                                 CODE OF VIRGINIA

RESERVE CALCULATION; VALUATION NET PREMIUM EXCEEDING THE GROSS PREMIUM CHARGED
(§ 38.2-1376)

A. If in any contract year the gross premium charged by an insurer on a policy
or contract is less than the valuation net premium for the policy or contract
calculated by the method used in calculating the reserve but using the minimum
valuation standards of mortality and rate of interest, the minimum reserve
required for the policy or contract shall be the greater of either the reserve
calculated according to the mortality table, rate of interest, and method
actually used for the policy or contract or the reserve calculated by the method
actually used for the policy or contract but using the minimum valuation
standards of mortality and rate of interest and replacing the valuation net
premium by the actual gross premium in each contract year for which the
valuation net premium exceeds the actual gross premium. The minimum valuation
standards of mortality and rate of interest referred to in this section are
those standards stated in &#xA7;&#xA7; 38.2-1369 and 38.2-1371.

B. For a life insurance policy issued on or after January 1, 1986, for which the
gross 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 which provides an endowment benefit or a cash surrender value or a
combination in an amount greater than the excess premium, the provisions of this
section shall be applied as if the method actually used in calculating the
reserve for the policy were the method described in &#xA7; 38.2-1372, ignoring
subsection B of &#xA7; 38.2-1372. The minimum reserve at each policy anniversary
of such a policy shall be the greater of the minimum reserve calculated in
accordance with &#xA7; 38.2-1372, including subsection B of that section, and
the minimum reserve calculated in accordance with this section.

HISTORY: 2014, c. 571.