Code Section Group

Insurance Code - INS


  ( Division 2 enacted by Stats. 1935, Ch. 145. )


  ( Part 2 enacted by Stats. 1935, Ch. 145. )

CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.946]

  ( Chapter 5 enacted by Stats. 1935, Ch. 145. )

ARTICLE 3. Valuation of Life Policies [10478 - 10489]
  ( Article 3 enacted by Stats. 1935, Ch. 145. )


This article is applicable only to policies and contracts issued prior to the operative date as to such policies or contracts of Article 3a, Chapter 1, Part 2, Division 2.

(Added by Stats. 1943, Ch. 955.)


The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every admitted life insurer, except that in the case of an alien insurer such valuation shall be limited to its insurance transactions in the United States, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods (net level premium method or other) used in the calculation of such reserves. In calculating such reserves, he or she may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien insurer, he or she may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard herein provided and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.

(Amended by Stats. 1991, Ch. 1005, Sec. 1.)


When the commissioner has valued the reserve liabilities of an insurer as provided by this article, he or she may upon request of the insurer issue his or her official certificate or certificates describing the reserve liability and the valuation thereof as he or she has determined. For issuing an original certificate, the commissioner shall require, in advance, a fee of forty-seven dollars ($47), plus the actual cost to the department of making the valuation on which the certificate is based including, but not limited to, the aggregate salaries computed on an hourly basis for the time actually spent thereon by all of the department personnel.

(Amended by Stats. 2017, Ch. 534, Sec. 60. (AB 1699) Effective January 1, 2018.)


On or before the first day of March of each year every domestic incorporated life insurer shall furnish the commissioner the necessary data for determining the valuation of all its policies outstanding on the last preceding thirty-first of December.

(Amended by Stats. 1991, Ch. 1005, Sec. 3.)


Every admitted foreign life insurer shall, upon the written demand of the commissioner, furnish him or her, at such time as he designates, the requisite data for determining the valuation of all its policies then outstanding.

(Amended by Stats. 1991, Ch. 1005, Sec. 4.)


Except as provided in Sections 10484 and 10485, and except as provided in Section 10489.7 for benefits purchased under group annuity and pure endowment contracts subject to this article, valuations of life policies must be based on the standards set forth in Section 986.

(Amended by Stats. 1973, Ch. 456.)


When the laws of any other State require a valuation of the outstanding policies of a domestic life insurer by any standard of valuation different from that named in this article, the commissioner may make such valuation for use in such other State, and issue his certificate in accordance therewith.

(Enacted by Stats. 1935, Ch. 145.)


In the case of insurance issued by a domestic insurer authorized to do business in a foreign country upon the lives of residents of that country, the commissioner may vary the mortality standard to a standard applicable to that country.

(Enacted by Stats. 1935, Ch. 145.)


Any life insurer issuing policies of group life insurance may value such policies on any accepted table of mortality with interest assumption adopted by the insurer for that purpose if such standard is not lower than the American Men Ultimate Table of Mortality with interest assumption at three and one-half per cent per annum.

(Enacted by Stats. 1935, Ch. 145.)


All policies of group insurance shall be segregated by the insurer into a separate class and the mortality experience kept separate. The number of policies, amount of insurance, reserves, premiums and payments to policyholders thereunder, together with the mortality table and interest assumption adopted by the insurer, shall be reported separately in its annual financial statement.

(Enacted by Stats. 1935, Ch. 145.)


(a) As prescribed in subdivision (b), an insurer may maintain reserves on a one year preliminary term basis on a life, term or endowment policy if by its terms such policy expressly provides that the first year’s insurance under such policy is term insurance purchased by part or the whole of the premium to be received during the first year.

(b) If the actuarial net preliminary term renewal premium in the case of

(1) insurance under a limited-payment life preliminary term policy providing for the payment of all premiums thereon within less than 20 years from the date thereof; or

(2) endowment insurance under an endowment preliminary term policy,

exceeds the actuarial net preliminary term renewal premium, calculated on the same table of mortality and rate of interest, for a 20-payment life policy, the reserve on such policy specified under (1) or (2) of this subdivision (b), as the case may be, at the end of any year, including the first, shall not be less than the sum of the reserve on a 20-payment life preliminary term policy issued at the same time on a life of the same age, and the actuarial net level premium reserve for a pure endowment maturing at the end of the premium payment period, equal to the excess of the full net level premium reserve, at the end of such premium payment period, on such policy specified under (1) or (2) of this subdivision (b), as the case may be, over the reserve, at the end of such premium payment period, of such 20-payment life preliminary term policy.

The premium payment period herein referred to is 20 years or the period, if less, during which premiums are actually payable under such policy specified in (1) or (2) of this subdivision (b), as the case may be.

(c) As used in this section, the term “20-payment life preliminary term policy” means a life insurance policy embodying all of the following attributes:

(1) It is whole-life insurance;

(2) The premium charged is payable annually or at lesser intervals until 20 annual premiums or a proportionately greater number of premiums payable at intervals less than one year shall have been paid, or until the prior death of the insured;

(3) The first year’s insurance is term insurance purchased by the whole or part of the premium to be received during the first contract year.

(Added by Stats. 1941, Ch. 277.)


Reserves for all policies and contracts to which this article applies may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this article.

(Added by Stats. 1943, Ch. 955.)


Any insurer which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided in this article or Article 3a of this chapter may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum therein provided.

(Added by Stats. 1943, Ch. 955.)

INSInsurance Code - INS3.