A. This section, in addition to all other applicable sections of law, shall apply to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall not differ by more than two-tenths percent of either (i) the amount of insurance, if the insurance is uniform in amount, or (ii) the average amount of insurance at the beginning of each of the first ten policy years, from the sum of (i) the greater of zero and the basic cash value specified in this section and (ii) the present value of any existing paid-up additions less the amount of any indebtedness to the insurer under the policy.
B. The basic cash value shall equal the present value on that anniversary of the future guaranteed benefits that would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, if there had been no default, less the then present value of the nonforfeiture factors, as defined in this section, corresponding to premiums that would have fallen due on and after that anniversary. However, the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in § 38.2-3203 or § 38.2-3205, whichever applies, shall be the same as the effects specified in § 38.2-3203 or § 38.2-3205, whichever applies, on the cash surrender values defined in those sections.
C. 1. The nonforfeiture factor for each policy year shall equal a percentage of the adjusted premium for the policy year, as defined in § 38.2-3205 or § 38.2-3209, whichever applies. Except as required by subdivision 2 of this subsection, such percentage: a. Shall be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths percent of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and b. Shall be such that no percentage after the later of the two policy anniversaries specified in subdivision 1 a of this subsection may apply to fewer than five consecutive policy years.
2. No basic cash value shall be less than the value that would be obtained if the adjusted premiums for the policy, as defined in § 38.2-3205 or § 38.2-3209, whichever applies, were substituted for the nonforfeiture factors in the calculation of the basic cash value.
D. All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases used in demonstrating the policy’s compliance with the other sections of this article. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy.
E. Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined by a method consistent with the methods specified for determining the analogous minimum amounts in §§ 38.2-3202 through 38.2-3204, 38.2-3209 and 38.2-3211. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits, such as those listed as B1 a through B1 f in § 38.2-3211, shall conform with the principles of this section.