§ 38.2-3137. Reserve valuation method - Life insurance and endowment benefits
A. Except as otherwise provided in §§ 38.2-3138 and 38.2-3141, reserves according to the Commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be any excess of the present value at the date of valuation of any future guaranteed benefits provided for by those policies, over the then present value of any future modified net premiums for those policies. The modified net premiums for any such policy shall be a uniform percentage of the respective contract premiums for those benefits, excluding any extra premiums charged because of impairments or special hazards, so that the present value at the date of issue of the policy of all the modified net premiums shall be equal to the sum of the then present value of those benefits provided for by the policy and the excess of 1 over 2, as follows:
1. A net level annual premium equal to the present value at the date of issue of those benefits provided for after the first policy year, divided by the present value at the date of issue of an annuity of one dollar per year payable on the first and each following anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy.
2. A net one-year term premium for the benefits provided for in the first policy year.
B. For any life insurance policy issued on or after January 1, 1986, (i) for which the contract premium in the first policy year exceeds that of the second year, (ii) for which no comparable additional benefit is provided in the first year for that excess first year premium and (iii) that provides an endowment benefit or a cash surrender value or a combination of both in an amount greater than the excess first year premium, the reserve according to the Commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date, defined to be the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than the excess premium, shall, except as otherwise provided in § 38.2-3141, be the greater of the reserve as of the policy anniversary calculated as described in subsection A of this section and the reserve as of the policy anniversary calculated as described in that subsection, but with (a) the value defined in subdivision 1 of that subsection being reduced by fifteen percent of the amount of the excess first year premium, (b) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (c) the policy being assumed to mature on the annual ending date as an endowment, and (d) the cash surrender value provided on the annual ending date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in §§ 38.2-3130 through 38.2-3136 shall be used.
C. Reserves according to the Commissioners reserve valuation method for (i) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, (ii) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under § 408 of the Internal Revenue Code, as amended, (iii) disability and accidental death benefits in all policies and contracts, and (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this section.
(Code 1950, § 38-394; 1952, c. 317, § 38.1-456; 1959, Ex. Sess., c. 43; 1962, c. 562; 1975, c. 215; 1979, c. 437; 1982, c. 227; 1986, c. 562.)
Sections: Previous 38.2-3130 38.2-3131 38.2-3132 38.2-3133 38.2-3134 38.2-3135 38.2-3136 38.2-3137 38.2-3138 38.2-3139 38.2-3140 38.2-3141 38.2-3142 38.2-3143 38.2-3144 NextLast modified: April 16, 2009