female risks, adjusted premiums  and  present  values may be calculated according to an age not more than  six years younger than the actual age of the insured; provided, however,  that in calculating the present value of any paid-up term insurance with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the rates of mortality assumed may be not more than those shown  in  the  Commissioners  1958  Extended  Term  Insurance Table. Provided, further,  that for insurance issued on a substandard basis, the calculation of any  such adjusted premiums and present values may be  based  on  such  other  table  of  mortality  as may be specified by the company and approved by  the superintendent.(3) Any company may file with the superintendent a written  notice  of  its  election  to  comply with the provisions of this subsection after a  specified date before January first, nineteen hundred  sixty-six.  After  the filing of such notice, then upon such specified date (which shall be  the operative date of this subsection for such company), this subsection  shall  become operative with respect to the ordinary policies thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date  of  this  subsection  for such company shall be January  first, nineteen hundred sixty-six.    (i) (1) In the case of industrial policies  issued  on  or  after  the  operative  date  of  this  subsection, all adjusted premiums and present  values shall be calculated  on  the  basis  of  the  Commissioners  1961  Standard  Industrial  Mortality Table and the rate of interest specified  in  the  policy  for  calculating  cash  surrender  values  and  paid-up  nonforfeiture  benefits  not  exceeding  three  and one-half percent per  annum except that four percent per annum may be used for policies issued  on or after June thirteenth, nineteen hundred seventy-four and prior  to  January  first, nineteen hundred seventy-nine and a rate of interest not  exceeding five and one-half percent per annum may be used  for  policies  issued  on  or  after  January  first,  nineteen  hundred  seventy-nine;  provided, however, that in calculating the present value of any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a  nonforfeiture benefit, the rates of mortality assumed may  be  not  more  than  those  shown  in  the  Commissioners 1961 Industrial Extended Term  Insurance Table. Provided, further,  that  for  insurance  issued  on  a  substandard  basis,  the  calculation  of any such adjusted premiums and  present values may be based on such other table of mortality as  may  be  specified by the company and approved by the superintendent.    (2)  Any  company may file with the superintendent a written notice of  its election to comply with the provisions of this  subsection  after  a  specified  date  before January first, nineteen hundred and sixty-eight.  After the filing of such notice, then upon such  specified  date  (which  shall  be  the operative date of this subsection for such company), this  subsection  shall  become  operative  with  respect  to  the  industrial  policies  thereafter  issued by such company. If a company makes no such  election, the operative date of this subsection for such  company  shall  be January first, nineteen hundred and sixty-eight.    (j)  In  the  case  of individual annuity and pure endowment contracts  issued on or after the operative date of paragraph three  of  subsection  (c)  of section four thousand two hundred seventeen of this article, and  prior to the  operative  date  of  section  four  thousand  two  hundred  twenty-three  of  this  article,  all  adjusted  stipulated payments and  present values referred to in this section shall be  calculated  on  the  basis  of  the  Annuity  Mortality  Table  for  1949,  Ultimate,  or any  modification of this table approved by the superintendent, and the  rate  of  interest  not  exceeding  four  percent  per annum, specified in the  contract for calculating cash surrender  values,  if  any,  and  paid-up  nonforfeiture  benefits,  except  that, if such rate of interest exceeds  three and one-half percent per annum, there  shall  be  substituted  for  such mortality table the 1971 Individual Annuity Mortality Table, or any  modification of this table approved by the superintendent.    (k) (1) This subsection shall apply to all policies issued on or after  the operative date as defined in this subsection.    (2)  Except  as  provided  in  paragraph eight of this subsection, the  adjusted premiums for any policy shall be calculated on an annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified in the policy for each policy year, excluding amounts  payable  as  extra  premiums  to  cover  impairments  or special hazards and alsoexcluding any uniform annual contract charge or policy fee specified  in  the  policy  in  a statement of the method to be used in calculating the  cash surrender values  and  paid-up  nonforfeiture  benefits,  that  the  present  value,  at  the  date  of  issue of the policy, of all adjusted  premiums shall be equal to the sum of (i) the then present value of  the  future  guaranteed benefits provided for by the policy; (ii) one percent  of either the amount of  insurance,  if  the  insurance  be  uniform  in  amount,  or  the average amount of insurance at the beginning of each of  the first ten policy years; and (iii) one hundred twenty-five percent of  the nonforfeiture net level premium as  hereinafter  defined.  Provided,  however,  that  in  applying  the percentage specified in (iii) above no  nonforfeiture net level premium shall be deemed to exceed  four  percent  of  either  the  amount  of  insurance,  if  the insurance be uniform in  amount, or the average amount of insurance at the beginning of  each  of  the  first  ten  policy  years.  The  date  of issue of a policy for the  purpose of this subsection shall be the date as of which the  rated  age  of the insured is determined.    (3)  The nonforfeiture net level premium shall be equal to the present  value, at the date of issue of the policy, of  the  guaranteed  benefits  provided  for by the policy divided by the present value, at the date of  issue of the policy, of an annuity of one per annum payable on the  date  of issue of the policy and on each anniversary of such policy on which a  premium falls due.    (4)  In  the case of policies which cause on a basis guaranteed in the  policy unscheduled changes in benefits or premiums, or which provide  an  option  for changes in benefits or premiums other than a change to a new  policy, the adjusted premiums and  present  values  shall  initially  be  calculated  on  the  assumption that future benefits and premiums do not  change from those stipulated at the date of issue of the policy. At  the  time  of any such change in the benefits or premiums the future adjusted  premiums, nonforfeiture net level premiums and present values  shall  be  recalculated  on the assumption that future benefits and premiums do not  change from those stipulated by the policy immediately after the change.    (5)  Except  as  otherwise  provided  in  paragraph  eight   of   this  subsection,  the  recalculated  future  adjusted  premiums  for any such  policy shall  be  such  uniform  percentage  of  the  respective  future  premiums specified in the policy for each policy year, excluding amounts  payable  as extra premiums to cover impairments and special hazards, and  also  excluding  any  uniform  annual  contract  charge  or  policy  fee  specified  in  the  policy  in  a  statement of the method to be used in  calculating  the  cash  surrender  values  and   paid-up   nonforfeiture  benefits,  that  the  present  value, at the time of change to the newly  defined benefits or premiums, of all such future adjusted premiums shall  be equal to the excess of    (A) the sum of    (i) the then present value of  the  then  future  guaranteed  benefits  provided for by the policy and    (ii) the additional expense allowance, if any, over    (B)  the  then  cash  surrender value, if any, or present value of any  paid-up nonforfeiture benefit under the policy.    (6) The additional expense allowance, at the time of the change to the  newly defined benefits or premiums, shall be the sum of (i) one  percent  of  the  excess,  if positive, of the average amount of insurance at the  beginning of each of the first ten policy years subsequent to the change  over the average  amount  of  insurance  prior  to  the  change  at  the  beginning  of  each of the first ten policy years subsequent to the time  of the most recent previous change, or, if there has  been  no  previous  change,  the  date  of  issue  of  the  policy;  and  (ii)  one  hundredtwenty-five percent of the increase, if positive, in  the  nonforfeiture  net level premium.    (7) The recalculated nonforfeiture net level premium shall be equal to  the  result  obtained  by  dividing subparagraph (A) by subparagraph (B)  hereof where:    (A) equals the sum of    (i) the nonforfeiture net level premium applicable prior to the change  times the present value of an annuity of one per annum payable  on  each  anniversary  of the policy on or subsequent to the date of the change on  which a premium would have fallen due had the change not occurred, and    (ii) the present value of the increase in future  guaranteed  benefits  provided for by the policy, and    (B) equals the present value of an annuity of one per annum payable on  each anniversary of the policy on or subsequent to the date of change on  which a premium falls due.    (8)  Notwithstanding  any  other  provision  of this subsection to the  contrary, in the case of a policy issued on a  substandard  basis  which  provides  reduced  graded  amounts  of insurance so that, in each policy  year, such policy has the same tabular mortality cost  as  an  otherwise  similar  policy  issued  on  the  standard  basis  which provides higher  uniform amounts of insurance, adjusted premiums and present  values  for  such  substandard  policy  may  be  calculated  as  if it were issued to  provide such higher uniform amounts of insurance on the standard basis.    (9) All adjusted premiums and  present  values  referred  to  in  this  section  shall  for  all policies of ordinary insurance be calculated on  the basis of    (A) the Commissioners 1980 Standard Ordinary Mortality Table, or    (B) at the election of the company for any one or more specified plans  of life insurance, the Commissioners 1980  Standard  Ordinary  Mortality  Table with Ten-Year Select Mortality Factors; and shall for all policies  issued  in  a  particular  calendar year be calculated on the basis of a  rate of interest  not  exceeding  the  nonforfeiture  interest  rate  as  defined  in  this  subsection for policies issued in that calendar year.  Provided, however, that:    (i) At the option of the company, calculations for all policies issued  in a particular calendar year may be made on the  basis  of  a  rate  of  interest  not  exceeding  the nonforfeiture interest rate, as defined in  this subsection,  for  policies  issued  in  the  immediately  preceding  calendar year.    (ii)  Under  any  paid-up nonforfeiture benefit, including any paid-up  dividend additions, any cash surrender value available, whether  or  not  required  by  subsection (a) hereof, shall be calculated on the basis of  the mortality table and rate of interest used in determining the  amount  of such paid-up nonforfeiture benefit and paid-up dividend additions, if  any.    (iii)  A  company  may  calculate the amount of any guaranteed paid-up  nonforfeiture benefit including any paid-up additions under  the  policy  on  the  basis  of  an interest rate no lower than that specified in the  policy for calculating cash surrender values.    (iv) In calculating the present value of any  paid-up  term  insurance  with  accompanying  pure  endowment,  if any, offered as a nonforfeiture  benefit, the rates of mortality assumed may be not more than those shown  in the Commissioners 1980 Extended Term Insurance Table.    (v) For insurance issued on a substandard basis,  the  calculation  of  any   such  adjusted  premiums  and  present  values  may  be  based  on  appropriate modifications of the aforementioned tables.    (vi) Any ordinary mortality tables,  adopted  after  nineteen  hundred  eighty  by  the  National Association of Insurance Commissioners (or anymodifications thereof for any specified class or classes of risks), that  are approved by the superintendent for use in  determining  the  minimum  nonforfeiture  standard  may  be  substituted for the Commissioners 1980  Standard  Ordinary  Mortality  Table  with  or  without  Ten-Year Select  Mortality Factors or for the Commissioners 1980 Extended Term  Insurance  Table.    (10)  The  nonforfeiture interest rate per annum for any policy issued  in a particular  calendar  year  shall  be  equal  to  one  hundred  and  twenty-five  percent  of  the calendar year statutory valuation interest  rate for such policy as defined in section  four  thousand  two  hundred  seventeen  of  this  article  rounded  to  the nearer one quarter of one  percent, computed, with respect  to  a  single  premium  life  insurance  policy  of  the  kind  referred  to  in item (vi) of subparagraph (B) of  paragraph four of subsection (c) of such section, on  a  year  of  issue  basis  by  using  a  reference  interest rate defined for such policy in  subparagraph (F) of such paragraph for the  year  immediately  preceding  the  year  of  issue on the assumption that the company has submitted an  opinion and memorandum,  in  form  and  substance  satisfactory  to  the  superintendent,  of  a  qualified  actuary  with  respect to such single  premium  life  insurance  policies  in  accordance  with  item  (vi)  of  subparagraph (B) of such paragraph.    (11)  Notwithstanding  any  other  provision  in  this  chapter to the  contrary, any refiling of  nonforfeiture  values  or  their  methods  of  computation  for any previously approved policy form which involves only  a change in the  interest  rate  or  mortality  table  used  to  compute  nonforfeiture  values shall not require refiling of any other provisions  of that policy form.    (12) After May twenty-fourth, nineteen hundred eighty-two, any company  may file with the superintendent a written notice  of  its  election  to  comply,  with  respect  to any plan of insurance, with the provisions of  this subsection after a specified date before  January  first,  nineteen  hundred   eighty-nine,  which  shall  be  the  operative  date  of  this  subsection for that plan of insurance for such  company;  the  operative  dates  of  this subsection for other plans of insurance for such company  shall be any dates not later than January first of the third  subsequent  calendar  year,  but  in  no  event  later  than January first, nineteen  hundred eighty-nine. If a company makes no such election with respect to  any plan of insurance, the operative date of this  subsection  for  such  company shall be January first, nineteen hundred eighty-nine.    (l)  In  the  case  of  any  plan of life insurance which provides for  future premium determination, the amounts of which are to be  determined  by  the  insurance company based on then estimates of future experience,  or in the case of any plan of life insurance which is of such  a  nature  that  minimum  values  cannot  be determined by the methods described in  subsection (a), (c), (d), (g), (h), (i) or (k) of this section, then:    (1) the superintendent must be satisfied that  the  benefits  provided  under  the  plan  are  substantially  as  favorable to policyholders and  insureds as the minimum benefits otherwise required by  subsection  (a),  (c), (d), (g), (h), (i) or (k) hereof;    (2)  the  superintendent  must  be satisfied that the benefits and the  pattern of premiums of that plan are not such as to mislead  prospective  policyholders or insureds;    (3)  the  cash  surrender  values  and  paid-up nonforfeiture benefits  provided by such plan must not be  less  than  the  minimum  values  and  benefits  required for the plan computed by a method consistent with the  principles of this section, as determined by the superintendent.    (m) (1)  Any  cash  surrender  value  and  any  paid-up  nonforfeiture  benefit,  available  under  any  such policy or contract in the event ofdefault in the payment of any premium or stipulated payment due  at  any  time  other  than  on  the  policy  or  contract  anniversary,  shall be  calculated with allowance for the lapse  of  time  and  the  payment  of  fractional  premiums  or stipulated payments beyond the beginning of the  policy or contract year in which the default occurs.    (2) All values referred to in subsections (c) through (k) hereof,  may  be  calculated  upon the assumption that any death benefit is payable at  the end of the policy or contract year of death.    (3) Notwithstanding the provisions of subsections (c) and (e)  hereof,  additional  benefits  payable (i) in the event of death or dismemberment  by accident, (ii) in the event of total and permanent disability,  (iii)  as  reversionary annuity or deferred reversionary annuity benefits, (iv)  as term insurance benefits provided by a rider  or  supplemental  policy  provision  to  which, if issued as a separate policy, this section would  not apply, (v) as term insurance on the life of a child or on the  lives  of  children  provided in a policy on the life of a parent of the child,  if such term insurance expires before the child's age is twenty-six,  is  uniform  in  amount  after  the  child's  age is one, and has not become  paid-up by reason of the death of a parent of  the  child  and  (vi)  as  other  policy  benefits  additional  to  life  insurance, endowment, and  annuity benefits, and premiums for all such additional  benefits,  shall  be  disregarded  in ascertaining cash surrender values and nonforfeiture  benefits required by this section, and no such additional benefits shall  be required to be included in any paid-up nonforfeiture benefits.    (n)  (1)  This  subsection,  in  addition  to  all  other   applicable  provisions  of  this  section,  shall apply to all policies issued on or  after January first, nineteen hundred eighty-six.    (2) Any cash surrender value available under the policy in  the  event  of  default  in a premium payment due on any policy anniversary shall be  in an amount which does not  differ  by  more  than  two-tenths  of  one  percent  of  either the amount of insurance, if the insurance be uniform  in amount, or the average amount of insurance at the beginning  of  each  of  the  first ten policy years, from the sum of (i) the greater of zero  and the basic cash value hereinafter  specified  and  (ii)  the  present  value  of  any  existing  paid-up  additions  less  the  amount  of  any  indebtedness to the company under the policy.    (3) The basic cash value shall be equal to the present value, on  such  anniversary,  of  the  future  guaranteed benefits which would have been  provided for by the policy, excluding any existing paid-up additions and  before deduction of any indebtedness to the company, if there  had  been  no default, less the then present value of the nonforfeiture factors, as  hereinafter  defined,  corresponding to premiums which would have fallen  due on and after such anniversary. Provided, however, that  the  effects  on  the  basic  cash  value  of  supplemental  life insurance or annuity  benefits or of family coverage, as described in subsection  (c)  or  (g)  hereof,  whichever  is  applicable, shall be the same as are the effects  specified in such subsection,  whichever  is  applicable,  on  the  cash  surrender values defined in that subsection.    (4)  The  nonforfeiture factor for each policy year shall be an amount  equal to a percentage of the adjusted premium for the  policy  year,  as  defined in subsection (g) or (k) hereof, whichever is applicable. Except  as  is  required by the next succeeding sentence of this paragraph, such  percentage:    (A) must be the same percentage  for  each  policy  year  between  the  second  policy  anniversary  and  the  later  of  (i)  the  fifth policy  anniversary and (ii) the first policy  anniversary  at  which  there  is  available  under  the policy a cash surrender value in an amount, before  including any paid-up additions and before deducting  any  indebtedness,of at least two-tenths of one percent of either the amount of insurance,  if  the  insurance  be  uniform  in  amount,  or  the  average amount of  insurance at the beginning of each of the first ten policy years; and    (B)  must be such that no percentage after the later of the two policy  anniversaries specified in subparagraph (A) hereof may  apply  to  fewer  than five consecutive policy years.    Provided,  that  no  basic cash value may be less than the value which  would be obtained if the adjusted premiums for the policy, as defined in  subsection (g) or (k) hereof, whichever is applicable, were  substituted  for  the  nonforfeiture  factors  in  the  calculation of the basic cash  value.    (5) All adjusted premiums and  present  values  referred  to  in  this  subsection  shall  for  a  particular  policy  be calculated on the same  mortality and interest bases as are used in demonstrating  the  policy's  compliance with the other subsections of this section.    (6) (A) The cash surrender values referred to in this subsection shall  include any endowment benefits provided for by the policy.    (B)  Any  cash  surrender  value  available other than in the event of  default in a premium payment due on a policy anniversary, and the amount  of any paid-up nonforfeiture benefit available under the policy  in  the  event  of  default  in  a premium payment shall be determined in manners  consistent with the manners  specified  for  determining  the  analogous  minimum amounts in subsections (a), (c), (d), (k) and (m) hereof.    (C)  The  amounts  of  any  cash  surrender  values and of any paid-up  nonforfeiture benefits granted in connection  with  additional  benefits  such  as  those  listed  as items (i) through (vi) in paragraph three of  subsection  (m)  hereof  shall  conform  with  the  principles  of  this  subsection.    (n-1)  (1)  Notwithstanding  any  other provision in this section, any  policy that meets the requirements of this subsection shall be deemed to  provide the minimum nonforfeiture benefits  and  cash  surrender  values  required  by this section. Any policy which is issued by a company after  the operative date of this subsection for the company  and  under  which  additional amounts may be credited pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two  of  this article must meet the  requirements of this subsection.    (2) In this subsection,    (A) "Policy value" means an amount equal to gross premiums paid  under  a  policy  (excluding  separately  identified  premiums  for  riders  or  supplementary benefits that are not credited to the policy  value)  plus  interest  credited  less  the  amount of any partial withdrawals and the  following charges as specified in the policy: (i) expense charges,  (ii)  benefits  charges,  (iii)  service  charges,  and (iv) partial surrender  charges.    (B) "Benefit charges" means mortality charges made for life  insurance  on  the  insured  person  or  persons and any charges made for riders or  supplementary benefits.    (C) "Service charges" means  charges  for  the  cost  of  transactions  requested  by  the  policyowner  such as partial withdrawals and benefit  illustrations.  Transactional  charges  made  under   mandatory   policy  provisions shall not be assessed unless specifically permitted by law or  regulation for such transactions.    (D) "Expense  charges"  means  charges  (other  than  service charges)  deducted from gross premiums before premiums are credited to the  policy  value or otherwise deducted from the policy value.    (E) "Excess  first  year expense charges" means the greatest amount by  which (x) can exceed (y) based, for stipulated premium policies, on  the  premiums  set  forth  in  the  policy  and,  for  other policies, on theassumption that any premium (other than a single premium) payable in the  first policy year is also  payable  during  the  entire  premium  paying  period, where    (x) is the amount of the expense charges made in the first policy year  and    (y)  is  the arithmetic average of the corresponding charges which the  policy states would be imposed in policy years two through twenty or the  premium paying period, if shorter.    (F) "Excess expense charges for a  face  amount  increase"  means  the  greatest  amount  by  which  (x)  can  exceed  (y) based, for stipulated  premium policies, on the premiums set forth in the policy and, for other  policies, on the assumption that the net level whole life annual premium  for the increase applies throughout the remaining premium paying period,  where    (x) is the amount of the expense charges attributable to  an  increase  in  face  amount  of insurance in the first policy year of the increase,  and    (y)  is  the  arithmetic  average   of   the   corresponding   charges  attributable to the increase which the policy states would be imposed in  the  nineteen  policy years following the increase or the premium paying  period, if shorter.    (G) "Interest credited" means the amount of interest credited  to  the  policy  value  but, with respect to policies meeting the requirements of  subparagraph (A) of paragraph three of this subsection,  not  less  than  three percent in any year.    (H) "Net  level  whole  life  annual premium at issue" means an annual  premium based on face amounts of insurance set forth in the  policy  and  on the assumption of level annual premiums for life, the mortality table  rate  used  to  calculate the maximum mortality charges (but not greater  than that permitted under item (iv) of  subparagraph  (A)  of  paragraph  three  of  this  subsection) and an interest rate based on the higher of  four percent or that specified in the policy.    (I) "Net level whole life annual premium for an increase in  the  face  amount  of insurance" means an additional annual premium for an increase  in the face amount of  insurance  determined  as  of  the  date  of  the  increase in accordance with subparagraph (H) of this paragraph as though  such increase were a separate policy.    (J) "Increase  in  face  amount of insurance" means an increase in the  schedule of face amounts of insurance provided for  in  the  policy  and  made  at the request of the policyholder and shall not include increases  in face amount resulting from a change in the death  benefit  option  or  changes in death benefit pursuant to policy terms that do not affect the  face amount.    (K) "Surrender  charge"  means  a  deferred  charge made to the policy  value in the event of  a  full  or  partial  surrender  of  the  policy,  reduction  in the face amount of insurance or premium, or a default in a  premium payment.    (L) "Cash surrender value" means an amount equal to the  policy  value  less  any  surrender  charge,  before reduction for outstanding loans or  other amounts due under the policy.    (M) "Deferred first year expense charge", at issue or for an  increase  in  the  face  amount  of  insurance, means any portion of the allowable  first year expense charge that is not deducted from premiums or  charged  to  the  policy  value  in the year of issue, or in the policy year of a  face amount increase, but deferred and charged to the  policy  value  in  subsequent years.    (N) "Consumer  price ratio" means the ratio (not to exceed two) of (x)  the consumer price index (for all urban households)  for  the  Septemberpreceding the policy year in which the ratio is being applied to (y) the  consumer price index for September, nineteen hundred eighty-five.    (3)  A  policy  that  meets  the  requirements of this subsection must  provide for cash surrender values that meet the requirements  of  either  subparagraph  (A)  or subparagraph (B) and comply with the provisions of  subparagraphs (C) and (D) of this paragraph.    (A) Cash surrender values shall be deemed to meet the requirements  of  this subparagraph, if the following conditions are met:    (i)  Expense  charges  for  any  policy  year  shall  not  exceed  the  following:    (I) ninety percent of premiums received up to the net level whole life  annual premium at issue (regardless of when received),    (II) ten percent of all other premiums received,    (III) ninety percent of any net level whole life  annual  premium  for  increases   in   the  face  amount  of  insurance  (including  increases  offsetting previous decreases),    (IV) ten dollars per one thousand dollars of initial  face  amount  in  the first policy year,    (V)  one  dollar  per  one  thousand  dollars of the first one hundred  thousand dollars of face amount in subsequent policy years,    (VI) ten dollars per one thousand dollars of any increase in the  face  amount  of  insurance  in  the  year  of  increase  (including increases  offsetting previous decreases),    (VII) a charge per policy in  the  first  policy  year  equal  to  the  product of one hundred fifty dollars and the consumer price ratio, and    (VIII)  in policy years after the first, a charge per policy per month  equal to the product of five dollars and the consumer price ratio.    (ii) Any surrender charge provided in the policy shall  be  such  that  the  initial  surrender charge together with the expense charges made in  the first policy year (and on premiums up to the net  level  whole  life  annual  premium  if received after the first year) do not exceed the sum  of the amounts determined in accordance with clauses (I) and  (II)  (for  premiums  received in the first year) and clauses (IV) and (VII) of item  (i) of this subparagraph. The surrender charge at any time shall not  be  greater than the difference between the maximum initial surrender charge  permitted  under  this  subparagraph  and  the  sum  of all the deferred  expense charges made up to that time. Any additional  surrender  charges  that  are  imposed  in connection with an increase in face amount of the  policy shall be such that such  additional  charges  together  with  any  expense  charges made in connection with such increase do not exceed the  sum of the amounts determined in accordance with clauses (III) and  (VI)  of item (i) of this subparagraph.    (iii)  Deferred first year expense charges shall be such that: (I) the  charge for any one year shall not exceed the maximum allowable surrender  charge for that year, and (II) the total of all such charges at any time  plus the surrender charge at that time  shall  not  exceed  the  maximum  initial surrender charge. Any deferred first year expense charge imposed  with  respect  to  an  increase in the face amount of insurance shall be  subject to comparable limitations.    (iv) A policy meeting the requirements of this subparagraph if  issued  before  the  operative  date  of  subsection (k) of this section may not  impose mortality charges in excess of those based on  the  commissioners  1958  standard  ordinary  mortality  table  in  the  case  of a standard  medically underwritten insured or the commissioners 1958  extended  term  insurance table in the case of any other standard insured, and if issued  on  or  after  such  operative  date may not impose mortality charges in  excess of those  based  on  the  commissioners  1980  standard  ordinary  mortality table in the case of a standard medically underwritten insuredor  the  commissioners 1980 extended term insurance table in the case of  any other standard insured.  At  the  option  of  the  company,  maximum  charges  based  on  the  commissioners  1980 standard ordinary mortality  table  may  be computed using ten-year select mortality factors. Maximum  charges may also be based on any other table  (or  modification  thereof  for the specified class of risk) approved by the superintendent pursuant  to  item (vi) of subparagraph (B) of paragraph nine of subsection (k) of  this section. For insurance issued on a substandard basis, such  charges  may be based on appropriate modifications of such tables.    (B)  Cash surrender values shall be deemed to meet the requirements of  this subparagraph, if the following conditions are met:    (i) Policy values shall not be less than a minimum policy value  which  reflects  the same transactions, the same interest credited and the same  benefit charges that are reflected in the actual  policy  value,  except  that the excess first year expense charges shall not be greater than the  initial  expense  allowance,  and  any excess expense charges for a face  amount increase after issue shall  not  be  greater  than  the  increase  expense  allowance.  For  purposes  of  this  item,  the initial expense  allowance shall be (I)  the  lesser  of  (aa)  one  hundred  twenty-five  percent  of  the  net  level whole life annual premium at issue and (bb)  four percent of the average face amount of insurance provided under  the  policy  during  the first ten policy years plus (II) one percent of such  average face amount, and the increase expense allowance shall be (I) the  lesser of (aa) one hundred twenty-five percent of the  net  level  whole  life  annual premium for an increase in the face amount of insurance and  (bb) four percent of the average increase in face  amount  of  insurance  over  a  period  of ten policy years (excluding any increases previously  taken into account in determining an expense allowance under this  item)  plus (II) one percent of any such average increase.    (ii)  Any  surrender  charge provided in the policy shall be such that  the initial surrender charge together with any excess first year expense  charges do not exceed the  initial  expense  allowance.  Any  additional  surrender  charges  that  are  imposed in connection with an increase in  face amount shall be such that any such additional charge together  with  any  excess expense charges made in connection with such increase do not  exceed the increase expense allowance.    (iii) The policy shall provide that at least once each policy year the  policyholder has the option to apply the portion of the  cash  surrender  value  necessary  to  provide  an  amount  of  guaranteed  paid-up  life  insurance at least as great as the lesser of (I) and (II), where (I)  is  the  amount  of  paid-up  life  insurance  provided by applying the cash  surrender value to provide such paid-up insurance, computed on the basis  of an interest rate (not less  than  four  percent)  guaranteed  in  the  policy  for  this  purpose, and a mortality basis (not less favorable to  the policyholder than the mortality basis specified for an  insured  not  medically  underwritten  in  item  (iv)  of  subparagraph  (A)  of  this  paragraph) guaranteed in the policy for this purpose, and  (II)  is  the  amount  of  paid-up  life  insurance such that the amount at risk on the  paid-up insurance is the same as the amount at risk under the policy. If  the option is elected, the portion  of  the  cash  surrender  value  not  applied  to  provide  the  paid-up  life  insurance shall be paid to the  policyholder. The guaranteed  paid-up  life  insurance  benefit  may  be  provided  under the policy or by means of a separate single premium life  insurance policy issued by the company or  an  affiliate  or  subsidiary  thereof.  For  purposes of this item, the term "cash surrender value" is  after reduction for outstanding loans or other  amounts  due  under  the  policy.(C)  The  surrender  charge  in policy years after the first shall not  exceed  the  maximum  initial  surrender  charge  permitted  under  this  subsection  multiplied  by  the ratio of (i) the value of a life annuity  due of one dollar per year for the balance of the amortization period to  (ii)  the  corresponding  annuity value at issue, based on the mortality  table and interest rate used in calculating the  net  level  whole  life  annual  premiums.  For  all  policies the maximum amortization period is  twenty years.    (D) Any surrender charge that is imposed on  an  increase  in  premium  payments under a policy meeting the requirements of this subsection that  does  not  result in any increase in face amount of the policy shall not  exceed the difference between (I) the maximum initial  surrender  charge  computed on the assumption that premiums were paid at the increased rate  from  the  date  of  issuance of the policy and (II) the maximum initial  surrender charge permitted under this subsection.    (4)  The  superintendent  may  issue  regulations  to  implement  this  subsection.    (5)  The  operative  date  of  this  subsection for a company shall be  January first, nineteen hundred eighty-eight, or the operative  date  of  this act for the company, whichever is earlier.    (n-2)  Notwithstanding any other provision of this section, any policy  that provides for  the  crediting  of  additional  amounts  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this  article may provide for cash surrender benefits determined in accordance  with a market-value adjustment formula,  provided,  however,  that  such  policy   provides   for   cash  surrender  benefits  determined  without  adjustment in accordance with such a formula at specified  times  (which  shall  not  be less frequent than once every ten years after issuance of  the policy). For  purposes  hereof,  "market-value  adjustment  formula"  means  a  formula  which  is  described in the policy for increasing and  decreasing cash surrender values that would otherwise meet  the  minimum  requirements  of  subsection  (n-1) of this section and which takes into  account (1) changes in interest rates on publicly-traded obligations  or  other investments or in interest rates provided in, or declared pursuant  to,  policies  of the same class as the policy being surrendered and (2)  the length of time between the date on which the policy  is  surrendered  and the next date on which the policy would have provided cash surrender  benefits  determined  without  the  use  of  any market-value adjustment  formula. The superintendent may  promulgate  reasonable  regulations  to  define permissible forms or market-value adjustment formulae.    (o) (1) This section shall not apply to any of the following:    (A) Reinsurance.    (B) Group insurance.    (C) Group annuity contract.    (D) A single premium pure endowment or annuity contract.    (E) A reversionary annuity contract.    (F)  A  term  policy  of  uniform amount, which provides no guaranteed  nonforfeiture or endowment benefits, or renewal thereof, of thirty years  or less expiring before age eighty-one, for which uniform  premiums  are  payable during the entire term of the policy.    (G)  A  term policy of decreasing amount, which provides no guaranteed  nonforfeiture or endowment benefits, on  which  each  adjusted  premium,  calculated  as specified in subsections (g), (h), (i) and (k) hereof, is  less than the adjusted premium  so  calculated,  on  a  term  policy  of  uniform  amount,  or  renewal  thereof,  which  provides  no  guaranteed  nonforfeiture or endowment benefits, issued at the same age and for  the  same initial amount of insurance, and for a term of twenty years or lessexpiring  before age seventy-one, for which uniform premiums are payable  during the entire term of the policy.    (H)  A policy, which provides no guaranteed nonforfeiture or endowment  benefits, for which no cash surrender value, if any, or present value of  any paid-up nonforfeiture benefit, at the beginning of any policy  year,  calculated  as  specified in subsections (c), (d), (g), (h), (i) and (k)  hereof, exceeds two and one-half percent of the amount of  insurance  at  the beginning of the same policy year.    (I) A policy or contract delivered outside this state through an agent  or  other  representative of the company issuing the policy or through a  broker.    (2) For purposes of determining the applicability of this section, the  age at expiry for a joint term life insurance policy shall be the age at  expiry of the oldest life.    (p) (1) Any company may file with the superintendent a written  notice  of  its  election  to comply with the provisions of this section after a  specified date before January first, nineteen hundred forty-eight.    (2) After the filing of such notice, then  upon  such  specified  date  (which shall be the operative date for such company), this section shall  become  operative  with respect to the policies and contracts thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date of this section for such company shall be January first,  nineteen hundred forty-eight.    (q) The provisions of this section  shall  not  apply  to  any  policy  qualified for special tax treatment under subsection (b) of section four  hundred  three  of the Internal Revenue Code of 1986, as amended, to the  extent such application would prevent such qualification.

State Codes and Statutes

Statutes > New-york > Isc > Article-42 > 4221

§ 4221. Standard nonforfeiture law. (a) In the case of policies issued  on  or after the operative date of this section as defined in subsection  (p) hereof, no policy of life insurance, except as stated in  subsection  (o)  hereof,  shall  be  delivered  or issued for delivery in this state  unless it shall  contain  in  substance  the  following  provisions,  or  corresponding  provisions which in the opinion of the superintendent are  at least as favorable to the defaulting or surrendering policyholder  as  are  minimum  requirements  hereinafter specified and are essentially in  compliance with subsection (n) hereof:    (1) That, in the event of default in any premium payment, the  company  will  grant, upon proper request not later than sixty days after the due  date of the premium in default, a paid-up  nonforfeiture  benefit  on  a  plan  stipulated  in  the policy, effective as of such due date, of such  value as may be  hereinafter  specified.  In  lieu  of  such  stipulated  paid-up  nonforfeiture  benefit, the company may substitute, upon proper  request not later than sixty days after the due date of the  premium  in  default,  a  more  favorable  alternative  paid-up nonforfeiture benefit  which provides a greater amount or longer period of death  benefits  or,  if  applicable,  a  greater  amount  or  earlier  payment  of  endowment  benefits.    (2) That, upon surrender of the policy within sixty days after the due  date of any premium payment in default after premiums have been paid for  at least three full years, the company will pay, in lieu of any  paid-up  nonforfeiture  benefit,  a cash surrender value of such amount as may be  hereinafter specified.    (3) That  a  specified  paid-up  nonforfeiture  benefit  shall  become  effective  as specified in the policy unless the person entitled to make  such election elects another available option not later than sixty  days  after the due date of the premium in default.    (4) That, if the policy shall have become paid up by completion of all  premium  payments  or if it is continued under any paid-up nonforfeiture  benefit which became effective on or after the third policy anniversary,  the company will pay, upon surrender of the policy  within  thirty  days  after  any  policy anniversary, a cash surrender value of such amount as  may be hereinafter specified.    (5) In the case  of  policies  which  provide  for  the  crediting  of  additional  amounts  pursuant to subsection (b) of section four thousand  two hundred thirty-two of  this  article,  under  which  cash  surrender  values  are  adjusted  in  accordance  with  a  market-value  adjustment  formula, which cause on a basis guaranteed  in  the  policy  unscheduled  changes  in benefits or premiums, or which provide an option for changes  in benefits or premiums other than a change to a new policy, a statement  of the mortality table, interest rate, and method  used  in  calculating  cash  surrender  values and any paid-up nonforfeiture benefits available  under the policy. In the case of all other policies, a statement of  the  mortality table and interest rate used in calculating the cash surrender  values  and  any  paid-up  nonforfeiture  benefits  available  under the  policy, together with a table showing the cash surrender value, if  any,  and paid-up nonforfeiture benefit, if any, available under the policy on  each  policy  anniversary either during the first twenty policy years or  during the term of the policy, whichever is  shorter,  such  values  and  benefits  to  be  calculated  upon  the  assumption  that  there  are no  dividends or paid-up additions credited to the policy and that there  is  no indebtedness to the company on the policy.    (5-a)  In  the  case  of  policies  which provide for the crediting of  additional amounts pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two of this article and which provide for surrendercharges in accordance with subsection (n-1) of this section, a statement  as to any charges that will be imposed upon surrender of the policy.    (5-b)  In  the case of policies that provide for the adjustment of any  cash surrender values  in  accordance  with  a  market-value  adjustment  formula, a statement as to the times (which shall not be less frequently  than  once  every  ten years after issuance of the policy) on which cash  surrender values will be determined without the use of such a formula.    (6) A statement  that  the  cash  surrender  values  and  the  paid-up  nonforfeiture  benefits available under the policy are not less than the  minimum values and benefits required by any  statute  of  the  state  in  which the policy is delivered; an explanation of the manner in which the  cash surrender values and the paid-up nonforfeiture benefits are altered  by  the existence of any paid-up additions credited to the policy or any  indebtedness to the company on the policy; if a  detailed  statement  of  the method of computation of the values and benefits shown in the policy  is  not  stated therein, a statement that such method of computation has  been filed with the insurance supervisory official of the state in which  the policy is delivered; and a statement of the method  to  be  used  in  calculating  the  cash surrender value and paid-up nonforfeiture benefit  available under the policy on any policy  anniversary  beyond  the  last  anniversary  for  which such values and benefits are consecutively shown  in the policy.    (7) That the company shall deliver at issue to each holder of a policy  under which additional amounts may be credited  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this article, or  under which cash surrender values and policy loan values are adjusted in  accordance  with  a  market-value  adjustment   formula,   a   statement  containing  such information as the superintendent prescribes, and shall  mail to each such holder at least once each policy year or within  sixty  days after the end of a policy year a statement as of a date during such  year  as to the death benefit, cash surrender value and loan value under  the policy (and any amount by which such cash surrender value  and  loan  value  were  adjusted  in  accordance  with  a  market-value  adjustment  formula) on such date  as  well  as  such  further  information  as  the  superintendent  requires.  The  statement shall be addressed to the last  post-office address of the policyholder known to the company.    (8) Any of the foregoing provisions or portions of this subsection not  applicable by reason of  the  plan  of  insurance  may,  to  the  extent  inapplicable, be omitted from the policy.    The  company  shall reserve the right to defer the payment of any cash  surrender value for a period of six months after  demand  therefor  with  surrender of the policy.    (b) (1) In the case of contracts issued on or after the operative date  of  this  section  as  defined in subsection (p) hereof and prior to the  operative date of section four thousand two hundred twenty-three of this  article, no contract of annuity or pure endowment, except as  stated  in  subsection (o) hereof, shall be delivered or issued for delivery in this  state  unless  it  contains  in  substance  the following provisions, or  corresponding provisions which in the opinion of the superintendent  are  at least as favorable to the defaulting or surrendering contract holder:    (A) That in the event of default in any stipulated payment the company  will  grant  a paid-up nonforfeiture benefit on a plan stipulated in the  contract, effective as of such  due  date,  of  such  value  as  may  be  hereinafter specified.    (B) A statement of the mortality table, if any, and interest rate used  in  calculating  the  paid-up nonforfeiture benefits available under the  contract, together with a table showing either the cash surrender  value  or  the  paid-up  nonforfeiture  benefit,  if  any,  available  on  eachanniversary of the contract either  during  the  first  twenty  contract  years  or  during the term of stipulated payments, whichever is shorter,  such benefits to be calculated upon the assumption  that  there  are  no  dividends  or  paid-up additions credited to the contract and that there  is no indebtedness to the company on the contract.    (C) A statement that  the  paid-up  nonforfeiture  benefits  available  under  the  contract  are not less than the minimum benefits required by  any statute of  the  state  in  which  the  contract  is  delivered;  an  explanation  of  the  manner in which the paid-up nonforfeiture benefits  are altered by the existence of any paid-up additions  credited  to  the  contract  or  any  indebtedness  to  the  company  on the contract; if a  detailed statement of the method of computation of the benefits shown in  the contract is not stated therein, a  statement  that  such  method  of  computation  has  been  filed with the insurance supervisory official of  the state in which the contract is delivered; and  a  statement  of  the  method  to  be  used  in  calculating  the paid-up nonforfeiture benefit  available under the contract on any contract anniversary beyond the last  anniversary for which such  benefits  are  consecutively  shown  in  the  contract.    If  a company shall provide for the payment of a cash surrender value,  it shall reserve the right to defer the payment  of  such  value  for  a  period  of  six  months  after  demand  therefor  with  surrender of the  contract.    (2) Notwithstanding the requirements of this subsection, any  deferred  annuity  contract  may  provide  that  if  the annuity allowed under any  paid-up nonforfeiture benefit would be less than sixty dollars annually,  the company may at its option grant a cash surrender value  in  lieu  of  such  paid-up nonforfeiture benefit of such amount as may be required by  subsection (f) hereof.    (c) (1) Any cash surrender value available under any  policy  referred  to  in  subsection  (a)  hereof,  in  the  event of default in a premium  payment due on any policy anniversary, whether or not required  by  such  subsection,  shall be an amount not less than the excess, if any, of the  present value, on such anniversary, of the  future  guaranteed  benefits  which would have been provided for by the policy, including any existing  paid-up additions, if there had been no default, over the sum of (i) the  then  present  value  of the adjusted premiums as defined in subsections  (g), (h), (i) and (k) hereof, corresponding to premiums which would have  fallen due on and after such anniversary, and (ii)  the  amount  of  any  indebtedness  to  the  company  on the policy, including interest due or  accrued.    (2) In the case of any policy issued on or after the operative date of  subsection (k) hereof, which provides  supplemental  life  insurance  or  annuity  benefits  at  the option of the insured and for an identifiable  additional premium by rider or supplemental policy provision,  the  cash  surrender value referred to in paragraph one of this subsection shall be  in  an  amount  not  less  than  the  sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such rider or supplemental policy provision, the cash  surrender value as defined in such paragraph for a policy which provides  only the supplemental life insurance benefits otherwise provided by such  rider or supplemental policy provision, and the cash surrender value  as  defined  in  section  four  thousand  two  hundred  twenty-three of this  article for a contract which  provides  only  the  supplemental  annuity  benefits  otherwise  provided  by  such  rider  or  supplemental  policy  provision.    (3) In the case of any family policy issued on or after the  operative  date  of  subsection  (k)  hereof  as  defined  therein, which defines aprimary insured and provides term insurance on the life of the spouse of  the primary insured expiring before the spouse's  age  seventy-one,  the  cash  surrender  value  referred  to in paragraph one of this subsection  shall  be an amount not less than the sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such term insurance on the life of the spouse and the  cash surrender value as defined in such paragraph  for  a  policy  which  provides  only the benefits otherwise provided by such term insurance on  the life of the spouse.    (4) Any cash surrender value available within thirty  days  after  any  policy  anniversary  under  any such policy paid up by completion of all  premium  payments  or  any  such  policy  continued  under  any  paid-up  nonforfeiture benefit, whether or not required by subsection (a) hereof,  shall be an amount not less than the present value, on such anniversary,  of  the future guaranteed benefits provided for by the policy, including  any existing paid-up additions, decreased by  any  indebtedness  to  the  company on the policy, including interest due or accrued.    (5)  Every company must provide, to any policyowner who so requests in  writing, within twenty business days from the date the  written  request  is  received  by the company, a statement of the cash surrender value of  the policy.    (d) Any paid-up  nonforfeiture  benefit  available  under  any  policy  referred  to  in  subsection  (a)  hereof,  in the event of default in a  premium payment due on any policy anniversary shall  be  such  that  its  present value as of such anniversary shall be at least equal to the cash  surrender  value then provided for by the policy or, if none is provided  for, that cash surrender value which would have been  required  by  this  section  in  the  absence of the condition that premiums shall have been  paid for at least a specified period.    (e) (1) Any paid-up nonforfeiture benefit available under any  annuity  or  pure endowment contract referred to in subsection (b) hereof, in the  event of default in a stipulated payment due on any contract anniversary  shall be such that its present value as of such anniversary shall be not  less than the excess, if any, of the present value, on such anniversary,  of the future guaranteed benefits which would have been provided for  by  the  contract,  including  any  existing paid-up additions, if there had  been no default, over the sum of (i)  the  then  present  value  of  the  adjusted   stipulated   payments   defined   in  subsection  (g)  hereof  corresponding to stipulated payments which would have fallen due on  and  after  such  anniversary, and (ii) the amount of any indebtedness to the  company on the contract, including interest due or accrued.    (2) In determining the benefits referred to in  paragraph  one  hereof  and  in  calculating  the  adjusted  stipulated  payments referred to in  subsection (g) hereof, in the case of annuity contracts under  which  an  election  may  be  made  to  have  annuity payments commence at optional  dates, the annuity payments shall be deemed to commence at a date  which  shall  be  the  latest permitted by the contract for the commencement of  such payments but not later than the contract  anniversary  nearest  the  annuitant's   seventieth  birthday  or  the  tenth  anniversary  of  the  contract, whichever is later;  and  the  stipulated  payments  shall  be  deemed  to  be payable for the longest period during which they would be  payable if election were made to have the annuity payments  commence  at  such date.    (f)  Any cash surrender value allowed by any annuity or pure endowment  contract referred to in subsection (b) hereof  and  the  present  value,  under  any  optional provision, of future benefits commencing on the due  date of the stipulated payment in default shall each be at  least  equalto  the  then present value of the minimum paid-up nonforfeiture benefit  required by subsection (e) hereof.    (g) (1) This subsection shall not apply to policies issued on or after  the operative date of subsection (k) as defined herein.    (2) Except as provided in paragraph four hereof, the adjusted premiums  for  any policy referred to in subsection (a) hereof shall be calculated  on an  annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified  in  the  policy  for  each policy year,  excluding amounts stated in  the  policy  as  extra  premiums  to  cover  impairments  or  special hazards, that the present value, at the date of  issue of the policy, of all such adjusted premiums shall be equal to the  sum of (i) the then present value  of  the  future  guaranteed  benefits  provided for by the policy; (ii) two percent of the amount of insurance,  if  the  insurance  be  uniform  in amount, or of the equivalent uniform  amount, as hereinafter defined, if the amount of insurance  varies  with  duration  of the policy; (iii) forty percent of the adjusted premium for  the first policy year; (iv) twenty-five percent of either  the  adjusted  premium  for  the  first policy year or the adjusted premium for a whole  life policy of the  same  uniform  or  equivalent  uniform  amount  with  uniform  premiums  for  the whole of life issued at the same age for the  same amount of insurance, whichever is less. Provided, however, that  in  applying  the  percentages  specified in items (iii) and (iv) hereof, no  adjusted premium shall be deemed to exceed four percent of the amount of  insurance or uniform amount equivalent thereto. The date of issue  of  a  policy  for the purpose of this subsection shall be the date as of which  the rated age of the insured is determined.    (3) In the case of a policy providing an amount of  insurance  varying  with  duration  of the policy, the equivalent uniform amount thereof for  the purpose of this subsection shall be deemed to be the uniform  amount  of  insurance  provided  by  an otherwise similar policy, containing the  same endowment benefit or benefits, if any, issued at the same  age  and  for  the  same term, the amount of which does not vary with duration and  the benefits under which have the same present  value  at  the  date  of  issue  as  the benefits under the policy, provided, however, that in the  case of a policy providing a  varying  amount  of  insurance  (including  policies  in  which  the  death benefit prior to a date specified in the  policy does not exceed the premiums paid  with  interest,  or  the  cash  value  of the policy if greater) issued on the life of a child under age  ten, the equivalent uniform amount of insurance shall be  calculated  as  though  the  amount  of  insurance  provided  by the policy prior to the  attainment of age ten were the amount provided by  such  policy  at  age  ten.    (4)  The  adjusted  premiums  for  any policy providing term insurance  benefits by rider or supplemental policy provision shall be equal to (i)  the adjusted premiums for an otherwise similar policy issued at the same  age without such term insurance benefits, increased, during  the  period  for which premiums for such term insurance benefits are payable, by (ii)  the  adjusted  premiums for such term insurance, the foregoing items (i)  and (ii) being calculated separately and as specified in paragraphs  two  and  three hereof except that, for the purposes of items (ii), (iii) and  (iv) of paragraph two hereof, the  amount  of  insurance  or  equivalent  uniform  amount  of  insurance  used  in the calculation of the adjusted  premiums referred to in item (ii) of this paragraph shall  be  equal  to  the  excess of the corresponding amount determined for the entire policy  over the amount used in the calculation of the adjusted premiums in item  (i) of this paragraph.    (5) The adjusted stipulated payments for any annuity or pure endowment  contract referred to in subsection (b) hereof shall be calculated on  anannual  basis  and  shall  be  such uniform percentage of the respective  stipulated payments specified in the contract  for  each  contract  year  that  the  present  value,  at the date of issue of the contract, of all  such  adjusted  stipulated payments shall be equal to the sum of (i) the  then present value of the future guaranteed benefits provided for by the  contract; (ii) twenty percent of the adjusted stipulated payment for the  first contract year; and (iii) two percent of  the  adjusted  stipulated  payment  for  the first contract year for each year not exceeding twenty  during which stipulated payments are payable.    (6) Except as otherwise provided  in  subsections  (h),  (i)  and  (j)  hereof, all adjusted premiums, adjusted stipulated payments, and present  values  referred  to in this section shall be calculated on the basis of  (i) the rate of interest, not exceeding three and one-half  percent  per  annum,  specified  in  the  policy  or  contract  for  calculating  cash  surrender values, if any, and paid-up nonforfeiture benefits; and (ii) a  mortality  table  which  shall   be:   for   ordinary   insurance,   the  Commissioners' 1941 Standard Ordinary Mortality Table, provided that for  any  category  of  ordinary  insurance  issued on female risks, adjusted  premiums and present values may be calculated according to  an  age  not  more  than  three  years younger than the actual age of the insured; for  industrial insurance, the 1941 Standard Industrial Mortality Table;  for  annuity  and  pure endowment contracts, either the 1937 Standard Annuity  Mortality Table, the Annuity Mortality  Table  for  1949  Ultimate,  any  modification of either of these tables approved by the superintendent or  any  other table approved by the superintendent. Provided, however, that  in calculating the present value of  any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the  rates  of  mortality  assumed  may be not more than one hundred and  thirty percent of the rates of mortality according  to  such  applicable  table.  Provided,  further,  that  for insurance issued on a substandard  basis, the calculation of any such adjusted premiums and present  values  may be based on such other table of mortality as may be specified by the  company and approved by the superintendent.    (h) (1) This subsection shall not apply to ordinary policies issued on  or after the operative date of subsection (k) hereof.    (2)  In the case of ordinary policies issued on or after the operative  date of this subsection, all adjusted premiums and present values  shall  be  calculated  on the basis of the Commissioners 1958 Standard Ordinary  Mortality Table and the rate of interest specified  in  the  policy  for  calculating cash surrender values and paid-up nonforfeiture benefits not  exceeding  three and one-half percent per annum except that four percent  per annum may be used for policies issued on or after  June  thirteenth,  nineteen  hundred  seventy-four  and  prior  to  January first, nineteen  hundred seventy-nine, and a rate of  interest  not  exceeding  five  and  one-half  percent  per annum may be used for policies issued on or after  January first, nineteen hundred  seventy-nine,  provided  that  for  any  category of ordinary insurance issued on female risks, adjusted premiums  and  present  values may be calculated according to an age not more than  six years younger than the actual age of the insured; provided, however,  that in calculating the present value of any paid-up term insurance with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the rates of mortality assumed may be not more than those shown  in  the  Commissioners  1958  Extended  Term  Insurance Table. Provided, further,  that for insurance issued on a substandard basis, the calculation of any  such adjusted premiums and present values may be  based  on  such  other  table  of  mortality  as may be specified by the company and approved by  the superintendent.(3) Any company may file with the superintendent a written  notice  of  its  election  to  comply with the provisions of this subsection after a  specified date before January first, nineteen hundred  sixty-six.  After  the filing of such notice, then upon such specified date (which shall be  the operative date of this subsection for such company), this subsection  shall  become operative with respect to the ordinary policies thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date  of  this  subsection  for such company shall be January  first, nineteen hundred sixty-six.    (i) (1) In the case of industrial policies  issued  on  or  after  the  operative  date  of  this  subsection, all adjusted premiums and present  values shall be calculated  on  the  basis  of  the  Commissioners  1961  Standard  Industrial  Mortality Table and the rate of interest specified  in  the  policy  for  calculating  cash  surrender  values  and  paid-up  nonforfeiture  benefits  not  exceeding  three  and one-half percent per  annum except that four percent per annum may be used for policies issued  on or after June thirteenth, nineteen hundred seventy-four and prior  to  January  first, nineteen hundred seventy-nine and a rate of interest not  exceeding five and one-half percent per annum may be used  for  policies  issued  on  or  after  January  first,  nineteen  hundred  seventy-nine;  provided, however, that in calculating the present value of any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a  nonforfeiture benefit, the rates of mortality assumed may  be  not  more  than  those  shown  in  the  Commissioners 1961 Industrial Extended Term  Insurance Table. Provided, further,  that  for  insurance  issued  on  a  substandard  basis,  the  calculation  of any such adjusted premiums and  present values may be based on such other table of mortality as  may  be  specified by the company and approved by the superintendent.    (2)  Any  company may file with the superintendent a written notice of  its election to comply with the provisions of this  subsection  after  a  specified  date  before January first, nineteen hundred and sixty-eight.  After the filing of such notice, then upon such  specified  date  (which  shall  be  the operative date of this subsection for such company), this  subsection  shall  become  operative  with  respect  to  the  industrial  policies  thereafter  issued by such company. If a company makes no such  election, the operative date of this subsection for such  company  shall  be January first, nineteen hundred and sixty-eight.    (j)  In  the  case  of individual annuity and pure endowment contracts  issued on or after the operative date of paragraph three  of  subsection  (c)  of section four thousand two hundred seventeen of this article, and  prior to the  operative  date  of  section  four  thousand  two  hundred  twenty-three  of  this  article,  all  adjusted  stipulated payments and  present values referred to in this section shall be  calculated  on  the  basis  of  the  Annuity  Mortality  Table  for  1949,  Ultimate,  or any  modification of this table approved by the superintendent, and the  rate  of  interest  not  exceeding  four  percent  per annum, specified in the  contract for calculating cash surrender  values,  if  any,  and  paid-up  nonforfeiture  benefits,  except  that, if such rate of interest exceeds  three and one-half percent per annum, there  shall  be  substituted  for  such mortality table the 1971 Individual Annuity Mortality Table, or any  modification of this table approved by the superintendent.    (k) (1) This subsection shall apply to all policies issued on or after  the operative date as defined in this subsection.    (2)  Except  as  provided  in  paragraph eight of this subsection, the  adjusted premiums for any policy shall be calculated on an annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified in the policy for each policy year, excluding amounts  payable  as  extra  premiums  to  cover  impairments  or special hazards and alsoexcluding any uniform annual contract charge or policy fee specified  in  the  policy  in  a statement of the method to be used in calculating the  cash surrender values  and  paid-up  nonforfeiture  benefits,  that  the  present  value,  at  the  date  of  issue of the policy, of all adjusted  premiums shall be equal to the sum of (i) the then present value of  the  future  guaranteed benefits provided for by the policy; (ii) one percent  of either the amount of  insurance,  if  the  insurance  be  uniform  in  amount,  or  the average amount of insurance at the beginning of each of  the first ten policy years; and (iii) one hundred twenty-five percent of  the nonforfeiture net level premium as  hereinafter  defined.  Provided,  however,  that  in  applying  the percentage specified in (iii) above no  nonforfeiture net level premium shall be deemed to exceed  four  percent  of  either  the  amount  of  insurance,  if  the insurance be uniform in  amount, or the average amount of insurance at the beginning of  each  of  the  first  ten  policy  years.  The  date  of issue of a policy for the  purpose of this subsection shall be the date as of which the  rated  age  of the insured is determined.    (3)  The nonforfeiture net level premium shall be equal to the present  value, at the date of issue of the policy, of  the  guaranteed  benefits  provided  for by the policy divided by the present value, at the date of  issue of the policy, of an annuity of one per annum payable on the  date  of issue of the policy and on each anniversary of such policy on which a  premium falls due.    (4)  In  the case of policies which cause on a basis guaranteed in the  policy unscheduled changes in benefits or premiums, or which provide  an  option  for changes in benefits or premiums other than a change to a new  policy, the adjusted premiums and  present  values  shall  initially  be  calculated  on  the  assumption that future benefits and premiums do not  change from those stipulated at the date of issue of the policy. At  the  time  of any such change in the benefits or premiums the future adjusted  premiums, nonforfeiture net level premiums and present values  shall  be  recalculated  on the assumption that future benefits and premiums do not  change from those stipulated by the policy immediately after the change.    (5)  Except  as  otherwise  provided  in  paragraph  eight   of   this  subsection,  the  recalculated  future  adjusted  premiums  for any such  policy shall  be  such  uniform  percentage  of  the  respective  future  premiums specified in the policy for each policy year, excluding amounts  payable  as extra premiums to cover impairments and special hazards, and  also  excluding  any  uniform  annual  contract  charge  or  policy  fee  specified  in  the  policy  in  a  statement of the method to be used in  calculating  the  cash  surrender  values  and   paid-up   nonforfeiture  benefits,  that  the  present  value, at the time of change to the newly  defined benefits or premiums, of all such future adjusted premiums shall  be equal to the excess of    (A) the sum of    (i) the then present value of  the  then  future  guaranteed  benefits  provided for by the policy and    (ii) the additional expense allowance, if any, over    (B)  the  then  cash  surrender value, if any, or present value of any  paid-up nonforfeiture benefit under the policy.    (6) The additional expense allowance, at the time of the change to the  newly defined benefits or premiums, shall be the sum of (i) one  percent  of  the  excess,  if positive, of the average amount of insurance at the  beginning of each of the first ten policy years subsequent to the change  over the average  amount  of  insurance  prior  to  the  change  at  the  beginning  of  each of the first ten policy years subsequent to the time  of the most recent previous change, or, if there has  been  no  previous  change,  the  date  of  issue  of  the  policy;  and  (ii)  one  hundredtwenty-five percent of the increase, if positive, in  the  nonforfeiture  net level premium.    (7) The recalculated nonforfeiture net level premium shall be equal to  the  result  obtained  by  dividing subparagraph (A) by subparagraph (B)  hereof where:    (A) equals the sum of    (i) the nonforfeiture net level premium applicable prior to the change  times the present value of an annuity of one per annum payable  on  each  anniversary  of the policy on or subsequent to the date of the change on  which a premium would have fallen due had the change not occurred, and    (ii) the present value of the increase in future  guaranteed  benefits  provided for by the policy, and    (B) equals the present value of an annuity of one per annum payable on  each anniversary of the policy on or subsequent to the date of change on  which a premium falls due.    (8)  Notwithstanding  any  other  provision  of this subsection to the  contrary, in the case of a policy issued on a  substandard  basis  which  provides  reduced  graded  amounts  of insurance so that, in each policy  year, such policy has the same tabular mortality cost  as  an  otherwise  similar  policy  issued  on  the  standard  basis  which provides higher  uniform amounts of insurance, adjusted premiums and present  values  for  such  substandard  policy  may  be  calculated  as  if it were issued to  provide such higher uniform amounts of insurance on the standard basis.    (9) All adjusted premiums and  present  values  referred  to  in  this  section  shall  for  all policies of ordinary insurance be calculated on  the basis of    (A) the Commissioners 1980 Standard Ordinary Mortality Table, or    (B) at the election of the company for any one or more specified plans  of life insurance, the Commissioners 1980  Standard  Ordinary  Mortality  Table with Ten-Year Select Mortality Factors; and shall for all policies  issued  in  a  particular  calendar year be calculated on the basis of a  rate of interest  not  exceeding  the  nonforfeiture  interest  rate  as  defined  in  this  subsection for policies issued in that calendar year.  Provided, however, that:    (i) At the option of the company, calculations for all policies issued  in a particular calendar year may be made on the  basis  of  a  rate  of  interest  not  exceeding  the nonforfeiture interest rate, as defined in  this subsection,  for  policies  issued  in  the  immediately  preceding  calendar year.    (ii)  Under  any  paid-up nonforfeiture benefit, including any paid-up  dividend additions, any cash surrender value available, whether  or  not  required  by  subsection (a) hereof, shall be calculated on the basis of  the mortality table and rate of interest used in determining the  amount  of such paid-up nonforfeiture benefit and paid-up dividend additions, if  any.    (iii)  A  company  may  calculate the amount of any guaranteed paid-up  nonforfeiture benefit including any paid-up additions under  the  policy  on  the  basis  of  an interest rate no lower than that specified in the  policy for calculating cash surrender values.    (iv) In calculating the present value of any  paid-up  term  insurance  with  accompanying  pure  endowment,  if any, offered as a nonforfeiture  benefit, the rates of mortality assumed may be not more than those shown  in the Commissioners 1980 Extended Term Insurance Table.    (v) For insurance issued on a substandard basis,  the  calculation  of  any   such  adjusted  premiums  and  present  values  may  be  based  on  appropriate modifications of the aforementioned tables.    (vi) Any ordinary mortality tables,  adopted  after  nineteen  hundred  eighty  by  the  National Association of Insurance Commissioners (or anymodifications thereof for any specified class or classes of risks), that  are approved by the superintendent for use in  determining  the  minimum  nonforfeiture  standard  may  be  substituted for the Commissioners 1980  Standard  Ordinary  Mortality  Table  with  or  without  Ten-Year Select  Mortality Factors or for the Commissioners 1980 Extended Term  Insurance  Table.    (10)  The  nonforfeiture interest rate per annum for any policy issued  in a particular  calendar  year  shall  be  equal  to  one  hundred  and  twenty-five  percent  of  the calendar year statutory valuation interest  rate for such policy as defined in section  four  thousand  two  hundred  seventeen  of  this  article  rounded  to  the nearer one quarter of one  percent, computed, with respect  to  a  single  premium  life  insurance  policy  of  the  kind  referred  to  in item (vi) of subparagraph (B) of  paragraph four of subsection (c) of such section, on  a  year  of  issue  basis  by  using  a  reference  interest rate defined for such policy in  subparagraph (F) of such paragraph for the  year  immediately  preceding  the  year  of  issue on the assumption that the company has submitted an  opinion and memorandum,  in  form  and  substance  satisfactory  to  the  superintendent,  of  a  qualified  actuary  with  respect to such single  premium  life  insurance  policies  in  accordance  with  item  (vi)  of  subparagraph (B) of such paragraph.    (11)  Notwithstanding  any  other  provision  in  this  chapter to the  contrary, any refiling of  nonforfeiture  values  or  their  methods  of  computation  for any previously approved policy form which involves only  a change in the  interest  rate  or  mortality  table  used  to  compute  nonforfeiture  values shall not require refiling of any other provisions  of that policy form.    (12) After May twenty-fourth, nineteen hundred eighty-two, any company  may file with the superintendent a written notice  of  its  election  to  comply,  with  respect  to any plan of insurance, with the provisions of  this subsection after a specified date before  January  first,  nineteen  hundred   eighty-nine,  which  shall  be  the  operative  date  of  this  subsection for that plan of insurance for such  company;  the  operative  dates  of  this subsection for other plans of insurance for such company  shall be any dates not later than January first of the third  subsequent  calendar  year,  but  in  no  event  later  than January first, nineteen  hundred eighty-nine. If a company makes no such election with respect to  any plan of insurance, the operative date of this  subsection  for  such  company shall be January first, nineteen hundred eighty-nine.    (l)  In  the  case  of  any  plan of life insurance which provides for  future premium determination, the amounts of which are to be  determined  by  the  insurance company based on then estimates of future experience,  or in the case of any plan of life insurance which is of such  a  nature  that  minimum  values  cannot  be determined by the methods described in  subsection (a), (c), (d), (g), (h), (i) or (k) of this section, then:    (1) the superintendent must be satisfied that  the  benefits  provided  under  the  plan  are  substantially  as  favorable to policyholders and  insureds as the minimum benefits otherwise required by  subsection  (a),  (c), (d), (g), (h), (i) or (k) hereof;    (2)  the  superintendent  must  be satisfied that the benefits and the  pattern of premiums of that plan are not such as to mislead  prospective  policyholders or insureds;    (3)  the  cash  surrender  values  and  paid-up nonforfeiture benefits  provided by such plan must not be  less  than  the  minimum  values  and  benefits  required for the plan computed by a method consistent with the  principles of this section, as determined by the superintendent.    (m) (1)  Any  cash  surrender  value  and  any  paid-up  nonforfeiture  benefit,  available  under  any  such policy or contract in the event ofdefault in the payment of any premium or stipulated payment due  at  any  time  other  than  on  the  policy  or  contract  anniversary,  shall be  calculated with allowance for the lapse  of  time  and  the  payment  of  fractional  premiums  or stipulated payments beyond the beginning of the  policy or contract year in which the default occurs.    (2) All values referred to in subsections (c) through (k) hereof,  may  be  calculated  upon the assumption that any death benefit is payable at  the end of the policy or contract year of death.    (3) Notwithstanding the provisions of subsections (c) and (e)  hereof,  additional  benefits  payable (i) in the event of death or dismemberment  by accident, (ii) in the event of total and permanent disability,  (iii)  as  reversionary annuity or deferred reversionary annuity benefits, (iv)  as term insurance benefits provided by a rider  or  supplemental  policy  provision  to  which, if issued as a separate policy, this section would  not apply, (v) as term insurance on the life of a child or on the  lives  of  children  provided in a policy on the life of a parent of the child,  if such term insurance expires before the child's age is twenty-six,  is  uniform  in  amount  after  the  child's  age is one, and has not become  paid-up by reason of the death of a parent of  the  child  and  (vi)  as  other  policy  benefits  additional  to  life  insurance, endowment, and  annuity benefits, and premiums for all such additional  benefits,  shall  be  disregarded  in ascertaining cash surrender values and nonforfeiture  benefits required by this section, and no such additional benefits shall  be required to be included in any paid-up nonforfeiture benefits.    (n)  (1)  This  subsection,  in  addition  to  all  other   applicable  provisions  of  this  section,  shall apply to all policies issued on or  after January first, nineteen hundred eighty-six.    (2) Any cash surrender value available under the policy in  the  event  of  default  in a premium payment due on any policy anniversary shall be  in an amount which does not  differ  by  more  than  two-tenths  of  one  percent  of  either the amount of insurance, if the insurance be uniform  in amount, or the average amount of insurance at the beginning  of  each  of  the  first ten policy years, from the sum of (i) the greater of zero  and the basic cash value hereinafter  specified  and  (ii)  the  present  value  of  any  existing  paid-up  additions  less  the  amount  of  any  indebtedness to the company under the policy.    (3) The basic cash value shall be equal to the present value, on  such  anniversary,  of  the  future  guaranteed benefits which would have been  provided for by the policy, excluding any existing paid-up additions and  before deduction of any indebtedness to the company, if there  had  been  no default, less the then present value of the nonforfeiture factors, as  hereinafter  defined,  corresponding to premiums which would have fallen  due on and after such anniversary. Provided, however, that  the  effects  on  the  basic  cash  value  of  supplemental  life insurance or annuity  benefits or of family coverage, as described in subsection  (c)  or  (g)  hereof,  whichever  is  applicable, shall be the same as are the effects  specified in such subsection,  whichever  is  applicable,  on  the  cash  surrender values defined in that subsection.    (4)  The  nonforfeiture factor for each policy year shall be an amount  equal to a percentage of the adjusted premium for the  policy  year,  as  defined in subsection (g) or (k) hereof, whichever is applicable. Except  as  is  required by the next succeeding sentence of this paragraph, such  percentage:    (A) must be the same percentage  for  each  policy  year  between  the  second  policy  anniversary  and  the  later  of  (i)  the  fifth policy  anniversary and (ii) the first policy  anniversary  at  which  there  is  available  under  the policy a cash surrender value in an amount, before  including any paid-up additions and before deducting  any  indebtedness,of at least two-tenths of one percent of either the amount of insurance,  if  the  insurance  be  uniform  in  amount,  or  the  average amount of  insurance at the beginning of each of the first ten policy years; and    (B)  must be such that no percentage after the later of the two policy  anniversaries specified in subparagraph (A) hereof may  apply  to  fewer  than five consecutive policy years.    Provided,  that  no  basic cash value may be less than the value which  would be obtained if the adjusted premiums for the policy, as defined in  subsection (g) or (k) hereof, whichever is applicable, were  substituted  for  the  nonforfeiture  factors  in  the  calculation of the basic cash  value.    (5) All adjusted premiums and  present  values  referred  to  in  this  subsection  shall  for  a  particular  policy  be calculated on the same  mortality and interest bases as are used in demonstrating  the  policy's  compliance with the other subsections of this section.    (6) (A) The cash surrender values referred to in this subsection shall  include any endowment benefits provided for by the policy.    (B)  Any  cash  surrender  value  available other than in the event of  default in a premium payment due on a policy anniversary, and the amount  of any paid-up nonforfeiture benefit available under the policy  in  the  event  of  default  in  a premium payment shall be determined in manners  consistent with the manners  specified  for  determining  the  analogous  minimum amounts in subsections (a), (c), (d), (k) and (m) hereof.    (C)  The  amounts  of  any  cash  surrender  values and of any paid-up  nonforfeiture benefits granted in connection  with  additional  benefits  such  as  those  listed  as items (i) through (vi) in paragraph three of  subsection  (m)  hereof  shall  conform  with  the  principles  of  this  subsection.    (n-1)  (1)  Notwithstanding  any  other provision in this section, any  policy that meets the requirements of this subsection shall be deemed to  provide the minimum nonforfeiture benefits  and  cash  surrender  values  required  by this section. Any policy which is issued by a company after  the operative date of this subsection for the company  and  under  which  additional amounts may be credited pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two  of  this article must meet the  requirements of this subsection.    (2) In this subsection,    (A) "Policy value" means an amount equal to gross premiums paid  under  a  policy  (excluding  separately  identified  premiums  for  riders  or  supplementary benefits that are not credited to the policy  value)  plus  interest  credited  less  the  amount of any partial withdrawals and the  following charges as specified in the policy: (i) expense charges,  (ii)  benefits  charges,  (iii)  service  charges,  and (iv) partial surrender  charges.    (B) "Benefit charges" means mortality charges made for life  insurance  on  the  insured  person  or  persons and any charges made for riders or  supplementary benefits.    (C) "Service charges" means  charges  for  the  cost  of  transactions  requested  by  the  policyowner  such as partial withdrawals and benefit  illustrations.  Transactional  charges  made  under   mandatory   policy  provisions shall not be assessed unless specifically permitted by law or  regulation for such transactions.    (D) "Expense  charges"  means  charges  (other  than  service charges)  deducted from gross premiums before premiums are credited to the  policy  value or otherwise deducted from the policy value.    (E) "Excess  first  year expense charges" means the greatest amount by  which (x) can exceed (y) based, for stipulated premium policies, on  the  premiums  set  forth  in  the  policy  and,  for  other policies, on theassumption that any premium (other than a single premium) payable in the  first policy year is also  payable  during  the  entire  premium  paying  period, where    (x) is the amount of the expense charges made in the first policy year  and    (y)  is  the arithmetic average of the corresponding charges which the  policy states would be imposed in policy years two through twenty or the  premium paying period, if shorter.    (F) "Excess expense charges for a  face  amount  increase"  means  the  greatest  amount  by  which  (x)  can  exceed  (y) based, for stipulated  premium policies, on the premiums set forth in the policy and, for other  policies, on the assumption that the net level whole life annual premium  for the increase applies throughout the remaining premium paying period,  where    (x) is the amount of the expense charges attributable to  an  increase  in  face  amount  of insurance in the first policy year of the increase,  and    (y)  is  the  arithmetic  average   of   the   corresponding   charges  attributable to the increase which the policy states would be imposed in  the  nineteen  policy years following the increase or the premium paying  period, if shorter.    (G) "Interest credited" means the amount of interest credited  to  the  policy  value  but, with respect to policies meeting the requirements of  subparagraph (A) of paragraph three of this subsection,  not  less  than  three percent in any year.    (H) "Net  level  whole  life  annual premium at issue" means an annual  premium based on face amounts of insurance set forth in the  policy  and  on the assumption of level annual premiums for life, the mortality table  rate  used  to  calculate the maximum mortality charges (but not greater  than that permitted under item (iv) of  subparagraph  (A)  of  paragraph  three  of  this  subsection) and an interest rate based on the higher of  four percent or that specified in the policy.    (I) "Net level whole life annual premium for an increase in  the  face  amount  of insurance" means an additional annual premium for an increase  in the face amount of  insurance  determined  as  of  the  date  of  the  increase in accordance with subparagraph (H) of this paragraph as though  such increase were a separate policy.    (J) "Increase  in  face  amount of insurance" means an increase in the  schedule of face amounts of insurance provided for  in  the  policy  and  made  at the request of the policyholder and shall not include increases  in face amount resulting from a change in the death  benefit  option  or  changes in death benefit pursuant to policy terms that do not affect the  face amount.    (K) "Surrender  charge"  means  a  deferred  charge made to the policy  value in the event of  a  full  or  partial  surrender  of  the  policy,  reduction  in the face amount of insurance or premium, or a default in a  premium payment.    (L) "Cash surrender value" means an amount equal to the  policy  value  less  any  surrender  charge,  before reduction for outstanding loans or  other amounts due under the policy.    (M) "Deferred first year expense charge", at issue or for an  increase  in  the  face  amount  of  insurance, means any portion of the allowable  first year expense charge that is not deducted from premiums or  charged  to  the  policy  value  in the year of issue, or in the policy year of a  face amount increase, but deferred and charged to the  policy  value  in  subsequent years.    (N) "Consumer  price ratio" means the ratio (not to exceed two) of (x)  the consumer price index (for all urban households)  for  the  Septemberpreceding the policy year in which the ratio is being applied to (y) the  consumer price index for September, nineteen hundred eighty-five.    (3)  A  policy  that  meets  the  requirements of this subsection must  provide for cash surrender values that meet the requirements  of  either  subparagraph  (A)  or subparagraph (B) and comply with the provisions of  subparagraphs (C) and (D) of this paragraph.    (A) Cash surrender values shall be deemed to meet the requirements  of  this subparagraph, if the following conditions are met:    (i)  Expense  charges  for  any  policy  year  shall  not  exceed  the  following:    (I) ninety percent of premiums received up to the net level whole life  annual premium at issue (regardless of when received),    (II) ten percent of all other premiums received,    (III) ninety percent of any net level whole life  annual  premium  for  increases   in   the  face  amount  of  insurance  (including  increases  offsetting previous decreases),    (IV) ten dollars per one thousand dollars of initial  face  amount  in  the first policy year,    (V)  one  dollar  per  one  thousand  dollars of the first one hundred  thousand dollars of face amount in subsequent policy years,    (VI) ten dollars per one thousand dollars of any increase in the  face  amount  of  insurance  in  the  year  of  increase  (including increases  offsetting previous decreases),    (VII) a charge per policy in  the  first  policy  year  equal  to  the  product of one hundred fifty dollars and the consumer price ratio, and    (VIII)  in policy years after the first, a charge per policy per month  equal to the product of five dollars and the consumer price ratio.    (ii) Any surrender charge provided in the policy shall  be  such  that  the  initial  surrender charge together with the expense charges made in  the first policy year (and on premiums up to the net  level  whole  life  annual  premium  if received after the first year) do not exceed the sum  of the amounts determined in accordance with clauses (I) and  (II)  (for  premiums  received in the first year) and clauses (IV) and (VII) of item  (i) of this subparagraph. The surrender charge at any time shall not  be  greater than the difference between the maximum initial surrender charge  permitted  under  this  subparagraph  and  the  sum  of all the deferred  expense charges made up to that time. Any additional  surrender  charges  that  are  imposed  in connection with an increase in face amount of the  policy shall be such that such  additional  charges  together  with  any  expense  charges made in connection with such increase do not exceed the  sum of the amounts determined in accordance with clauses (III) and  (VI)  of item (i) of this subparagraph.    (iii)  Deferred first year expense charges shall be such that: (I) the  charge for any one year shall not exceed the maximum allowable surrender  charge for that year, and (II) the total of all such charges at any time  plus the surrender charge at that time  shall  not  exceed  the  maximum  initial surrender charge. Any deferred first year expense charge imposed  with  respect  to  an  increase in the face amount of insurance shall be  subject to comparable limitations.    (iv) A policy meeting the requirements of this subparagraph if  issued  before  the  operative  date  of  subsection (k) of this section may not  impose mortality charges in excess of those based on  the  commissioners  1958  standard  ordinary  mortality  table  in  the  case  of a standard  medically underwritten insured or the commissioners 1958  extended  term  insurance table in the case of any other standard insured, and if issued  on  or  after  such  operative  date may not impose mortality charges in  excess of those  based  on  the  commissioners  1980  standard  ordinary  mortality table in the case of a standard medically underwritten insuredor  the  commissioners 1980 extended term insurance table in the case of  any other standard insured.  At  the  option  of  the  company,  maximum  charges  based  on  the  commissioners  1980 standard ordinary mortality  table  may  be computed using ten-year select mortality factors. Maximum  charges may also be based on any other table  (or  modification  thereof  for the specified class of risk) approved by the superintendent pursuant  to  item (vi) of subparagraph (B) of paragraph nine of subsection (k) of  this section. For insurance issued on a substandard basis, such  charges  may be based on appropriate modifications of such tables.    (B)  Cash surrender values shall be deemed to meet the requirements of  this subparagraph, if the following conditions are met:    (i) Policy values shall not be less than a minimum policy value  which  reflects  the same transactions, the same interest credited and the same  benefit charges that are reflected in the actual  policy  value,  except  that the excess first year expense charges shall not be greater than the  initial  expense  allowance,  and  any excess expense charges for a face  amount increase after issue shall  not  be  greater  than  the  increase  expense  allowance.  For  purposes  of  this  item,  the initial expense  allowance shall be (I)  the  lesser  of  (aa)  one  hundred  twenty-five  percent  of  the  net  level whole life annual premium at issue and (bb)  four percent of the average face amount of insurance provided under  the  policy  during  the first ten policy years plus (II) one percent of such  average face amount, and the increase expense allowance shall be (I) the  lesser of (aa) one hundred twenty-five percent of the  net  level  whole  life  annual premium for an increase in the face amount of insurance and  (bb) four percent of the average increase in face  amount  of  insurance  over  a  period  of ten policy years (excluding any increases previously  taken into account in determining an expense allowance under this  item)  plus (II) one percent of any such average increase.    (ii)  Any  surrender  charge provided in the policy shall be such that  the initial surrender charge together with any excess first year expense  charges do not exceed the  initial  expense  allowance.  Any  additional  surrender  charges  that  are  imposed in connection with an increase in  face amount shall be such that any such additional charge together  with  any  excess expense charges made in connection with such increase do not  exceed the increase expense allowance.    (iii) The policy shall provide that at least once each policy year the  policyholder has the option to apply the portion of the  cash  surrender  value  necessary  to  provide  an  amount  of  guaranteed  paid-up  life  insurance at least as great as the lesser of (I) and (II), where (I)  is  the  amount  of  paid-up  life  insurance  provided by applying the cash  surrender value to provide such paid-up insurance, computed on the basis  of an interest rate (not less  than  four  percent)  guaranteed  in  the  policy  for  this  purpose, and a mortality basis (not less favorable to  the policyholder than the mortality basis specified for an  insured  not  medically  underwritten  in  item  (iv)  of  subparagraph  (A)  of  this  paragraph) guaranteed in the policy for this purpose, and  (II)  is  the  amount  of  paid-up  life  insurance such that the amount at risk on the  paid-up insurance is the same as the amount at risk under the policy. If  the option is elected, the portion  of  the  cash  surrender  value  not  applied  to  provide  the  paid-up  life  insurance shall be paid to the  policyholder. The guaranteed  paid-up  life  insurance  benefit  may  be  provided  under the policy or by means of a separate single premium life  insurance policy issued by the company or  an  affiliate  or  subsidiary  thereof.  For  purposes of this item, the term "cash surrender value" is  after reduction for outstanding loans or other  amounts  due  under  the  policy.(C)  The  surrender  charge  in policy years after the first shall not  exceed  the  maximum  initial  surrender  charge  permitted  under  this  subsection  multiplied  by  the ratio of (i) the value of a life annuity  due of one dollar per year for the balance of the amortization period to  (ii)  the  corresponding  annuity value at issue, based on the mortality  table and interest rate used in calculating the  net  level  whole  life  annual  premiums.  For  all  policies the maximum amortization period is  twenty years.    (D) Any surrender charge that is imposed on  an  increase  in  premium  payments under a policy meeting the requirements of this subsection that  does  not  result in any increase in face amount of the policy shall not  exceed the difference between (I) the maximum initial  surrender  charge  computed on the assumption that premiums were paid at the increased rate  from  the  date  of  issuance of the policy and (II) the maximum initial  surrender charge permitted under this subsection.    (4)  The  superintendent  may  issue  regulations  to  implement  this  subsection.    (5)  The  operative  date  of  this  subsection for a company shall be  January first, nineteen hundred eighty-eight, or the operative  date  of  this act for the company, whichever is earlier.    (n-2)  Notwithstanding any other provision of this section, any policy  that provides for  the  crediting  of  additional  amounts  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this  article may provide for cash surrender benefits determined in accordance  with a market-value adjustment formula,  provided,  however,  that  such  policy   provides   for   cash  surrender  benefits  determined  without  adjustment in accordance with such a formula at specified  times  (which  shall  not  be less frequent than once every ten years after issuance of  the policy). For  purposes  hereof,  "market-value  adjustment  formula"  means  a  formula  which  is  described in the policy for increasing and  decreasing cash surrender values that would otherwise meet  the  minimum  requirements  of  subsection  (n-1) of this section and which takes into  account (1) changes in interest rates on publicly-traded obligations  or  other investments or in interest rates provided in, or declared pursuant  to,  policies  of the same class as the policy being surrendered and (2)  the length of time between the date on which the policy  is  surrendered  and the next date on which the policy would have provided cash surrender  benefits  determined  without  the  use  of  any market-value adjustment  formula. The superintendent may  promulgate  reasonable  regulations  to  define permissible forms or market-value adjustment formulae.    (o) (1) This section shall not apply to any of the following:    (A) Reinsurance.    (B) Group insurance.    (C) Group annuity contract.    (D) A single premium pure endowment or annuity contract.    (E) A reversionary annuity contract.    (F)  A  term  policy  of  uniform amount, which provides no guaranteed  nonforfeiture or endowment benefits, or renewal thereof, of thirty years  or less expiring before age eighty-one, for which uniform  premiums  are  payable during the entire term of the policy.    (G)  A  term policy of decreasing amount, which provides no guaranteed  nonforfeiture or endowment benefits, on  which  each  adjusted  premium,  calculated  as specified in subsections (g), (h), (i) and (k) hereof, is  less than the adjusted premium  so  calculated,  on  a  term  policy  of  uniform  amount,  or  renewal  thereof,  which  provides  no  guaranteed  nonforfeiture or endowment benefits, issued at the same age and for  the  same initial amount of insurance, and for a term of twenty years or lessexpiring  before age seventy-one, for which uniform premiums are payable  during the entire term of the policy.    (H)  A policy, which provides no guaranteed nonforfeiture or endowment  benefits, for which no cash surrender value, if any, or present value of  any paid-up nonforfeiture benefit, at the beginning of any policy  year,  calculated  as  specified in subsections (c), (d), (g), (h), (i) and (k)  hereof, exceeds two and one-half percent of the amount of  insurance  at  the beginning of the same policy year.    (I) A policy or contract delivered outside this state through an agent  or  other  representative of the company issuing the policy or through a  broker.    (2) For purposes of determining the applicability of this section, the  age at expiry for a joint term life insurance policy shall be the age at  expiry of the oldest life.    (p) (1) Any company may file with the superintendent a written  notice  of  its  election  to comply with the provisions of this section after a  specified date before January first, nineteen hundred forty-eight.    (2) After the filing of such notice, then  upon  such  specified  date  (which shall be the operative date for such company), this section shall  become  operative  with respect to the policies and contracts thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date of this section for such company shall be January first,  nineteen hundred forty-eight.    (q) The provisions of this section  shall  not  apply  to  any  policy  qualified for special tax treatment under subsection (b) of section four  hundred  three  of the Internal Revenue Code of 1986, as amended, to the  extent such application would prevent such qualification.

State Codes and Statutes

State Codes and Statutes

Statutes > New-york > Isc > Article-42 > 4221

§ 4221. Standard nonforfeiture law. (a) In the case of policies issued  on  or after the operative date of this section as defined in subsection  (p) hereof, no policy of life insurance, except as stated in  subsection  (o)  hereof,  shall  be  delivered  or issued for delivery in this state  unless it shall  contain  in  substance  the  following  provisions,  or  corresponding  provisions which in the opinion of the superintendent are  at least as favorable to the defaulting or surrendering policyholder  as  are  minimum  requirements  hereinafter specified and are essentially in  compliance with subsection (n) hereof:    (1) That, in the event of default in any premium payment, the  company  will  grant, upon proper request not later than sixty days after the due  date of the premium in default, a paid-up  nonforfeiture  benefit  on  a  plan  stipulated  in  the policy, effective as of such due date, of such  value as may be  hereinafter  specified.  In  lieu  of  such  stipulated  paid-up  nonforfeiture  benefit, the company may substitute, upon proper  request not later than sixty days after the due date of the  premium  in  default,  a  more  favorable  alternative  paid-up nonforfeiture benefit  which provides a greater amount or longer period of death  benefits  or,  if  applicable,  a  greater  amount  or  earlier  payment  of  endowment  benefits.    (2) That, upon surrender of the policy within sixty days after the due  date of any premium payment in default after premiums have been paid for  at least three full years, the company will pay, in lieu of any  paid-up  nonforfeiture  benefit,  a cash surrender value of such amount as may be  hereinafter specified.    (3) That  a  specified  paid-up  nonforfeiture  benefit  shall  become  effective  as specified in the policy unless the person entitled to make  such election elects another available option not later than sixty  days  after the due date of the premium in default.    (4) That, if the policy shall have become paid up by completion of all  premium  payments  or if it is continued under any paid-up nonforfeiture  benefit which became effective on or after the third policy anniversary,  the company will pay, upon surrender of the policy  within  thirty  days  after  any  policy anniversary, a cash surrender value of such amount as  may be hereinafter specified.    (5) In the case  of  policies  which  provide  for  the  crediting  of  additional  amounts  pursuant to subsection (b) of section four thousand  two hundred thirty-two of  this  article,  under  which  cash  surrender  values  are  adjusted  in  accordance  with  a  market-value  adjustment  formula, which cause on a basis guaranteed  in  the  policy  unscheduled  changes  in benefits or premiums, or which provide an option for changes  in benefits or premiums other than a change to a new policy, a statement  of the mortality table, interest rate, and method  used  in  calculating  cash  surrender  values and any paid-up nonforfeiture benefits available  under the policy. In the case of all other policies, a statement of  the  mortality table and interest rate used in calculating the cash surrender  values  and  any  paid-up  nonforfeiture  benefits  available  under the  policy, together with a table showing the cash surrender value, if  any,  and paid-up nonforfeiture benefit, if any, available under the policy on  each  policy  anniversary either during the first twenty policy years or  during the term of the policy, whichever is  shorter,  such  values  and  benefits  to  be  calculated  upon  the  assumption  that  there  are no  dividends or paid-up additions credited to the policy and that there  is  no indebtedness to the company on the policy.    (5-a)  In  the  case  of  policies  which provide for the crediting of  additional amounts pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two of this article and which provide for surrendercharges in accordance with subsection (n-1) of this section, a statement  as to any charges that will be imposed upon surrender of the policy.    (5-b)  In  the case of policies that provide for the adjustment of any  cash surrender values  in  accordance  with  a  market-value  adjustment  formula, a statement as to the times (which shall not be less frequently  than  once  every  ten years after issuance of the policy) on which cash  surrender values will be determined without the use of such a formula.    (6) A statement  that  the  cash  surrender  values  and  the  paid-up  nonforfeiture  benefits available under the policy are not less than the  minimum values and benefits required by any  statute  of  the  state  in  which the policy is delivered; an explanation of the manner in which the  cash surrender values and the paid-up nonforfeiture benefits are altered  by  the existence of any paid-up additions credited to the policy or any  indebtedness to the company on the policy; if a  detailed  statement  of  the method of computation of the values and benefits shown in the policy  is  not  stated therein, a statement that such method of computation has  been filed with the insurance supervisory official of the state in which  the policy is delivered; and a statement of the method  to  be  used  in  calculating  the  cash surrender value and paid-up nonforfeiture benefit  available under the policy on any policy  anniversary  beyond  the  last  anniversary  for  which such values and benefits are consecutively shown  in the policy.    (7) That the company shall deliver at issue to each holder of a policy  under which additional amounts may be credited  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this article, or  under which cash surrender values and policy loan values are adjusted in  accordance  with  a  market-value  adjustment   formula,   a   statement  containing  such information as the superintendent prescribes, and shall  mail to each such holder at least once each policy year or within  sixty  days after the end of a policy year a statement as of a date during such  year  as to the death benefit, cash surrender value and loan value under  the policy (and any amount by which such cash surrender value  and  loan  value  were  adjusted  in  accordance  with  a  market-value  adjustment  formula) on such date  as  well  as  such  further  information  as  the  superintendent  requires.  The  statement shall be addressed to the last  post-office address of the policyholder known to the company.    (8) Any of the foregoing provisions or portions of this subsection not  applicable by reason of  the  plan  of  insurance  may,  to  the  extent  inapplicable, be omitted from the policy.    The  company  shall reserve the right to defer the payment of any cash  surrender value for a period of six months after  demand  therefor  with  surrender of the policy.    (b) (1) In the case of contracts issued on or after the operative date  of  this  section  as  defined in subsection (p) hereof and prior to the  operative date of section four thousand two hundred twenty-three of this  article, no contract of annuity or pure endowment, except as  stated  in  subsection (o) hereof, shall be delivered or issued for delivery in this  state  unless  it  contains  in  substance  the following provisions, or  corresponding provisions which in the opinion of the superintendent  are  at least as favorable to the defaulting or surrendering contract holder:    (A) That in the event of default in any stipulated payment the company  will  grant  a paid-up nonforfeiture benefit on a plan stipulated in the  contract, effective as of such  due  date,  of  such  value  as  may  be  hereinafter specified.    (B) A statement of the mortality table, if any, and interest rate used  in  calculating  the  paid-up nonforfeiture benefits available under the  contract, together with a table showing either the cash surrender  value  or  the  paid-up  nonforfeiture  benefit,  if  any,  available  on  eachanniversary of the contract either  during  the  first  twenty  contract  years  or  during the term of stipulated payments, whichever is shorter,  such benefits to be calculated upon the assumption  that  there  are  no  dividends  or  paid-up additions credited to the contract and that there  is no indebtedness to the company on the contract.    (C) A statement that  the  paid-up  nonforfeiture  benefits  available  under  the  contract  are not less than the minimum benefits required by  any statute of  the  state  in  which  the  contract  is  delivered;  an  explanation  of  the  manner in which the paid-up nonforfeiture benefits  are altered by the existence of any paid-up additions  credited  to  the  contract  or  any  indebtedness  to  the  company  on the contract; if a  detailed statement of the method of computation of the benefits shown in  the contract is not stated therein, a  statement  that  such  method  of  computation  has  been  filed with the insurance supervisory official of  the state in which the contract is delivered; and  a  statement  of  the  method  to  be  used  in  calculating  the paid-up nonforfeiture benefit  available under the contract on any contract anniversary beyond the last  anniversary for which such  benefits  are  consecutively  shown  in  the  contract.    If  a company shall provide for the payment of a cash surrender value,  it shall reserve the right to defer the payment  of  such  value  for  a  period  of  six  months  after  demand  therefor  with  surrender of the  contract.    (2) Notwithstanding the requirements of this subsection, any  deferred  annuity  contract  may  provide  that  if  the annuity allowed under any  paid-up nonforfeiture benefit would be less than sixty dollars annually,  the company may at its option grant a cash surrender value  in  lieu  of  such  paid-up nonforfeiture benefit of such amount as may be required by  subsection (f) hereof.    (c) (1) Any cash surrender value available under any  policy  referred  to  in  subsection  (a)  hereof,  in  the  event of default in a premium  payment due on any policy anniversary, whether or not required  by  such  subsection,  shall be an amount not less than the excess, if any, of the  present value, on such anniversary, of the  future  guaranteed  benefits  which would have been provided for by the policy, including any existing  paid-up additions, if there had been no default, over the sum of (i) the  then  present  value  of the adjusted premiums as defined in subsections  (g), (h), (i) and (k) hereof, corresponding to premiums which would have  fallen due on and after such anniversary, and (ii)  the  amount  of  any  indebtedness  to  the  company  on the policy, including interest due or  accrued.    (2) In the case of any policy issued on or after the operative date of  subsection (k) hereof, which provides  supplemental  life  insurance  or  annuity  benefits  at  the option of the insured and for an identifiable  additional premium by rider or supplemental policy provision,  the  cash  surrender value referred to in paragraph one of this subsection shall be  in  an  amount  not  less  than  the  sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such rider or supplemental policy provision, the cash  surrender value as defined in such paragraph for a policy which provides  only the supplemental life insurance benefits otherwise provided by such  rider or supplemental policy provision, and the cash surrender value  as  defined  in  section  four  thousand  two  hundred  twenty-three of this  article for a contract which  provides  only  the  supplemental  annuity  benefits  otherwise  provided  by  such  rider  or  supplemental  policy  provision.    (3) In the case of any family policy issued on or after the  operative  date  of  subsection  (k)  hereof  as  defined  therein, which defines aprimary insured and provides term insurance on the life of the spouse of  the primary insured expiring before the spouse's  age  seventy-one,  the  cash  surrender  value  referred  to in paragraph one of this subsection  shall  be an amount not less than the sum of the cash surrender value as  defined in such paragraph for an otherwise similar policy issued at  the  same  age  without such term insurance on the life of the spouse and the  cash surrender value as defined in such paragraph  for  a  policy  which  provides  only the benefits otherwise provided by such term insurance on  the life of the spouse.    (4) Any cash surrender value available within thirty  days  after  any  policy  anniversary  under  any such policy paid up by completion of all  premium  payments  or  any  such  policy  continued  under  any  paid-up  nonforfeiture benefit, whether or not required by subsection (a) hereof,  shall be an amount not less than the present value, on such anniversary,  of  the future guaranteed benefits provided for by the policy, including  any existing paid-up additions, decreased by  any  indebtedness  to  the  company on the policy, including interest due or accrued.    (5)  Every company must provide, to any policyowner who so requests in  writing, within twenty business days from the date the  written  request  is  received  by the company, a statement of the cash surrender value of  the policy.    (d) Any paid-up  nonforfeiture  benefit  available  under  any  policy  referred  to  in  subsection  (a)  hereof,  in the event of default in a  premium payment due on any policy anniversary shall  be  such  that  its  present value as of such anniversary shall be at least equal to the cash  surrender  value then provided for by the policy or, if none is provided  for, that cash surrender value which would have been  required  by  this  section  in  the  absence of the condition that premiums shall have been  paid for at least a specified period.    (e) (1) Any paid-up nonforfeiture benefit available under any  annuity  or  pure endowment contract referred to in subsection (b) hereof, in the  event of default in a stipulated payment due on any contract anniversary  shall be such that its present value as of such anniversary shall be not  less than the excess, if any, of the present value, on such anniversary,  of the future guaranteed benefits which would have been provided for  by  the  contract,  including  any  existing paid-up additions, if there had  been no default, over the sum of (i)  the  then  present  value  of  the  adjusted   stipulated   payments   defined   in  subsection  (g)  hereof  corresponding to stipulated payments which would have fallen due on  and  after  such  anniversary, and (ii) the amount of any indebtedness to the  company on the contract, including interest due or accrued.    (2) In determining the benefits referred to in  paragraph  one  hereof  and  in  calculating  the  adjusted  stipulated  payments referred to in  subsection (g) hereof, in the case of annuity contracts under  which  an  election  may  be  made  to  have  annuity payments commence at optional  dates, the annuity payments shall be deemed to commence at a date  which  shall  be  the  latest permitted by the contract for the commencement of  such payments but not later than the contract  anniversary  nearest  the  annuitant's   seventieth  birthday  or  the  tenth  anniversary  of  the  contract, whichever is later;  and  the  stipulated  payments  shall  be  deemed  to  be payable for the longest period during which they would be  payable if election were made to have the annuity payments  commence  at  such date.    (f)  Any cash surrender value allowed by any annuity or pure endowment  contract referred to in subsection (b) hereof  and  the  present  value,  under  any  optional provision, of future benefits commencing on the due  date of the stipulated payment in default shall each be at  least  equalto  the  then present value of the minimum paid-up nonforfeiture benefit  required by subsection (e) hereof.    (g) (1) This subsection shall not apply to policies issued on or after  the operative date of subsection (k) as defined herein.    (2) Except as provided in paragraph four hereof, the adjusted premiums  for  any policy referred to in subsection (a) hereof shall be calculated  on an  annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified  in  the  policy  for  each policy year,  excluding amounts stated in  the  policy  as  extra  premiums  to  cover  impairments  or  special hazards, that the present value, at the date of  issue of the policy, of all such adjusted premiums shall be equal to the  sum of (i) the then present value  of  the  future  guaranteed  benefits  provided for by the policy; (ii) two percent of the amount of insurance,  if  the  insurance  be  uniform  in amount, or of the equivalent uniform  amount, as hereinafter defined, if the amount of insurance  varies  with  duration  of the policy; (iii) forty percent of the adjusted premium for  the first policy year; (iv) twenty-five percent of either  the  adjusted  premium  for  the  first policy year or the adjusted premium for a whole  life policy of the  same  uniform  or  equivalent  uniform  amount  with  uniform  premiums  for  the whole of life issued at the same age for the  same amount of insurance, whichever is less. Provided, however, that  in  applying  the  percentages  specified in items (iii) and (iv) hereof, no  adjusted premium shall be deemed to exceed four percent of the amount of  insurance or uniform amount equivalent thereto. The date of issue  of  a  policy  for the purpose of this subsection shall be the date as of which  the rated age of the insured is determined.    (3) In the case of a policy providing an amount of  insurance  varying  with  duration  of the policy, the equivalent uniform amount thereof for  the purpose of this subsection shall be deemed to be the uniform  amount  of  insurance  provided  by  an otherwise similar policy, containing the  same endowment benefit or benefits, if any, issued at the same  age  and  for  the  same term, the amount of which does not vary with duration and  the benefits under which have the same present  value  at  the  date  of  issue  as  the benefits under the policy, provided, however, that in the  case of a policy providing a  varying  amount  of  insurance  (including  policies  in  which  the  death benefit prior to a date specified in the  policy does not exceed the premiums paid  with  interest,  or  the  cash  value  of the policy if greater) issued on the life of a child under age  ten, the equivalent uniform amount of insurance shall be  calculated  as  though  the  amount  of  insurance  provided  by the policy prior to the  attainment of age ten were the amount provided by  such  policy  at  age  ten.    (4)  The  adjusted  premiums  for  any policy providing term insurance  benefits by rider or supplemental policy provision shall be equal to (i)  the adjusted premiums for an otherwise similar policy issued at the same  age without such term insurance benefits, increased, during  the  period  for which premiums for such term insurance benefits are payable, by (ii)  the  adjusted  premiums for such term insurance, the foregoing items (i)  and (ii) being calculated separately and as specified in paragraphs  two  and  three hereof except that, for the purposes of items (ii), (iii) and  (iv) of paragraph two hereof, the  amount  of  insurance  or  equivalent  uniform  amount  of  insurance  used  in the calculation of the adjusted  premiums referred to in item (ii) of this paragraph shall  be  equal  to  the  excess of the corresponding amount determined for the entire policy  over the amount used in the calculation of the adjusted premiums in item  (i) of this paragraph.    (5) The adjusted stipulated payments for any annuity or pure endowment  contract referred to in subsection (b) hereof shall be calculated on  anannual  basis  and  shall  be  such uniform percentage of the respective  stipulated payments specified in the contract  for  each  contract  year  that  the  present  value,  at the date of issue of the contract, of all  such  adjusted  stipulated payments shall be equal to the sum of (i) the  then present value of the future guaranteed benefits provided for by the  contract; (ii) twenty percent of the adjusted stipulated payment for the  first contract year; and (iii) two percent of  the  adjusted  stipulated  payment  for  the first contract year for each year not exceeding twenty  during which stipulated payments are payable.    (6) Except as otherwise provided  in  subsections  (h),  (i)  and  (j)  hereof, all adjusted premiums, adjusted stipulated payments, and present  values  referred  to in this section shall be calculated on the basis of  (i) the rate of interest, not exceeding three and one-half  percent  per  annum,  specified  in  the  policy  or  contract  for  calculating  cash  surrender values, if any, and paid-up nonforfeiture benefits; and (ii) a  mortality  table  which  shall   be:   for   ordinary   insurance,   the  Commissioners' 1941 Standard Ordinary Mortality Table, provided that for  any  category  of  ordinary  insurance  issued on female risks, adjusted  premiums and present values may be calculated according to  an  age  not  more  than  three  years younger than the actual age of the insured; for  industrial insurance, the 1941 Standard Industrial Mortality Table;  for  annuity  and  pure endowment contracts, either the 1937 Standard Annuity  Mortality Table, the Annuity Mortality  Table  for  1949  Ultimate,  any  modification of either of these tables approved by the superintendent or  any  other table approved by the superintendent. Provided, however, that  in calculating the present value of  any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the  rates  of  mortality  assumed  may be not more than one hundred and  thirty percent of the rates of mortality according  to  such  applicable  table.  Provided,  further,  that  for insurance issued on a substandard  basis, the calculation of any such adjusted premiums and present  values  may be based on such other table of mortality as may be specified by the  company and approved by the superintendent.    (h) (1) This subsection shall not apply to ordinary policies issued on  or after the operative date of subsection (k) hereof.    (2)  In the case of ordinary policies issued on or after the operative  date of this subsection, all adjusted premiums and present values  shall  be  calculated  on the basis of the Commissioners 1958 Standard Ordinary  Mortality Table and the rate of interest specified  in  the  policy  for  calculating cash surrender values and paid-up nonforfeiture benefits not  exceeding  three and one-half percent per annum except that four percent  per annum may be used for policies issued on or after  June  thirteenth,  nineteen  hundred  seventy-four  and  prior  to  January first, nineteen  hundred seventy-nine, and a rate of  interest  not  exceeding  five  and  one-half  percent  per annum may be used for policies issued on or after  January first, nineteen hundred  seventy-nine,  provided  that  for  any  category of ordinary insurance issued on female risks, adjusted premiums  and  present  values may be calculated according to an age not more than  six years younger than the actual age of the insured; provided, however,  that in calculating the present value of any paid-up term insurance with  accompanying pure endowment, if any, offered as a nonforfeiture benefit,  the rates of mortality assumed may be not more than those shown  in  the  Commissioners  1958  Extended  Term  Insurance Table. Provided, further,  that for insurance issued on a substandard basis, the calculation of any  such adjusted premiums and present values may be  based  on  such  other  table  of  mortality  as may be specified by the company and approved by  the superintendent.(3) Any company may file with the superintendent a written  notice  of  its  election  to  comply with the provisions of this subsection after a  specified date before January first, nineteen hundred  sixty-six.  After  the filing of such notice, then upon such specified date (which shall be  the operative date of this subsection for such company), this subsection  shall  become operative with respect to the ordinary policies thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date  of  this  subsection  for such company shall be January  first, nineteen hundred sixty-six.    (i) (1) In the case of industrial policies  issued  on  or  after  the  operative  date  of  this  subsection, all adjusted premiums and present  values shall be calculated  on  the  basis  of  the  Commissioners  1961  Standard  Industrial  Mortality Table and the rate of interest specified  in  the  policy  for  calculating  cash  surrender  values  and  paid-up  nonforfeiture  benefits  not  exceeding  three  and one-half percent per  annum except that four percent per annum may be used for policies issued  on or after June thirteenth, nineteen hundred seventy-four and prior  to  January  first, nineteen hundred seventy-nine and a rate of interest not  exceeding five and one-half percent per annum may be used  for  policies  issued  on  or  after  January  first,  nineteen  hundred  seventy-nine;  provided, however, that in calculating the present value of any  paid-up  term  insurance  with  accompanying pure endowment, if any, offered as a  nonforfeiture benefit, the rates of mortality assumed may  be  not  more  than  those  shown  in  the  Commissioners 1961 Industrial Extended Term  Insurance Table. Provided, further,  that  for  insurance  issued  on  a  substandard  basis,  the  calculation  of any such adjusted premiums and  present values may be based on such other table of mortality as  may  be  specified by the company and approved by the superintendent.    (2)  Any  company may file with the superintendent a written notice of  its election to comply with the provisions of this  subsection  after  a  specified  date  before January first, nineteen hundred and sixty-eight.  After the filing of such notice, then upon such  specified  date  (which  shall  be  the operative date of this subsection for such company), this  subsection  shall  become  operative  with  respect  to  the  industrial  policies  thereafter  issued by such company. If a company makes no such  election, the operative date of this subsection for such  company  shall  be January first, nineteen hundred and sixty-eight.    (j)  In  the  case  of individual annuity and pure endowment contracts  issued on or after the operative date of paragraph three  of  subsection  (c)  of section four thousand two hundred seventeen of this article, and  prior to the  operative  date  of  section  four  thousand  two  hundred  twenty-three  of  this  article,  all  adjusted  stipulated payments and  present values referred to in this section shall be  calculated  on  the  basis  of  the  Annuity  Mortality  Table  for  1949,  Ultimate,  or any  modification of this table approved by the superintendent, and the  rate  of  interest  not  exceeding  four  percent  per annum, specified in the  contract for calculating cash surrender  values,  if  any,  and  paid-up  nonforfeiture  benefits,  except  that, if such rate of interest exceeds  three and one-half percent per annum, there  shall  be  substituted  for  such mortality table the 1971 Individual Annuity Mortality Table, or any  modification of this table approved by the superintendent.    (k) (1) This subsection shall apply to all policies issued on or after  the operative date as defined in this subsection.    (2)  Except  as  provided  in  paragraph eight of this subsection, the  adjusted premiums for any policy shall be calculated on an annual  basis  and  shall  be  such  uniform  percentage  of  the  respective  premiums  specified in the policy for each policy year, excluding amounts  payable  as  extra  premiums  to  cover  impairments  or special hazards and alsoexcluding any uniform annual contract charge or policy fee specified  in  the  policy  in  a statement of the method to be used in calculating the  cash surrender values  and  paid-up  nonforfeiture  benefits,  that  the  present  value,  at  the  date  of  issue of the policy, of all adjusted  premiums shall be equal to the sum of (i) the then present value of  the  future  guaranteed benefits provided for by the policy; (ii) one percent  of either the amount of  insurance,  if  the  insurance  be  uniform  in  amount,  or  the average amount of insurance at the beginning of each of  the first ten policy years; and (iii) one hundred twenty-five percent of  the nonforfeiture net level premium as  hereinafter  defined.  Provided,  however,  that  in  applying  the percentage specified in (iii) above no  nonforfeiture net level premium shall be deemed to exceed  four  percent  of  either  the  amount  of  insurance,  if  the insurance be uniform in  amount, or the average amount of insurance at the beginning of  each  of  the  first  ten  policy  years.  The  date  of issue of a policy for the  purpose of this subsection shall be the date as of which the  rated  age  of the insured is determined.    (3)  The nonforfeiture net level premium shall be equal to the present  value, at the date of issue of the policy, of  the  guaranteed  benefits  provided  for by the policy divided by the present value, at the date of  issue of the policy, of an annuity of one per annum payable on the  date  of issue of the policy and on each anniversary of such policy on which a  premium falls due.    (4)  In  the case of policies which cause on a basis guaranteed in the  policy unscheduled changes in benefits or premiums, or which provide  an  option  for changes in benefits or premiums other than a change to a new  policy, the adjusted premiums and  present  values  shall  initially  be  calculated  on  the  assumption that future benefits and premiums do not  change from those stipulated at the date of issue of the policy. At  the  time  of any such change in the benefits or premiums the future adjusted  premiums, nonforfeiture net level premiums and present values  shall  be  recalculated  on the assumption that future benefits and premiums do not  change from those stipulated by the policy immediately after the change.    (5)  Except  as  otherwise  provided  in  paragraph  eight   of   this  subsection,  the  recalculated  future  adjusted  premiums  for any such  policy shall  be  such  uniform  percentage  of  the  respective  future  premiums specified in the policy for each policy year, excluding amounts  payable  as extra premiums to cover impairments and special hazards, and  also  excluding  any  uniform  annual  contract  charge  or  policy  fee  specified  in  the  policy  in  a  statement of the method to be used in  calculating  the  cash  surrender  values  and   paid-up   nonforfeiture  benefits,  that  the  present  value, at the time of change to the newly  defined benefits or premiums, of all such future adjusted premiums shall  be equal to the excess of    (A) the sum of    (i) the then present value of  the  then  future  guaranteed  benefits  provided for by the policy and    (ii) the additional expense allowance, if any, over    (B)  the  then  cash  surrender value, if any, or present value of any  paid-up nonforfeiture benefit under the policy.    (6) The additional expense allowance, at the time of the change to the  newly defined benefits or premiums, shall be the sum of (i) one  percent  of  the  excess,  if positive, of the average amount of insurance at the  beginning of each of the first ten policy years subsequent to the change  over the average  amount  of  insurance  prior  to  the  change  at  the  beginning  of  each of the first ten policy years subsequent to the time  of the most recent previous change, or, if there has  been  no  previous  change,  the  date  of  issue  of  the  policy;  and  (ii)  one  hundredtwenty-five percent of the increase, if positive, in  the  nonforfeiture  net level premium.    (7) The recalculated nonforfeiture net level premium shall be equal to  the  result  obtained  by  dividing subparagraph (A) by subparagraph (B)  hereof where:    (A) equals the sum of    (i) the nonforfeiture net level premium applicable prior to the change  times the present value of an annuity of one per annum payable  on  each  anniversary  of the policy on or subsequent to the date of the change on  which a premium would have fallen due had the change not occurred, and    (ii) the present value of the increase in future  guaranteed  benefits  provided for by the policy, and    (B) equals the present value of an annuity of one per annum payable on  each anniversary of the policy on or subsequent to the date of change on  which a premium falls due.    (8)  Notwithstanding  any  other  provision  of this subsection to the  contrary, in the case of a policy issued on a  substandard  basis  which  provides  reduced  graded  amounts  of insurance so that, in each policy  year, such policy has the same tabular mortality cost  as  an  otherwise  similar  policy  issued  on  the  standard  basis  which provides higher  uniform amounts of insurance, adjusted premiums and present  values  for  such  substandard  policy  may  be  calculated  as  if it were issued to  provide such higher uniform amounts of insurance on the standard basis.    (9) All adjusted premiums and  present  values  referred  to  in  this  section  shall  for  all policies of ordinary insurance be calculated on  the basis of    (A) the Commissioners 1980 Standard Ordinary Mortality Table, or    (B) at the election of the company for any one or more specified plans  of life insurance, the Commissioners 1980  Standard  Ordinary  Mortality  Table with Ten-Year Select Mortality Factors; and shall for all policies  issued  in  a  particular  calendar year be calculated on the basis of a  rate of interest  not  exceeding  the  nonforfeiture  interest  rate  as  defined  in  this  subsection for policies issued in that calendar year.  Provided, however, that:    (i) At the option of the company, calculations for all policies issued  in a particular calendar year may be made on the  basis  of  a  rate  of  interest  not  exceeding  the nonforfeiture interest rate, as defined in  this subsection,  for  policies  issued  in  the  immediately  preceding  calendar year.    (ii)  Under  any  paid-up nonforfeiture benefit, including any paid-up  dividend additions, any cash surrender value available, whether  or  not  required  by  subsection (a) hereof, shall be calculated on the basis of  the mortality table and rate of interest used in determining the  amount  of such paid-up nonforfeiture benefit and paid-up dividend additions, if  any.    (iii)  A  company  may  calculate the amount of any guaranteed paid-up  nonforfeiture benefit including any paid-up additions under  the  policy  on  the  basis  of  an interest rate no lower than that specified in the  policy for calculating cash surrender values.    (iv) In calculating the present value of any  paid-up  term  insurance  with  accompanying  pure  endowment,  if any, offered as a nonforfeiture  benefit, the rates of mortality assumed may be not more than those shown  in the Commissioners 1980 Extended Term Insurance Table.    (v) For insurance issued on a substandard basis,  the  calculation  of  any   such  adjusted  premiums  and  present  values  may  be  based  on  appropriate modifications of the aforementioned tables.    (vi) Any ordinary mortality tables,  adopted  after  nineteen  hundred  eighty  by  the  National Association of Insurance Commissioners (or anymodifications thereof for any specified class or classes of risks), that  are approved by the superintendent for use in  determining  the  minimum  nonforfeiture  standard  may  be  substituted for the Commissioners 1980  Standard  Ordinary  Mortality  Table  with  or  without  Ten-Year Select  Mortality Factors or for the Commissioners 1980 Extended Term  Insurance  Table.    (10)  The  nonforfeiture interest rate per annum for any policy issued  in a particular  calendar  year  shall  be  equal  to  one  hundred  and  twenty-five  percent  of  the calendar year statutory valuation interest  rate for such policy as defined in section  four  thousand  two  hundred  seventeen  of  this  article  rounded  to  the nearer one quarter of one  percent, computed, with respect  to  a  single  premium  life  insurance  policy  of  the  kind  referred  to  in item (vi) of subparagraph (B) of  paragraph four of subsection (c) of such section, on  a  year  of  issue  basis  by  using  a  reference  interest rate defined for such policy in  subparagraph (F) of such paragraph for the  year  immediately  preceding  the  year  of  issue on the assumption that the company has submitted an  opinion and memorandum,  in  form  and  substance  satisfactory  to  the  superintendent,  of  a  qualified  actuary  with  respect to such single  premium  life  insurance  policies  in  accordance  with  item  (vi)  of  subparagraph (B) of such paragraph.    (11)  Notwithstanding  any  other  provision  in  this  chapter to the  contrary, any refiling of  nonforfeiture  values  or  their  methods  of  computation  for any previously approved policy form which involves only  a change in the  interest  rate  or  mortality  table  used  to  compute  nonforfeiture  values shall not require refiling of any other provisions  of that policy form.    (12) After May twenty-fourth, nineteen hundred eighty-two, any company  may file with the superintendent a written notice  of  its  election  to  comply,  with  respect  to any plan of insurance, with the provisions of  this subsection after a specified date before  January  first,  nineteen  hundred   eighty-nine,  which  shall  be  the  operative  date  of  this  subsection for that plan of insurance for such  company;  the  operative  dates  of  this subsection for other plans of insurance for such company  shall be any dates not later than January first of the third  subsequent  calendar  year,  but  in  no  event  later  than January first, nineteen  hundred eighty-nine. If a company makes no such election with respect to  any plan of insurance, the operative date of this  subsection  for  such  company shall be January first, nineteen hundred eighty-nine.    (l)  In  the  case  of  any  plan of life insurance which provides for  future premium determination, the amounts of which are to be  determined  by  the  insurance company based on then estimates of future experience,  or in the case of any plan of life insurance which is of such  a  nature  that  minimum  values  cannot  be determined by the methods described in  subsection (a), (c), (d), (g), (h), (i) or (k) of this section, then:    (1) the superintendent must be satisfied that  the  benefits  provided  under  the  plan  are  substantially  as  favorable to policyholders and  insureds as the minimum benefits otherwise required by  subsection  (a),  (c), (d), (g), (h), (i) or (k) hereof;    (2)  the  superintendent  must  be satisfied that the benefits and the  pattern of premiums of that plan are not such as to mislead  prospective  policyholders or insureds;    (3)  the  cash  surrender  values  and  paid-up nonforfeiture benefits  provided by such plan must not be  less  than  the  minimum  values  and  benefits  required for the plan computed by a method consistent with the  principles of this section, as determined by the superintendent.    (m) (1)  Any  cash  surrender  value  and  any  paid-up  nonforfeiture  benefit,  available  under  any  such policy or contract in the event ofdefault in the payment of any premium or stipulated payment due  at  any  time  other  than  on  the  policy  or  contract  anniversary,  shall be  calculated with allowance for the lapse  of  time  and  the  payment  of  fractional  premiums  or stipulated payments beyond the beginning of the  policy or contract year in which the default occurs.    (2) All values referred to in subsections (c) through (k) hereof,  may  be  calculated  upon the assumption that any death benefit is payable at  the end of the policy or contract year of death.    (3) Notwithstanding the provisions of subsections (c) and (e)  hereof,  additional  benefits  payable (i) in the event of death or dismemberment  by accident, (ii) in the event of total and permanent disability,  (iii)  as  reversionary annuity or deferred reversionary annuity benefits, (iv)  as term insurance benefits provided by a rider  or  supplemental  policy  provision  to  which, if issued as a separate policy, this section would  not apply, (v) as term insurance on the life of a child or on the  lives  of  children  provided in a policy on the life of a parent of the child,  if such term insurance expires before the child's age is twenty-six,  is  uniform  in  amount  after  the  child's  age is one, and has not become  paid-up by reason of the death of a parent of  the  child  and  (vi)  as  other  policy  benefits  additional  to  life  insurance, endowment, and  annuity benefits, and premiums for all such additional  benefits,  shall  be  disregarded  in ascertaining cash surrender values and nonforfeiture  benefits required by this section, and no such additional benefits shall  be required to be included in any paid-up nonforfeiture benefits.    (n)  (1)  This  subsection,  in  addition  to  all  other   applicable  provisions  of  this  section,  shall apply to all policies issued on or  after January first, nineteen hundred eighty-six.    (2) Any cash surrender value available under the policy in  the  event  of  default  in a premium payment due on any policy anniversary shall be  in an amount which does not  differ  by  more  than  two-tenths  of  one  percent  of  either the amount of insurance, if the insurance be uniform  in amount, or the average amount of insurance at the beginning  of  each  of  the  first ten policy years, from the sum of (i) the greater of zero  and the basic cash value hereinafter  specified  and  (ii)  the  present  value  of  any  existing  paid-up  additions  less  the  amount  of  any  indebtedness to the company under the policy.    (3) The basic cash value shall be equal to the present value, on  such  anniversary,  of  the  future  guaranteed benefits which would have been  provided for by the policy, excluding any existing paid-up additions and  before deduction of any indebtedness to the company, if there  had  been  no default, less the then present value of the nonforfeiture factors, as  hereinafter  defined,  corresponding to premiums which would have fallen  due on and after such anniversary. Provided, however, that  the  effects  on  the  basic  cash  value  of  supplemental  life insurance or annuity  benefits or of family coverage, as described in subsection  (c)  or  (g)  hereof,  whichever  is  applicable, shall be the same as are the effects  specified in such subsection,  whichever  is  applicable,  on  the  cash  surrender values defined in that subsection.    (4)  The  nonforfeiture factor for each policy year shall be an amount  equal to a percentage of the adjusted premium for the  policy  year,  as  defined in subsection (g) or (k) hereof, whichever is applicable. Except  as  is  required by the next succeeding sentence of this paragraph, such  percentage:    (A) must be the same percentage  for  each  policy  year  between  the  second  policy  anniversary  and  the  later  of  (i)  the  fifth policy  anniversary and (ii) the first policy  anniversary  at  which  there  is  available  under  the policy a cash surrender value in an amount, before  including any paid-up additions and before deducting  any  indebtedness,of at least two-tenths of one percent of either the amount of insurance,  if  the  insurance  be  uniform  in  amount,  or  the  average amount of  insurance at the beginning of each of the first ten policy years; and    (B)  must be such that no percentage after the later of the two policy  anniversaries specified in subparagraph (A) hereof may  apply  to  fewer  than five consecutive policy years.    Provided,  that  no  basic cash value may be less than the value which  would be obtained if the adjusted premiums for the policy, as defined in  subsection (g) or (k) hereof, whichever is applicable, were  substituted  for  the  nonforfeiture  factors  in  the  calculation of the basic cash  value.    (5) All adjusted premiums and  present  values  referred  to  in  this  subsection  shall  for  a  particular  policy  be calculated on the same  mortality and interest bases as are used in demonstrating  the  policy's  compliance with the other subsections of this section.    (6) (A) The cash surrender values referred to in this subsection shall  include any endowment benefits provided for by the policy.    (B)  Any  cash  surrender  value  available other than in the event of  default in a premium payment due on a policy anniversary, and the amount  of any paid-up nonforfeiture benefit available under the policy  in  the  event  of  default  in  a premium payment shall be determined in manners  consistent with the manners  specified  for  determining  the  analogous  minimum amounts in subsections (a), (c), (d), (k) and (m) hereof.    (C)  The  amounts  of  any  cash  surrender  values and of any paid-up  nonforfeiture benefits granted in connection  with  additional  benefits  such  as  those  listed  as items (i) through (vi) in paragraph three of  subsection  (m)  hereof  shall  conform  with  the  principles  of  this  subsection.    (n-1)  (1)  Notwithstanding  any  other provision in this section, any  policy that meets the requirements of this subsection shall be deemed to  provide the minimum nonforfeiture benefits  and  cash  surrender  values  required  by this section. Any policy which is issued by a company after  the operative date of this subsection for the company  and  under  which  additional amounts may be credited pursuant to subsection (b) of section  four  thousand  two  hundred  thirty-two  of  this article must meet the  requirements of this subsection.    (2) In this subsection,    (A) "Policy value" means an amount equal to gross premiums paid  under  a  policy  (excluding  separately  identified  premiums  for  riders  or  supplementary benefits that are not credited to the policy  value)  plus  interest  credited  less  the  amount of any partial withdrawals and the  following charges as specified in the policy: (i) expense charges,  (ii)  benefits  charges,  (iii)  service  charges,  and (iv) partial surrender  charges.    (B) "Benefit charges" means mortality charges made for life  insurance  on  the  insured  person  or  persons and any charges made for riders or  supplementary benefits.    (C) "Service charges" means  charges  for  the  cost  of  transactions  requested  by  the  policyowner  such as partial withdrawals and benefit  illustrations.  Transactional  charges  made  under   mandatory   policy  provisions shall not be assessed unless specifically permitted by law or  regulation for such transactions.    (D) "Expense  charges"  means  charges  (other  than  service charges)  deducted from gross premiums before premiums are credited to the  policy  value or otherwise deducted from the policy value.    (E) "Excess  first  year expense charges" means the greatest amount by  which (x) can exceed (y) based, for stipulated premium policies, on  the  premiums  set  forth  in  the  policy  and,  for  other policies, on theassumption that any premium (other than a single premium) payable in the  first policy year is also  payable  during  the  entire  premium  paying  period, where    (x) is the amount of the expense charges made in the first policy year  and    (y)  is  the arithmetic average of the corresponding charges which the  policy states would be imposed in policy years two through twenty or the  premium paying period, if shorter.    (F) "Excess expense charges for a  face  amount  increase"  means  the  greatest  amount  by  which  (x)  can  exceed  (y) based, for stipulated  premium policies, on the premiums set forth in the policy and, for other  policies, on the assumption that the net level whole life annual premium  for the increase applies throughout the remaining premium paying period,  where    (x) is the amount of the expense charges attributable to  an  increase  in  face  amount  of insurance in the first policy year of the increase,  and    (y)  is  the  arithmetic  average   of   the   corresponding   charges  attributable to the increase which the policy states would be imposed in  the  nineteen  policy years following the increase or the premium paying  period, if shorter.    (G) "Interest credited" means the amount of interest credited  to  the  policy  value  but, with respect to policies meeting the requirements of  subparagraph (A) of paragraph three of this subsection,  not  less  than  three percent in any year.    (H) "Net  level  whole  life  annual premium at issue" means an annual  premium based on face amounts of insurance set forth in the  policy  and  on the assumption of level annual premiums for life, the mortality table  rate  used  to  calculate the maximum mortality charges (but not greater  than that permitted under item (iv) of  subparagraph  (A)  of  paragraph  three  of  this  subsection) and an interest rate based on the higher of  four percent or that specified in the policy.    (I) "Net level whole life annual premium for an increase in  the  face  amount  of insurance" means an additional annual premium for an increase  in the face amount of  insurance  determined  as  of  the  date  of  the  increase in accordance with subparagraph (H) of this paragraph as though  such increase were a separate policy.    (J) "Increase  in  face  amount of insurance" means an increase in the  schedule of face amounts of insurance provided for  in  the  policy  and  made  at the request of the policyholder and shall not include increases  in face amount resulting from a change in the death  benefit  option  or  changes in death benefit pursuant to policy terms that do not affect the  face amount.    (K) "Surrender  charge"  means  a  deferred  charge made to the policy  value in the event of  a  full  or  partial  surrender  of  the  policy,  reduction  in the face amount of insurance or premium, or a default in a  premium payment.    (L) "Cash surrender value" means an amount equal to the  policy  value  less  any  surrender  charge,  before reduction for outstanding loans or  other amounts due under the policy.    (M) "Deferred first year expense charge", at issue or for an  increase  in  the  face  amount  of  insurance, means any portion of the allowable  first year expense charge that is not deducted from premiums or  charged  to  the  policy  value  in the year of issue, or in the policy year of a  face amount increase, but deferred and charged to the  policy  value  in  subsequent years.    (N) "Consumer  price ratio" means the ratio (not to exceed two) of (x)  the consumer price index (for all urban households)  for  the  Septemberpreceding the policy year in which the ratio is being applied to (y) the  consumer price index for September, nineteen hundred eighty-five.    (3)  A  policy  that  meets  the  requirements of this subsection must  provide for cash surrender values that meet the requirements  of  either  subparagraph  (A)  or subparagraph (B) and comply with the provisions of  subparagraphs (C) and (D) of this paragraph.    (A) Cash surrender values shall be deemed to meet the requirements  of  this subparagraph, if the following conditions are met:    (i)  Expense  charges  for  any  policy  year  shall  not  exceed  the  following:    (I) ninety percent of premiums received up to the net level whole life  annual premium at issue (regardless of when received),    (II) ten percent of all other premiums received,    (III) ninety percent of any net level whole life  annual  premium  for  increases   in   the  face  amount  of  insurance  (including  increases  offsetting previous decreases),    (IV) ten dollars per one thousand dollars of initial  face  amount  in  the first policy year,    (V)  one  dollar  per  one  thousand  dollars of the first one hundred  thousand dollars of face amount in subsequent policy years,    (VI) ten dollars per one thousand dollars of any increase in the  face  amount  of  insurance  in  the  year  of  increase  (including increases  offsetting previous decreases),    (VII) a charge per policy in  the  first  policy  year  equal  to  the  product of one hundred fifty dollars and the consumer price ratio, and    (VIII)  in policy years after the first, a charge per policy per month  equal to the product of five dollars and the consumer price ratio.    (ii) Any surrender charge provided in the policy shall  be  such  that  the  initial  surrender charge together with the expense charges made in  the first policy year (and on premiums up to the net  level  whole  life  annual  premium  if received after the first year) do not exceed the sum  of the amounts determined in accordance with clauses (I) and  (II)  (for  premiums  received in the first year) and clauses (IV) and (VII) of item  (i) of this subparagraph. The surrender charge at any time shall not  be  greater than the difference between the maximum initial surrender charge  permitted  under  this  subparagraph  and  the  sum  of all the deferred  expense charges made up to that time. Any additional  surrender  charges  that  are  imposed  in connection with an increase in face amount of the  policy shall be such that such  additional  charges  together  with  any  expense  charges made in connection with such increase do not exceed the  sum of the amounts determined in accordance with clauses (III) and  (VI)  of item (i) of this subparagraph.    (iii)  Deferred first year expense charges shall be such that: (I) the  charge for any one year shall not exceed the maximum allowable surrender  charge for that year, and (II) the total of all such charges at any time  plus the surrender charge at that time  shall  not  exceed  the  maximum  initial surrender charge. Any deferred first year expense charge imposed  with  respect  to  an  increase in the face amount of insurance shall be  subject to comparable limitations.    (iv) A policy meeting the requirements of this subparagraph if  issued  before  the  operative  date  of  subsection (k) of this section may not  impose mortality charges in excess of those based on  the  commissioners  1958  standard  ordinary  mortality  table  in  the  case  of a standard  medically underwritten insured or the commissioners 1958  extended  term  insurance table in the case of any other standard insured, and if issued  on  or  after  such  operative  date may not impose mortality charges in  excess of those  based  on  the  commissioners  1980  standard  ordinary  mortality table in the case of a standard medically underwritten insuredor  the  commissioners 1980 extended term insurance table in the case of  any other standard insured.  At  the  option  of  the  company,  maximum  charges  based  on  the  commissioners  1980 standard ordinary mortality  table  may  be computed using ten-year select mortality factors. Maximum  charges may also be based on any other table  (or  modification  thereof  for the specified class of risk) approved by the superintendent pursuant  to  item (vi) of subparagraph (B) of paragraph nine of subsection (k) of  this section. For insurance issued on a substandard basis, such  charges  may be based on appropriate modifications of such tables.    (B)  Cash surrender values shall be deemed to meet the requirements of  this subparagraph, if the following conditions are met:    (i) Policy values shall not be less than a minimum policy value  which  reflects  the same transactions, the same interest credited and the same  benefit charges that are reflected in the actual  policy  value,  except  that the excess first year expense charges shall not be greater than the  initial  expense  allowance,  and  any excess expense charges for a face  amount increase after issue shall  not  be  greater  than  the  increase  expense  allowance.  For  purposes  of  this  item,  the initial expense  allowance shall be (I)  the  lesser  of  (aa)  one  hundred  twenty-five  percent  of  the  net  level whole life annual premium at issue and (bb)  four percent of the average face amount of insurance provided under  the  policy  during  the first ten policy years plus (II) one percent of such  average face amount, and the increase expense allowance shall be (I) the  lesser of (aa) one hundred twenty-five percent of the  net  level  whole  life  annual premium for an increase in the face amount of insurance and  (bb) four percent of the average increase in face  amount  of  insurance  over  a  period  of ten policy years (excluding any increases previously  taken into account in determining an expense allowance under this  item)  plus (II) one percent of any such average increase.    (ii)  Any  surrender  charge provided in the policy shall be such that  the initial surrender charge together with any excess first year expense  charges do not exceed the  initial  expense  allowance.  Any  additional  surrender  charges  that  are  imposed in connection with an increase in  face amount shall be such that any such additional charge together  with  any  excess expense charges made in connection with such increase do not  exceed the increase expense allowance.    (iii) The policy shall provide that at least once each policy year the  policyholder has the option to apply the portion of the  cash  surrender  value  necessary  to  provide  an  amount  of  guaranteed  paid-up  life  insurance at least as great as the lesser of (I) and (II), where (I)  is  the  amount  of  paid-up  life  insurance  provided by applying the cash  surrender value to provide such paid-up insurance, computed on the basis  of an interest rate (not less  than  four  percent)  guaranteed  in  the  policy  for  this  purpose, and a mortality basis (not less favorable to  the policyholder than the mortality basis specified for an  insured  not  medically  underwritten  in  item  (iv)  of  subparagraph  (A)  of  this  paragraph) guaranteed in the policy for this purpose, and  (II)  is  the  amount  of  paid-up  life  insurance such that the amount at risk on the  paid-up insurance is the same as the amount at risk under the policy. If  the option is elected, the portion  of  the  cash  surrender  value  not  applied  to  provide  the  paid-up  life  insurance shall be paid to the  policyholder. The guaranteed  paid-up  life  insurance  benefit  may  be  provided  under the policy or by means of a separate single premium life  insurance policy issued by the company or  an  affiliate  or  subsidiary  thereof.  For  purposes of this item, the term "cash surrender value" is  after reduction for outstanding loans or other  amounts  due  under  the  policy.(C)  The  surrender  charge  in policy years after the first shall not  exceed  the  maximum  initial  surrender  charge  permitted  under  this  subsection  multiplied  by  the ratio of (i) the value of a life annuity  due of one dollar per year for the balance of the amortization period to  (ii)  the  corresponding  annuity value at issue, based on the mortality  table and interest rate used in calculating the  net  level  whole  life  annual  premiums.  For  all  policies the maximum amortization period is  twenty years.    (D) Any surrender charge that is imposed on  an  increase  in  premium  payments under a policy meeting the requirements of this subsection that  does  not  result in any increase in face amount of the policy shall not  exceed the difference between (I) the maximum initial  surrender  charge  computed on the assumption that premiums were paid at the increased rate  from  the  date  of  issuance of the policy and (II) the maximum initial  surrender charge permitted under this subsection.    (4)  The  superintendent  may  issue  regulations  to  implement  this  subsection.    (5)  The  operative  date  of  this  subsection for a company shall be  January first, nineteen hundred eighty-eight, or the operative  date  of  this act for the company, whichever is earlier.    (n-2)  Notwithstanding any other provision of this section, any policy  that provides for  the  crediting  of  additional  amounts  pursuant  to  subsection  (b)  of section four thousand two hundred thirty-two of this  article may provide for cash surrender benefits determined in accordance  with a market-value adjustment formula,  provided,  however,  that  such  policy   provides   for   cash  surrender  benefits  determined  without  adjustment in accordance with such a formula at specified  times  (which  shall  not  be less frequent than once every ten years after issuance of  the policy). For  purposes  hereof,  "market-value  adjustment  formula"  means  a  formula  which  is  described in the policy for increasing and  decreasing cash surrender values that would otherwise meet  the  minimum  requirements  of  subsection  (n-1) of this section and which takes into  account (1) changes in interest rates on publicly-traded obligations  or  other investments or in interest rates provided in, or declared pursuant  to,  policies  of the same class as the policy being surrendered and (2)  the length of time between the date on which the policy  is  surrendered  and the next date on which the policy would have provided cash surrender  benefits  determined  without  the  use  of  any market-value adjustment  formula. The superintendent may  promulgate  reasonable  regulations  to  define permissible forms or market-value adjustment formulae.    (o) (1) This section shall not apply to any of the following:    (A) Reinsurance.    (B) Group insurance.    (C) Group annuity contract.    (D) A single premium pure endowment or annuity contract.    (E) A reversionary annuity contract.    (F)  A  term  policy  of  uniform amount, which provides no guaranteed  nonforfeiture or endowment benefits, or renewal thereof, of thirty years  or less expiring before age eighty-one, for which uniform  premiums  are  payable during the entire term of the policy.    (G)  A  term policy of decreasing amount, which provides no guaranteed  nonforfeiture or endowment benefits, on  which  each  adjusted  premium,  calculated  as specified in subsections (g), (h), (i) and (k) hereof, is  less than the adjusted premium  so  calculated,  on  a  term  policy  of  uniform  amount,  or  renewal  thereof,  which  provides  no  guaranteed  nonforfeiture or endowment benefits, issued at the same age and for  the  same initial amount of insurance, and for a term of twenty years or lessexpiring  before age seventy-one, for which uniform premiums are payable  during the entire term of the policy.    (H)  A policy, which provides no guaranteed nonforfeiture or endowment  benefits, for which no cash surrender value, if any, or present value of  any paid-up nonforfeiture benefit, at the beginning of any policy  year,  calculated  as  specified in subsections (c), (d), (g), (h), (i) and (k)  hereof, exceeds two and one-half percent of the amount of  insurance  at  the beginning of the same policy year.    (I) A policy or contract delivered outside this state through an agent  or  other  representative of the company issuing the policy or through a  broker.    (2) For purposes of determining the applicability of this section, the  age at expiry for a joint term life insurance policy shall be the age at  expiry of the oldest life.    (p) (1) Any company may file with the superintendent a written  notice  of  its  election  to comply with the provisions of this section after a  specified date before January first, nineteen hundred forty-eight.    (2) After the filing of such notice, then  upon  such  specified  date  (which shall be the operative date for such company), this section shall  become  operative  with respect to the policies and contracts thereafter  issued by such company.  If  a  company  makes  no  such  election,  the  operative  date of this section for such company shall be January first,  nineteen hundred forty-eight.    (q) The provisions of this section  shall  not  apply  to  any  policy  qualified for special tax treatment under subsection (b) of section four  hundred  three  of the Internal Revenue Code of 1986, as amended, to the  extent such application would prevent such qualification.