                                 CODE OF VIRGINIA

MINIMUM VALUATION STANDARD FOR POLICIES ISSUED PRIOR TO CERTAIN DATES (§
38.2-1368)

The following provisions of this section shall apply only to those policies and
contracts issued prior to the operative date stated in § 38.2-3214:

1. The legal minimum standard for the valuation of life insurance contracts
issued prior to January 1, 1937, shall be on the basis of the American
Experience Table of Mortality, with interest at four percent per year, and
strictly in accordance with the terms and conditions of such contracts, and for
life insurance contracts issued on and after that date shall be the one-year
preliminary term method of valuation, as hereinafter modified, on the basis of
the American Experience Table of Mortality or, at the option of the insurer, the
American Men Ultimate Table of Mortality with interest at three and one-half
percent per year.

2. If the net renewal premium under a limited payment life preliminary term
policy providing for the payment of less than 20 annual premiums under the
policy, or under an endowment preliminary term policy, exceeds that under a
20-payment life preliminary term policy, the reserve for that policy at the end
of any year, including the first, shall be at least the reserve on a 20-payment
life preliminary term policy issued in the same year and at the same age,
together with an amount equivalent to the accumulation of a net level premium
sufficient to provide for a pure endowment maturing one year after the date on
which the last annual premium is due, or at the end of 20 years if the policy
provides for the payment of premiums for more than 20 years, equal to the
difference between the value on the maturity date of a 20-payment life
preliminary term policy and the full net level premium reserve at such time of
such a limited payment life or endowment policy. Policies valued by the above
method shall contain a clause specifying either that the reserve of the policies
shall be computed in accordance with the 20-payment life modification of the
preliminary term method of valuation or that the first year&#8217;s insurance is
term insurance.

3. Except as otherwise provided in &#xA7; 38.2-1370 for group annuity and pure
endowment contracts, the legal minimum standard for the valuation of annuities
issued on and after January 1, 1937, shall be the Combined Annuity Table, with
interest at four percent per year, but annuities deferred 10 or more years and
written in connection with life insurance shall be valued on the same basis as
that used in computing the consideration or premium for the life insurance, or
upon any higher standard, at the insurer&#8217;s option.

4. The legal minimum standard for the calculation of the reserve liability for
insurance against disability incorporated in life insurance policies issued on
and after January 1, 1937, shall be on the basis of any table adopted by the
insurer and approved by the Commission, with interest at three and one-half
percent per year. However, in no case shall such liability be less than one-half
of the net annual premium for the disability benefit computed by the table.

5. The legal standard for the valuation of group insurance written as yearly
renewable term insurance issued on and after January 1, 1937, shall be on the
basis of the American Men Ultimate Table of Mortality with interest at three and
one-half percent per year.

6. The legal minimum standard for the valuation of industrial policies issued on
and after January 1, 1937, shall be the American Experience Table of Mortality,
with interest at three and one-half percent per year; however, any insurer may
voluntarily value its industrial policies on the basis of the standard
industrial mortality table or the substandard industrial mortality table, and by
the level net premium method or in accordance with their terms by the modified
preliminary term method as described in subdivision 2, or the full preliminary
term method.
			All industrial policies issued on and after January 1, 1937, shall be valued
under the rules set forth in this section, whether or not the policies provide
for surrender values, either in cash, paid-up insurance, or extended insurance.

7. The Commission may vary the standards of interest and mortality in the case
of alien insurers as to contracts issued by those insurers in countries other
than the United States, and in particular cases of invalid lives and other extra
hazards.

8. If the actual annual premium charged for insurance is less than the net
annual premium for the insurance, computed as specified in this section, the
insurer shall set up an additional reserve equal to the value of an annuity of
the difference between the actual premium charged and the net premium required
by this section, and the term of which at the date of the valuation shall equal
the period during which future premium payments are to become due on the
insurance. The annuity shall be valued according to the table of mortality with
the rate of interest at which the net annual premium is calculated.

9. Reserves for all of these policies and contracts, or all of any class of
these policies and contracts, may be calculated, at the insurer&#8217;s option,
according to any standards that produce greater aggregate reserves for all the
policies and contracts, or all of the class of the policies and contracts so
valued, than the minimum reserves required by this section; and in each case the
insurer shall report to the Commission in its annual statement the standards it
used in making the valuation.

HISTORY: 2014, c. 571.