                                 CODE OF VIRGINIA

RESERVE VALUATION METHOD; LIFE INSURANCE AND ENDOWMENT BENEFITS (§ 38.2-1372)

A. Except as otherwise provided in §§ 38.2-1373, 38.2-1376, and 38.2-1378,
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 the excess, if
any, of the present value, at the date of valuation, of the 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 a
policy shall be the uniform percentage of the respective contract premiums for
the benefits, excluding any extra premiums charged because of impairments or
special hazards, such that the present value, at the date of issue of the
policy, of all modified net premiums shall be equal to the sum of the
then-present value of the benefits provided for by the policy and the excess of
subdivision 1 over subdivision 2, as follows:

   1. A net level annual premium equal to the present value, at the date of
   issue, of the benefits provided for after the first policy year, divided by
   the present value, at the date of issue, of an annuity of one per annum
   payable on the first and each subsequent 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 a life insurance policy issued on or after January 1, 1986, for which the
contract premium in the first policy year exceeds that of the second year and
for which no comparable additional benefit is provided in the first year for the
excess, and that provides an endowment benefit or a cash surrender value or a
combination in an amount greater than the excess premium, the reserve according
to the Commissioners reserve valuation method as of any policy anniversary
occurring on or before the assumed ending date, defined herein as 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 &#xA7; 38.2-1376, be the greater of the reserve as of
the policy anniversary calculated as described in subsection A and the reserve
as of the policy anniversary calculated as described in that subsection but with
(i) the value defined in subdivision A 1 being reduced by 15 percent of the
amount of such excess first-year premium, (ii) 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, (iii) the policy being assumed
to mature on that date as an endowment, and (iv) the cash surrender value
provided on that date being considered as an endowment benefit. In making the
above comparison, the mortality and interest bases stated in &#xA7;&#xA7;
38.2-1369 and 38.2-1371 shall be used.

C. Reserves according to the Commissioners reserve valuation method shall be
calculated by a method consistent with the principles of the preceding
subsections for:

   1. Life insurance policies providing for a varying amount of insurance or
   requiring the payment of varying premiums;

   2. 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 &#xA7; 408 of the Internal
   Revenue Code, as now or hereafter amended;

   3. Disability and accidental death benefits in all policies and contracts; and

   4. All other benefits, except life insurance and endowment benefits in life
   insurance policies and benefits provided by all other annuity and pure
   endowment contracts.

HISTORY: 2014, c. 571.