For the purposes of this subchapter, the following terms have the following meanings unless the explicit wording of a section or portion of a section directs otherwise.
(1) Actuarial Standards Board--the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.
(2) Concept Illustration--the use of non-guaranteed policy values to pay premiums or policy expenses (suspension or reduction of premiums) or to generate distributions to the policyholder or owner (cash flows).
(3) Contract premium--the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.
(4) Currently payable scale--a scale of non-guaranteed elements in effect for a policy form as of the illustration date or declared to become effective within 95 days of the illustration date.
(5) Disciplined current scale--a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. Further guidance in determining the disciplined current scale as contained in standards established by the Actuarial Standards Board may be relied upon if the standards:
(6) Generic name--a short title descriptive of the policy being illustrated such as "whole life," "term life" or "flexible premium adjustable life."
(7) Guaranteed elements--the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue.
(8) Illustrated scale--a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:
(9) Illustration--a presentation or depiction used in the solicitation or sale of a life insurance policy that includes non-guaranteed elements of a policy of life insurance over a period of years and includes but is not limited to the three types defined in subparagraphs (A) - (C) of this paragraph.
(10) Illustration actuary--an actuary meeting the requirements of §21.2211(c) of this title (relating to Annual Certification) who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.
(11) Illustration date--the date on which the illustration was prepared.
(12) Insurer--a life insurance company as defined by Insurance Code §841.001 and §982.001; a fraternal benefit society as defined by Insurance Code §885.051 and §885.052; a Mutual Life Insurance Company as defined by Insurance Code Chapter 882; or a Stipulated Premium Insurance Company as defined by Insurance Code Chapter 884.
(13) Lapse-supported illustration--an illustration of a policy form failing the test of self-supporting as defined in this subchapter, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five years and 100% policy persistency thereafter.
(14) Minimum assumed expenses--the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from:
(15) Non-guaranteed elements--the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue.
(16) Non-term group life--a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:
(17) Participating life insurance policy--a life insurance policy which provides for possible policyholder dividends.
(18) Policy owner--the owner named in the policy or the certificate holder in the case of a group policy.
(19) Premium outlay--the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket.
(20) Self-supporting illustration--an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election.
(21) Universal life insurance policy--a life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other separate accounts) and mortality and expense charges are made to the policy. A universal life policy may provide for other credits and charges, such as charges for the cost of benefits provided by rider.
Source Note: The provisions of this §21.2204 adopted to be effective September 29, 1998, 23 TexReg 9753; amended to be effective November 7, 2021, 46 TexReg 7408