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Industry Frequently Asked Questions

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Group Life Insurance

Do premium rates need to be filed for group life insurance?

Answer:

1. For some groups the approval of the rates is required. This would apply regardless of the plan of insurance (e.g., term insurance vs. whole life). The approval is required in instances where the New York Insurance Law requires that the premium charged be reasonable in relation to the benefits provided. There are two areas where this occurs.

  1. Credit Life Insurance as authorized by section 4216(b)(3) of the Insurance Law. Subparagraph (M) of this paragraph requires the filing of rates, and requires that the relationship between premiums and benefits be reasonable. The standards for judging reasonableness are found in Regulation 27A, which is also known as Part 185 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York, or 11 NYCRR 185.
  2. Certificates deemed to have been delivered in this state by section 3201(a)(1) of the Insurance Law. These would be any certificate covering a New York life where the group is not recognized in Paragraphs (1)-(11) of subsection 4216(b) of the Insurance Law. This would include such groups as financial institutions (depositors or revolving credit customers), affinity associations (Alumni Associations, American Legion), and what is often referred to as discretionary groups. The standards for judging reasonableness are found in Regulation 123, which is also known as Part 59 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York, or 11 NYCRR 59.

2. There are also a number of other areas where we have concerns with the rates, although rates may not actually need to be submitted:

Ages Premium Rate Per $1,000 Insurance Amount of Insurance Monthly Premium
80-84 9.430 10,000 94.30
85-89 14.508 6,500 94.30
90-94 21.432 4,400 94.30
95 + 50.973 1,850 94.30

In practice, it may be difficult to produce a table of premium rates for these ages which, together with the pattern of scheduled reductions, produces exactly a level premium. Because of this, it may be desirable to express the amount of insurance for the higher ages in terms of the amount of insurance at some younger age. For example:

Ages Amount Premium of Insurance 
85-89

65.0% of the age 80 amount

90-94

44.0% of the age 80 amount

95+

18.5% of the age 80 amount

These comments are specifically for the situation when the coverage is subject to ADEA and the insured pays 100% of the cost of insurance. However, the basic principal expressed here would apply in other instances, although its application and effect would change somewhat.