                                 CODE OF VIRGINIA

SAME; ADJUSTED PREMIUMS FOR POLICIES (§ 38.2-3209)

A. This section shall apply to all policies issued on or after the operative
date as defined in this section. Except as provided in subsection G of this
section, the adjusted premiums for any policy shall be calculated on an annual
basis and shall be a uniform percentage of the respective premiums specified in
the policy for each policy year, excluding amounts payable as extra premiums to
cover impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the
method to be used in calculating the cash surrender values and paid-up
nonforfeiture benefits, so that the present value at the date of issue of the
policy of all adjusted premiums shall equal the sum of (i) the then present
value of the future guaranteed benefits provided for by the policy; (ii) 1
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
10 policy years; and (iii) 125 percent of the nonforfeiture net level premium as
defined in subsection B of this section. However, in applying the percentage
specified in (iii) of this subsection no nonforfeiture net level premium shall
be deemed to exceed four 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. The date of issue of a policy
for the purpose of this section shall be the date as of which the rated age of
the insured is determined.

B. The nonforfeiture net level premium shall equal the present value, at the
date of issue of the policy, of the guaranteed benefits provided for by the
policy divided by the present value, at the date of issue of the policy, of an
annual annuity of one dollar payable on the date of issue of the policy and 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 an option for changes
in benefits or premiums, or both, other than a change to a new policy, the
adjusted premiums and present values shall initially be calculated on the
assumption that future benefits and premiums do not change from those stipulated
at the date of issue of the policy. At the time of any change in the benefits or
premiums, the future adjusted premiums, nonforfeiture net level premiums and
present values shall be recalculated on the assumption that future benefits and
premiums do not change from those stipulated by the policy immediately after the
change.

D. Except as otherwise provided in subsection G of this section, the
recalculated future adjusted premiums for any policy referred to in subsection C
of this section shall be a uniform percentage of the respective future premiums
specified in the policy for each policy year, excluding amounts payable as extra
premiums to cover impairments and special hazards, and also excluding any
uniform annual contract charge or policy fee specified in the policy in a
statement of the method to be used in calculating the cash surrender values and
paid-up nonforfeiture benefits, so that the present value at the time of change
to the newly defined benefits or premiums of all future adjusted premiums shall
equal the excess of (1) over (2), where (1) is (i) the then present value of the
then future guaranteed benefits provided for by the policy plus (ii) any
additional expense allowance and (2) is the then cash surrender value, if any,
or present value of any paid-up nonforfeiture benefit under the policy.

E. The additional expense allowance, at the time of the change to the newly
defined benefits or premiums, shall be the sum of (i) 1 percent of the excess,
if positive, of the average amount of insurance at the beginning of each of the
first 10 policy years after the change over the average amount of insurance
before the change at the beginning of each of the first 10 policy years after
the time of the most recent previous change, or, if there has been no previous
change, the date of issue of the policy and (ii) 125 percent of the increase, if
positive, in the nonforfeiture net level premium.

F. The recalculated nonforfeiture net level premium shall equal (1) divided by
(2), where (1) is the sum of (i) the nonforfeiture net level premium applicable
before the change times the present value of an annual annuity of one dollar
payable on each anniversary of the policy on or after the date of the change on
which a premium would have fallen due had the change not occurred, and (ii) the
present value of the increase in future guaranteed benefits provided by the
policy, and (2) is the present value of an annual annuity of one dollar payable
on each anniversary of the policy on or after the date of change on which a
premium falls due.

G. Notwithstanding any other provisions of this section, for a policy issued on
a substandard basis that provides reduced graded amounts of insurance so that,
in each policy year, the policy has the same tabular mortality cost as an
otherwise similar policy issued on the standard basis that provides higher
uniform amounts of insurance, adjusted premiums and present values for the
substandard policy may be calculated as if it were issued to provide the higher
uniform amounts of insurance on the standard basis.

H. All adjusted premiums and present values referred to in §§ 38.2-3202
through 38.2-3213 shall for all policies of ordinary insurance be calculated on
the basis of (i) the Commissioners 1980 Standard Ordinary Mortality Table or
(ii) at the election of the insurer for any one or more specified plans of life
insurance, the Commissioners 1980 Standard Ordinary Mortality Table with
Ten-Year Select Mortality Factors. The premiums and values shall for all
policies of industrial insurance be calculated on the basis of the Commissioners
1961 Standard Industrial Mortality Table. The premiums and values shall for all
policies issued in a particular calendar year be calculated on the basis of a
rate of interest not exceeding the nonforfeiture interest rate as defined in
this section for policies issued in that calendar year, provided that:

   1. At the insurer&#8217;s option, calculations for all policies issued in a
   particular calendar year may be made on the basis of a rate of interest not
   exceeding the nonforfeiture interest rate, as defined in this section, for
   policies issued in the immediately preceding calendar year;

   2. Under any paid-up nonforfeiture benefit, including any paid-up dividend
   additions, any cash surrender value available, whether or not required by
   &#xA7; 38.2-3202, shall be calculated on the basis of the mortality table and
   rate of interest used in determining the amount of the paid-up nonforfeiture
   benefit and any paid-up dividend additions;

   3. An insurer may calculate the amount of any guaranteed paid-up nonforfeiture
   benefit, including any paid-up additions, under the policy on the basis of an
   interest rate no lower than that specified in the policy for calculating cash
   surrender values;

   4. In calculating the present value of any paid-up term insurance with any
   accompanying pure endowment offered as a nonforfeiture benefit, the rates of
   mortality assumed may be not more than those shown in the Commissioners 1980
   Extended Term Insurance Table for policies of ordinary insurance and not more
   than the Commissioners 1961 Industrial Extended Term Insurance Table for
   policies of industrial insurance;

   5. For insurance issued on a substandard basis, the calculation of any
   adjusted premiums and present values may be based on appropriate modifications
   of the tables referred to in this section;

   6. For policies issued prior to the operative date of the valuation manual,
   any Commissioners Standard ordinary mortality tables adopted after 1980 by the
   National Association of Insurance Commissioners (NAIC) and approved by the
   Commission for use in determining the minimum nonforfeiture standard may be
   substituted for the Commissioners 1980 Standard Ordinary Mortality Table with
   or without Ten-Year Select Mortality Factors or for the Commissioners 1980
   Extended Term Insurance Table. &#8220;Operative date of the valuation
   manual&#8221; means the January 1 of the first calendar year that the
   valuation manual as defined in &#xA7; 38.2-1365 is effective.
   				For policies issued on or after the operative date of the valuation
   manual, the valuation manual shall provide the Commissioners Standard
   mortality table for use in determining the minimum nonforfeiture standard that
   may be substituted for the Commissioners 1980 Standard Ordinary Mortality
   Table with or without Ten-Year Select Mortality Factors or for the
   Commissioners 1980 Extended Term Insurance Table. If the Commission approves
   by regulation any Commissioners Standard ordinary mortality table adopted by
   the NAIC for use in determining the minimum nonforfeiture standard for
   policies issued on or after the operative date of the valuation manual, then
   that minimum nonforfeiture standard supersedes the minimum nonforfeiture
   standard provided by the valuation manual; and

   7. For policies issued prior to the operative date of the valuation manual,
   any Commissioners Standard industrial mortality tables adopted after 1980 by
   the National Association of Insurance Commissioners and approved by the
   Commission for use in determining the minimum nonforfeiture standard may be
   substituted for the Commissioners 1961 Standard Industrial Mortality Table or
   the Commissioners 1961 Industrial Extended Term Insurance Table.
   				For policies issued on or after the operative date of the valuation
   manual, the valuation manual shall provide the Commissioners Standard
   mortality table for use in determining the minimum nonforfeiture standard that
   may be substituted for the Commissioners 1961 Standard Industrial Mortality
   Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If
   the Commission approves by regulation any Commissioners Standard industrial
   mortality table adopted by the NAIC for use in determining the minimum
   nonforfeiture standard for policies issued on or after the operative date of
   the valuation manual, then that minimum nonforfeiture standard supersedes the
   minimum nonforfeiture standard provided by the valuation manual.

I. The nonforfeiture annual interest rate for any policy issued in a particular
calendar year:

   1. For policies issued prior to the operative date of the valuation manual,
   shall equal 125 percent of the calendar year statutory valuation interest rate
   for the policy as defined in Article 10 (&#xA7; 38.2-1365 et seq.) of Chapter
   13, rounded to the nearest one-quarter percent, provided, however, that the
   nonforfeiture annual interest rate shall not be less than four percent; and

   2. For policies issued on or after the operative date of the valuation manual,
   shall be provided by the valuation manual.

J. Any refiling of nonforfeiture values or their methods of computation for any
previously approved policy form that involves only a change in the interest rate
or mortality table used to compute nonforfeiture values shall not require
refiling of any other provisions of that policy form.

K. After July 1, 1982, any insurer may file with the Commission a written notice
of its election to comply with the provisions of this section after a specified
date before January 1, 1989, which shall be the operative date of this section
for that insurer. If an insurer makes no election, the operative date of this
section for that insurer shall be January 1, 1989.

HISTORY: 1982, c. 228, § 38.1-465.3; 1986, c. 562; 2014, c. 571.