§ 38.2-3209. Same; adjusted premiums for policies.
A. This section shall apply to all policies issued on or after the operativedate as defined in this section. Except as provided in subsection G of thissection, the adjusted premiums for any policy shall be calculated on anannual basis and shall be a uniform percentage of the respective premiumsspecified in the policy for each policy year, excluding amounts payable asextra premiums to cover impairments or special hazards and also excluding anyuniform annual contract charge or policy fee specified in the policy in astatement of the method to be used in calculating the cash surrender valuesand paid-up nonforfeiture benefits, so that the present value at the date ofissue of the policy of all adjusted premiums shall equal the sum of (i) thethen present value of the future guaranteed benefits provided for by thepolicy; (ii) 1 percent of either the amount of insurance, if the insurance isuniform in amount, or the average amount of insurance at the beginning ofeach of the first 10 policy years; and (iii) 125 percent of the nonforfeiturenet level premium as defined in subsection B of this section. However, inapplying the percentage specified in (iii) of this subsection nononforfeiture net level premium shall be deemed to exceed four percent ofeither the amount of insurance, if the insurance is uniform in amount, or theaverage amount of insurance at the beginning of each of the first ten policyyears. The date of issue of a policy for the purpose of this section shall bethe date as of which the rated age of the insured is determined.
B. The nonforfeiture net level premium shall equal the present value, at thedate of issue of the policy, of the guaranteed benefits provided for by thepolicy divided by the present value, at the date of issue of the policy, ofan annual annuity of one dollar payable on the date of issue of the policyand on each anniversary of the policy on which a premium falls due.
C. For a policy that provides, on a basis guaranteed in the policy,unscheduled changes in benefits or premiums, or both, or that provides anoption for changes in benefits or premiums, or both, other than a change to anew policy, the adjusted premiums and present values shall initially becalculated on the assumption that future benefits and premiums do not changefrom those stipulated at the date of issue of the policy. At the time of anychange in the benefits or premiums, the future adjusted premiums,nonforfeiture net level premiums and present values shall be recalculated onthe assumption that future benefits and premiums do not change from thosestipulated by the policy immediately after the change.
D. Except as otherwise provided in subsection G of this section, therecalculated future adjusted premiums for any policy referred to insubsection C of this section shall be a uniform percentage of the respectivefuture premiums specified in the policy for each policy year, excludingamounts payable as extra premiums to cover impairments and special hazards,and also excluding any uniform annual contract charge or policy fee specifiedin the policy in a statement of the method to be used in calculating the cashsurrender values and paid-up nonforfeiture benefits, so that the presentvalue at the time of change to the newly defined benefits or premiums of allfuture adjusted premiums shall equal the excess of (1) over (2), where (1) is(i) the then present value of the then future guaranteed benefits providedfor by the policy plus (ii) any additional expense allowance and (2) is thethen cash surrender value, if any, or present value of any paid-upnonforfeiture benefit under the policy.
E. The additional expense allowance, at the time of the change to the newlydefined benefits or premiums, shall be the sum of (i) 1 percent of theexcess, if positive, of the average amount of insurance at the beginning ofeach of the first 10 policy years after the change over the average amount ofinsurance before the change at the beginning of each of the first 10 policyyears after the time of the most recent previous change, or, if there hasbeen no previous change, the date of issue of the policy and (ii) 125 percentof the increase, if positive, in the nonforfeiture net level premium.
F. The recalculated nonforfeiture net level premium shall equal (1) dividedby (2), where (1) is the sum of (i) the nonforfeiture net level premiumapplicable before the change times the present value of an annual annuity ofone dollar payable on each anniversary of the policy on or after the date ofthe change on which a premium would have fallen due had the change notoccurred, and (ii) the present value of the increase in future guaranteedbenefits provided by the policy, and (2) is the present value of an annualannuity of one dollar payable on each anniversary of the policy on or afterthe date of change on which a premium falls due.
G. Notwithstanding any other provisions of this section, for a policy issuedon a substandard basis that provides reduced graded amounts of insurance sothat, in each policy year, the policy has the same tabular mortality cost asan otherwise similar policy issued on the standard basis that provides higheruniform amounts of insurance, adjusted premiums and present values for thesubstandard policy may be calculated as if it were issued to provide thehigher uniform amounts of insurance on the standard basis.
H. All adjusted premiums and present values referred to in §§ 38.2-3202through 38.2-3213 shall for all policies of ordinary insurance be calculatedon the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Tableor (ii) at the election of the insurer for any one or more specified plans oflife insurance, the Commissioners 1980 Standard Ordinary Mortality Table withTen-Year Select Mortality Factors. The premiums and values shall for allpolicies of industrial insurance be calculated on the basis of theCommissioners 1961 Standard Industrial Mortality Table. The premiums andvalues shall for all policies issued in a particular calendar year becalculated on the basis of a rate of interest not exceeding the nonforfeitureinterest rate as defined in this section for policies issued in that calendaryear, provided that:
1. At the insurer's option, calculations for all policies issued in aparticular calendar year may be made on the basis of a rate of interest notexceeding the nonforfeiture interest rate, as defined in this section, forpolicies issued in the immediately preceding calendar year;
2. Under any paid-up nonforfeiture benefit, including any paid-up dividendadditions, any cash surrender value available, whether or not required by §38.2-3202, shall be calculated on the basis of the mortality table and rateof interest used in determining the amount of the paid-up nonforfeiturebenefit and any paid-up dividend additions;
3. An insurer may calculate the amount of any guaranteed paid-upnonforfeiture benefit, including any paid-up additions, under the policy onthe basis of an interest rate no lower than that specified in the policy forcalculating cash surrender values;
4. In calculating the present value of any paid-up term insurance with anyaccompanying pure endowment offered as a nonforfeiture benefit, the rates ofmortality assumed may be not more than those shown in the Commissioners 1980Extended Term Insurance Table for policies of ordinary insurance and not morethan the Commissioners 1961 Industrial Extended Term Insurance Table forpolicies of industrial insurance;
5. For insurance issued on a substandard basis, the calculation of anyadjusted premiums and present values may be based on appropriatemodifications of the tables referred to in this section;
6. Any ordinary mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1980 Standard Ordinary Mortality Table with or without Ten-YearSelect Mortality Factors or for the Commissioners 1980 Extended TermInsurance Table; and
7. Any industrial mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1961 Standard Industrial Mortality Table or the Commissioners1961 Industrial Extended Term Insurance Table.
I. The nonforfeiture annual interest rate for any policy issued in aparticular calendar year shall equal 125 percent of the calendar yearstatutory valuation interest rate for the policy as defined in §§ 38.2-3130through 38.2-3142, rounded to the nearest one-quarter percent.
J. Any refiling of nonforfeiture values or their methods of computation forany previously approved policy form that involves only a change in theinterest rate or mortality table used to compute nonforfeiture values shallnot require refiling of any other provisions of that policy form.
K. After July 1, 1982, any insurer may file with the Commission a writtennotice of its election to comply with the provisions of this section after aspecified date before January 1, 1989, which shall be the operative date ofthis section for that insurer. If an insurer makes no election, the operativedate of this section for that insurer shall be January 1, 1989.
§ 38.2-3209. Same; adjusted premiums for policies.
A. This section shall apply to all policies issued on or after the operativedate as defined in this section. Except as provided in subsection G of thissection, the adjusted premiums for any policy shall be calculated on anannual basis and shall be a uniform percentage of the respective premiumsspecified in the policy for each policy year, excluding amounts payable asextra premiums to cover impairments or special hazards and also excluding anyuniform annual contract charge or policy fee specified in the policy in astatement of the method to be used in calculating the cash surrender valuesand paid-up nonforfeiture benefits, so that the present value at the date ofissue of the policy of all adjusted premiums shall equal the sum of (i) thethen present value of the future guaranteed benefits provided for by thepolicy; (ii) 1 percent of either the amount of insurance, if the insurance isuniform in amount, or the average amount of insurance at the beginning ofeach of the first 10 policy years; and (iii) 125 percent of the nonforfeiturenet level premium as defined in subsection B of this section. However, inapplying the percentage specified in (iii) of this subsection nononforfeiture net level premium shall be deemed to exceed four percent ofeither the amount of insurance, if the insurance is uniform in amount, or theaverage amount of insurance at the beginning of each of the first ten policyyears. The date of issue of a policy for the purpose of this section shall bethe date as of which the rated age of the insured is determined.
B. The nonforfeiture net level premium shall equal the present value, at thedate of issue of the policy, of the guaranteed benefits provided for by thepolicy divided by the present value, at the date of issue of the policy, ofan annual annuity of one dollar payable on the date of issue of the policyand on each anniversary of the policy on which a premium falls due.
C. For a policy that provides, on a basis guaranteed in the policy,unscheduled changes in benefits or premiums, or both, or that provides anoption for changes in benefits or premiums, or both, other than a change to anew policy, the adjusted premiums and present values shall initially becalculated on the assumption that future benefits and premiums do not changefrom those stipulated at the date of issue of the policy. At the time of anychange in the benefits or premiums, the future adjusted premiums,nonforfeiture net level premiums and present values shall be recalculated onthe assumption that future benefits and premiums do not change from thosestipulated by the policy immediately after the change.
D. Except as otherwise provided in subsection G of this section, therecalculated future adjusted premiums for any policy referred to insubsection C of this section shall be a uniform percentage of the respectivefuture premiums specified in the policy for each policy year, excludingamounts payable as extra premiums to cover impairments and special hazards,and also excluding any uniform annual contract charge or policy fee specifiedin the policy in a statement of the method to be used in calculating the cashsurrender values and paid-up nonforfeiture benefits, so that the presentvalue at the time of change to the newly defined benefits or premiums of allfuture adjusted premiums shall equal the excess of (1) over (2), where (1) is(i) the then present value of the then future guaranteed benefits providedfor by the policy plus (ii) any additional expense allowance and (2) is thethen cash surrender value, if any, or present value of any paid-upnonforfeiture benefit under the policy.
E. The additional expense allowance, at the time of the change to the newlydefined benefits or premiums, shall be the sum of (i) 1 percent of theexcess, if positive, of the average amount of insurance at the beginning ofeach of the first 10 policy years after the change over the average amount ofinsurance before the change at the beginning of each of the first 10 policyyears after the time of the most recent previous change, or, if there hasbeen no previous change, the date of issue of the policy and (ii) 125 percentof the increase, if positive, in the nonforfeiture net level premium.
F. The recalculated nonforfeiture net level premium shall equal (1) dividedby (2), where (1) is the sum of (i) the nonforfeiture net level premiumapplicable before the change times the present value of an annual annuity ofone dollar payable on each anniversary of the policy on or after the date ofthe change on which a premium would have fallen due had the change notoccurred, and (ii) the present value of the increase in future guaranteedbenefits provided by the policy, and (2) is the present value of an annualannuity of one dollar payable on each anniversary of the policy on or afterthe date of change on which a premium falls due.
G. Notwithstanding any other provisions of this section, for a policy issuedon a substandard basis that provides reduced graded amounts of insurance sothat, in each policy year, the policy has the same tabular mortality cost asan otherwise similar policy issued on the standard basis that provides higheruniform amounts of insurance, adjusted premiums and present values for thesubstandard policy may be calculated as if it were issued to provide thehigher uniform amounts of insurance on the standard basis.
H. All adjusted premiums and present values referred to in §§ 38.2-3202through 38.2-3213 shall for all policies of ordinary insurance be calculatedon the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Tableor (ii) at the election of the insurer for any one or more specified plans oflife insurance, the Commissioners 1980 Standard Ordinary Mortality Table withTen-Year Select Mortality Factors. The premiums and values shall for allpolicies of industrial insurance be calculated on the basis of theCommissioners 1961 Standard Industrial Mortality Table. The premiums andvalues shall for all policies issued in a particular calendar year becalculated on the basis of a rate of interest not exceeding the nonforfeitureinterest rate as defined in this section for policies issued in that calendaryear, provided that:
1. At the insurer's option, calculations for all policies issued in aparticular calendar year may be made on the basis of a rate of interest notexceeding the nonforfeiture interest rate, as defined in this section, forpolicies issued in the immediately preceding calendar year;
2. Under any paid-up nonforfeiture benefit, including any paid-up dividendadditions, any cash surrender value available, whether or not required by §38.2-3202, shall be calculated on the basis of the mortality table and rateof interest used in determining the amount of the paid-up nonforfeiturebenefit and any paid-up dividend additions;
3. An insurer may calculate the amount of any guaranteed paid-upnonforfeiture benefit, including any paid-up additions, under the policy onthe basis of an interest rate no lower than that specified in the policy forcalculating cash surrender values;
4. In calculating the present value of any paid-up term insurance with anyaccompanying pure endowment offered as a nonforfeiture benefit, the rates ofmortality assumed may be not more than those shown in the Commissioners 1980Extended Term Insurance Table for policies of ordinary insurance and not morethan the Commissioners 1961 Industrial Extended Term Insurance Table forpolicies of industrial insurance;
5. For insurance issued on a substandard basis, the calculation of anyadjusted premiums and present values may be based on appropriatemodifications of the tables referred to in this section;
6. Any ordinary mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1980 Standard Ordinary Mortality Table with or without Ten-YearSelect Mortality Factors or for the Commissioners 1980 Extended TermInsurance Table; and
7. Any industrial mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1961 Standard Industrial Mortality Table or the Commissioners1961 Industrial Extended Term Insurance Table.
I. The nonforfeiture annual interest rate for any policy issued in aparticular calendar year shall equal 125 percent of the calendar yearstatutory valuation interest rate for the policy as defined in §§ 38.2-3130through 38.2-3142, rounded to the nearest one-quarter percent.
J. Any refiling of nonforfeiture values or their methods of computation forany previously approved policy form that involves only a change in theinterest rate or mortality table used to compute nonforfeiture values shallnot require refiling of any other provisions of that policy form.
K. After July 1, 1982, any insurer may file with the Commission a writtennotice of its election to comply with the provisions of this section after aspecified date before January 1, 1989, which shall be the operative date ofthis section for that insurer. If an insurer makes no election, the operativedate of this section for that insurer shall be January 1, 1989.
§ 38.2-3209. Same; adjusted premiums for policies.
A. This section shall apply to all policies issued on or after the operativedate as defined in this section. Except as provided in subsection G of thissection, the adjusted premiums for any policy shall be calculated on anannual basis and shall be a uniform percentage of the respective premiumsspecified in the policy for each policy year, excluding amounts payable asextra premiums to cover impairments or special hazards and also excluding anyuniform annual contract charge or policy fee specified in the policy in astatement of the method to be used in calculating the cash surrender valuesand paid-up nonforfeiture benefits, so that the present value at the date ofissue of the policy of all adjusted premiums shall equal the sum of (i) thethen present value of the future guaranteed benefits provided for by thepolicy; (ii) 1 percent of either the amount of insurance, if the insurance isuniform in amount, or the average amount of insurance at the beginning ofeach of the first 10 policy years; and (iii) 125 percent of the nonforfeiturenet level premium as defined in subsection B of this section. However, inapplying the percentage specified in (iii) of this subsection nononforfeiture net level premium shall be deemed to exceed four percent ofeither the amount of insurance, if the insurance is uniform in amount, or theaverage amount of insurance at the beginning of each of the first ten policyyears. The date of issue of a policy for the purpose of this section shall bethe date as of which the rated age of the insured is determined.
B. The nonforfeiture net level premium shall equal the present value, at thedate of issue of the policy, of the guaranteed benefits provided for by thepolicy divided by the present value, at the date of issue of the policy, ofan annual annuity of one dollar payable on the date of issue of the policyand on each anniversary of the policy on which a premium falls due.
C. For a policy that provides, on a basis guaranteed in the policy,unscheduled changes in benefits or premiums, or both, or that provides anoption for changes in benefits or premiums, or both, other than a change to anew policy, the adjusted premiums and present values shall initially becalculated on the assumption that future benefits and premiums do not changefrom those stipulated at the date of issue of the policy. At the time of anychange in the benefits or premiums, the future adjusted premiums,nonforfeiture net level premiums and present values shall be recalculated onthe assumption that future benefits and premiums do not change from thosestipulated by the policy immediately after the change.
D. Except as otherwise provided in subsection G of this section, therecalculated future adjusted premiums for any policy referred to insubsection C of this section shall be a uniform percentage of the respectivefuture premiums specified in the policy for each policy year, excludingamounts payable as extra premiums to cover impairments and special hazards,and also excluding any uniform annual contract charge or policy fee specifiedin the policy in a statement of the method to be used in calculating the cashsurrender values and paid-up nonforfeiture benefits, so that the presentvalue at the time of change to the newly defined benefits or premiums of allfuture adjusted premiums shall equal the excess of (1) over (2), where (1) is(i) the then present value of the then future guaranteed benefits providedfor by the policy plus (ii) any additional expense allowance and (2) is thethen cash surrender value, if any, or present value of any paid-upnonforfeiture benefit under the policy.
E. The additional expense allowance, at the time of the change to the newlydefined benefits or premiums, shall be the sum of (i) 1 percent of theexcess, if positive, of the average amount of insurance at the beginning ofeach of the first 10 policy years after the change over the average amount ofinsurance before the change at the beginning of each of the first 10 policyyears after the time of the most recent previous change, or, if there hasbeen no previous change, the date of issue of the policy and (ii) 125 percentof the increase, if positive, in the nonforfeiture net level premium.
F. The recalculated nonforfeiture net level premium shall equal (1) dividedby (2), where (1) is the sum of (i) the nonforfeiture net level premiumapplicable before the change times the present value of an annual annuity ofone dollar payable on each anniversary of the policy on or after the date ofthe change on which a premium would have fallen due had the change notoccurred, and (ii) the present value of the increase in future guaranteedbenefits provided by the policy, and (2) is the present value of an annualannuity of one dollar payable on each anniversary of the policy on or afterthe date of change on which a premium falls due.
G. Notwithstanding any other provisions of this section, for a policy issuedon a substandard basis that provides reduced graded amounts of insurance sothat, in each policy year, the policy has the same tabular mortality cost asan otherwise similar policy issued on the standard basis that provides higheruniform amounts of insurance, adjusted premiums and present values for thesubstandard policy may be calculated as if it were issued to provide thehigher uniform amounts of insurance on the standard basis.
H. All adjusted premiums and present values referred to in §§ 38.2-3202through 38.2-3213 shall for all policies of ordinary insurance be calculatedon the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Tableor (ii) at the election of the insurer for any one or more specified plans oflife insurance, the Commissioners 1980 Standard Ordinary Mortality Table withTen-Year Select Mortality Factors. The premiums and values shall for allpolicies of industrial insurance be calculated on the basis of theCommissioners 1961 Standard Industrial Mortality Table. The premiums andvalues shall for all policies issued in a particular calendar year becalculated on the basis of a rate of interest not exceeding the nonforfeitureinterest rate as defined in this section for policies issued in that calendaryear, provided that:
1. At the insurer's option, calculations for all policies issued in aparticular calendar year may be made on the basis of a rate of interest notexceeding the nonforfeiture interest rate, as defined in this section, forpolicies issued in the immediately preceding calendar year;
2. Under any paid-up nonforfeiture benefit, including any paid-up dividendadditions, any cash surrender value available, whether or not required by §38.2-3202, shall be calculated on the basis of the mortality table and rateof interest used in determining the amount of the paid-up nonforfeiturebenefit and any paid-up dividend additions;
3. An insurer may calculate the amount of any guaranteed paid-upnonforfeiture benefit, including any paid-up additions, under the policy onthe basis of an interest rate no lower than that specified in the policy forcalculating cash surrender values;
4. In calculating the present value of any paid-up term insurance with anyaccompanying pure endowment offered as a nonforfeiture benefit, the rates ofmortality assumed may be not more than those shown in the Commissioners 1980Extended Term Insurance Table for policies of ordinary insurance and not morethan the Commissioners 1961 Industrial Extended Term Insurance Table forpolicies of industrial insurance;
5. For insurance issued on a substandard basis, the calculation of anyadjusted premiums and present values may be based on appropriatemodifications of the tables referred to in this section;
6. Any ordinary mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1980 Standard Ordinary Mortality Table with or without Ten-YearSelect Mortality Factors or for the Commissioners 1980 Extended TermInsurance Table; and
7. Any industrial mortality tables adopted after 1980 by the NationalAssociation of Insurance Commissioners and approved by the Commission for usein determining the minimum nonforfeiture standard may be substituted for theCommissioners 1961 Standard Industrial Mortality Table or the Commissioners1961 Industrial Extended Term Insurance Table.
I. The nonforfeiture annual interest rate for any policy issued in aparticular calendar year shall equal 125 percent of the calendar yearstatutory valuation interest rate for the policy as defined in §§ 38.2-3130through 38.2-3142, rounded to the nearest one-quarter percent.
J. Any refiling of nonforfeiture values or their methods of computation forany previously approved policy form that involves only a change in theinterest rate or mortality table used to compute nonforfeiture values shallnot require refiling of any other provisions of that policy form.
K. After July 1, 1982, any insurer may file with the Commission a writtennotice of its election to comply with the provisions of this section after aspecified date before January 1, 1989, which shall be the operative date ofthis section for that insurer. If an insurer makes no election, the operativedate of this section for that insurer shall be January 1, 1989.
