Life Bureau Filing Guidance Note

Guidance Date: February 19, 2021

Changes to Maximum Nonforfeiture Interest Rates

Changes to the maximum nonforfeiture interest rates went into effect January 1, 2021. The Department previously issued actuarial guidance on these rates:

Pursuant to New York State Insurance Law section 4221(k)(9)(B)(i), insurers can use the rate for the year immediately preceding:

“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.”

Therefore, insurers are not required to implement the new rates until January 1, 2022.

Policy form submissions will be necessary to implement this change when the rate is referenced in an approved policy form. The Department is currently accepting these submissions.

Insurers seeking expedited policy form approval may use the Circular Letter No. 6 (2004) certified process, subject to the usual requirements in the product outlines and other guidance related to that process. To further expedite approval, it is recommended that insurers make their submissions well in advance of the January 1, 2022 date for implementing the new rates and not combine the nonforfeiture interest rate change with more extensive product revisions.

Interest Rate Referenced in Policy Form

If a previously approved policy form references the nonforfeiture interest rate, a new version of the policy form must be filed for approval, as the nonforfeiture interest rate may not be bracketed as variable material. The new version of the form will require a new, unique form number.

If the insurer is only updating the interest rate and cash values, and if the underlying policy forms utilize insert specifications pages with a separate form number, then the company need only submit the revised specifications pages with a new form number, a revised memorandum of variable material corresponding to the new form number, actuarial memorandum, statement of self-support, and nonforfeiture certification (Note: The nonforfeiture certification is not required for submissions made pursuant to Circular Letter No. 6 (2004). The general certification required by Circular Letter No. 6 (2004) eliminates the need for this more specific certification).

If the previously approved policy form did not utilize insert specifications pages with a separate form number (i.e., if the specifications pages were embedded in the policy with the same form number), then the full policy form, with a new form number, must be submitted, along with the aforementioned supporting materials.

The policy form submission should be sent to the Life Bureau via SERFF.

The SERFF Filing Description for the form filing should identify:

  1. the form number, state file number, and approval date of the previously approved form(s) being replaced; and
  2. the previously approved forms with which the new policy form will be used. Previously approved related forms, such as an application, that do not reference the interest rate, may be used with the new version of policy form without the need to refile.

These form submissions must also comply with all the usual procedural and substantive requirements set forth in the applicable product outline.

Interest Rate Not Referenced in Policy Form

If the insurer is utilizing a new rate, but the rate is not referenced in the policy form and does not change any information in the policy form, the company must send supporting materials, including a nonforfeiture certification, an updated actuarial memorandum, and a statement of self-support to the Department.

These submissions should be directed to Michael Mazzie via SERFF.

The SERFF Filing Description for the filing should identify:

  1. the previously approved form(s) for which the supporting documentation is being updated; and
  2. the state file number under which such forms were approved.

SERFF submissions should be coded as follows:

TOI: Life – Informational
Sub-TOI: Form or Rate Related
Filing Type: Form