§ 38.2-3137. Reserve valuation method - Life insurance and endowment benefits.
A. Except as otherwise provided in §§ 38.2-3138 and 38.2-3141, reservesaccording to the Commissioners reserve valuation method, for the lifeinsurance and endowment benefits of policies providing for a uniform amountof insurance and requiring the payment of uniform premiums shall be anyexcess of the present value at the date of valuation of any future guaranteedbenefits provided for by those policies, over the then present value of anyfuture modified net premiums for those policies. The modified net premiumsfor any such policy shall be a uniform percentage of the respective contractpremiums for those benefits, excluding any extra premiums charged because ofimpairments or special hazards, so that the present value at the date ofissue of the policy of all the modified net premiums shall be equal to thesum of the then present value of those benefits provided for by the policyand the excess of 1 over 2, as follows:
1. A net level annual premium equal to the present value at the date of issueof those benefits provided for after the first policy year, divided by thepresent value at the date of issue of an annuity of one dollar per yearpayable on the first and each following anniversary of the policy on which apremium falls due. However, the net level annual premium shall not exceed thenet level annual premium on the nineteen-year premium whole life plan forinsurance of the same amount at an age one year higher than the age at issueof the policy.
2. A net one-year term premium for the benefits provided for in the firstpolicy year.
B. For any life insurance policy issued on or after January 1, 1986, (i) forwhich the contract premium in the first policy year exceeds that of thesecond year, (ii) for which no comparable additional benefit is provided inthe first year for that excess first year premium and (iii) that provides anendowment benefit or a cash surrender value or a combination of both in anamount greater than the excess first year premium, the reserve according tothe Commissioners reserve valuation method as of any policy anniversaryoccurring on or before the assumed ending date, defined to be the firstpolicy anniversary on which the sum of any endowment benefit and any cashsurrender value then available is greater than the excess premium, shall,except as otherwise provided in § 38.2-3141, be the greater of the reserve asof the policy anniversary calculated as described in subsection A of thissection and the reserve as of the policy anniversary calculated as describedin that subsection, but with (a) the value defined in subdivision 1 of thatsubsection being reduced by fifteen percent of the amount of the excess firstyear premium, (b) all present values of benefits and premiums beingdetermined without reference to premiums or benefits provided for by thepolicy after the assumed ending date, (c) the policy being assumed to matureon the annual ending date as an endowment, and (d) the cash surrender valueprovided 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 orrequiring the payment of varying premiums, (ii) group annuity and pureendowment contracts purchased under a retirement plan or plan of deferredcompensation, established or maintained by an employer, including apartnership or sole proprietorship, or by an employee organization, or byboth, other than a plan providing individual retirement accounts orindividual retirement annuities under § 408 of the Internal Revenue Code, asamended, (iii) disability and accidental death benefits in all policies andcontracts, and (iv) all other benefits, except life insurance and endowmentbenefits in life insurance policies and benefits provided by all otherannuity and pure endowment contracts, shall be calculated by a methodconsistent 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.)
§ 38.2-3137. Reserve valuation method - Life insurance and endowment benefits.
A. Except as otherwise provided in §§ 38.2-3138 and 38.2-3141, reservesaccording to the Commissioners reserve valuation method, for the lifeinsurance and endowment benefits of policies providing for a uniform amountof insurance and requiring the payment of uniform premiums shall be anyexcess of the present value at the date of valuation of any future guaranteedbenefits provided for by those policies, over the then present value of anyfuture modified net premiums for those policies. The modified net premiumsfor any such policy shall be a uniform percentage of the respective contractpremiums for those benefits, excluding any extra premiums charged because ofimpairments or special hazards, so that the present value at the date ofissue of the policy of all the modified net premiums shall be equal to thesum of the then present value of those benefits provided for by the policyand the excess of 1 over 2, as follows:
1. A net level annual premium equal to the present value at the date of issueof those benefits provided for after the first policy year, divided by thepresent value at the date of issue of an annuity of one dollar per yearpayable on the first and each following anniversary of the policy on which apremium falls due. However, the net level annual premium shall not exceed thenet level annual premium on the nineteen-year premium whole life plan forinsurance of the same amount at an age one year higher than the age at issueof the policy.
2. A net one-year term premium for the benefits provided for in the firstpolicy year.
B. For any life insurance policy issued on or after January 1, 1986, (i) forwhich the contract premium in the first policy year exceeds that of thesecond year, (ii) for which no comparable additional benefit is provided inthe first year for that excess first year premium and (iii) that provides anendowment benefit or a cash surrender value or a combination of both in anamount greater than the excess first year premium, the reserve according tothe Commissioners reserve valuation method as of any policy anniversaryoccurring on or before the assumed ending date, defined to be the firstpolicy anniversary on which the sum of any endowment benefit and any cashsurrender value then available is greater than the excess premium, shall,except as otherwise provided in § 38.2-3141, be the greater of the reserve asof the policy anniversary calculated as described in subsection A of thissection and the reserve as of the policy anniversary calculated as describedin that subsection, but with (a) the value defined in subdivision 1 of thatsubsection being reduced by fifteen percent of the amount of the excess firstyear premium, (b) all present values of benefits and premiums beingdetermined without reference to premiums or benefits provided for by thepolicy after the assumed ending date, (c) the policy being assumed to matureon the annual ending date as an endowment, and (d) the cash surrender valueprovided 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 orrequiring the payment of varying premiums, (ii) group annuity and pureendowment contracts purchased under a retirement plan or plan of deferredcompensation, established or maintained by an employer, including apartnership or sole proprietorship, or by an employee organization, or byboth, other than a plan providing individual retirement accounts orindividual retirement annuities under § 408 of the Internal Revenue Code, asamended, (iii) disability and accidental death benefits in all policies andcontracts, and (iv) all other benefits, except life insurance and endowmentbenefits in life insurance policies and benefits provided by all otherannuity and pure endowment contracts, shall be calculated by a methodconsistent 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.)
§ 38.2-3137. Reserve valuation method - Life insurance and endowment benefits.
A. Except as otherwise provided in §§ 38.2-3138 and 38.2-3141, reservesaccording to the Commissioners reserve valuation method, for the lifeinsurance and endowment benefits of policies providing for a uniform amountof insurance and requiring the payment of uniform premiums shall be anyexcess of the present value at the date of valuation of any future guaranteedbenefits provided for by those policies, over the then present value of anyfuture modified net premiums for those policies. The modified net premiumsfor any such policy shall be a uniform percentage of the respective contractpremiums for those benefits, excluding any extra premiums charged because ofimpairments or special hazards, so that the present value at the date ofissue of the policy of all the modified net premiums shall be equal to thesum of the then present value of those benefits provided for by the policyand the excess of 1 over 2, as follows:
1. A net level annual premium equal to the present value at the date of issueof those benefits provided for after the first policy year, divided by thepresent value at the date of issue of an annuity of one dollar per yearpayable on the first and each following anniversary of the policy on which apremium falls due. However, the net level annual premium shall not exceed thenet level annual premium on the nineteen-year premium whole life plan forinsurance of the same amount at an age one year higher than the age at issueof the policy.
2. A net one-year term premium for the benefits provided for in the firstpolicy year.
B. For any life insurance policy issued on or after January 1, 1986, (i) forwhich the contract premium in the first policy year exceeds that of thesecond year, (ii) for which no comparable additional benefit is provided inthe first year for that excess first year premium and (iii) that provides anendowment benefit or a cash surrender value or a combination of both in anamount greater than the excess first year premium, the reserve according tothe Commissioners reserve valuation method as of any policy anniversaryoccurring on or before the assumed ending date, defined to be the firstpolicy anniversary on which the sum of any endowment benefit and any cashsurrender value then available is greater than the excess premium, shall,except as otherwise provided in § 38.2-3141, be the greater of the reserve asof the policy anniversary calculated as described in subsection A of thissection and the reserve as of the policy anniversary calculated as describedin that subsection, but with (a) the value defined in subdivision 1 of thatsubsection being reduced by fifteen percent of the amount of the excess firstyear premium, (b) all present values of benefits and premiums beingdetermined without reference to premiums or benefits provided for by thepolicy after the assumed ending date, (c) the policy being assumed to matureon the annual ending date as an endowment, and (d) the cash surrender valueprovided 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 orrequiring the payment of varying premiums, (ii) group annuity and pureendowment contracts purchased under a retirement plan or plan of deferredcompensation, established or maintained by an employer, including apartnership or sole proprietorship, or by an employee organization, or byboth, other than a plan providing individual retirement accounts orindividual retirement annuities under § 408 of the Internal Revenue Code, asamended, (iii) disability and accidental death benefits in all policies andcontracts, and (iv) all other benefits, except life insurance and endowmentbenefits in life insurance policies and benefits provided by all otherannuity and pure endowment contracts, shall be calculated by a methodconsistent 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.)
