                                 CODE OF VIRGINIA

REFUNDS (§ 38.2-3729)

A. Each individual policy or group certificate shall provide that, in the event
of termination of the insurance prior to the scheduled maturity date of the
indebtedness, any refund of an amount paid by the debtor for insurance shall be
paid or credited promptly to the debtor or person entitled thereto.

B. If a creditor requires a debtor to make any payment for credit life insurance
or credit accident and sickness insurance and an individual policy or group
certificate of insurance is not issued, the creditor shall immediately give
written notice to such debtor and shall promptly make an appropriate credit to
the account.

C. Refund formulas which any insurer desires to use for decreasing term credit
life insurance with terms of more than sixty-one months must develop refunds
which are at least as favorable to the debtor as refunds based on the actuarial
method. Refund formulas for decreasing term credit life insurance with terms of
sixty-one months or less must develop refunds which are at least as favorable to
the debtor as refunds based on the Rule of 78 or the actuarial method, whichever
method is consistent with the original method of premium calculation. Refund
formulas for credit accident and sickness insurance shall develop refunds that
are at least as favorable to the debtor as refunds based on the actuarial
method. The actuarial method will result in refunds equal to the premium cost of
scheduled benefits subsequent to the date of cancellation or termination,
computed at the schedule of premium rates in effect on the date of issue. The
refund of premiums for level term credit life insurance shall be no less than
the pro rata unearned gross premium. Refund formulas must be filed with and
approved by the Commission prior to use.

D. The requirements of subsection C of this section that refund formulas be
filed with the Commission shall be considered fulfilled if the refund formulas
are set forth in the individual policy or group certificate filed with the
Commission.

E. Refunds may be computed:

   1. On a daily basis; or

   2. From the end of the loan month if sixteen days or more of a loan month have
   been earned, provided that, if fifteen days or less of a loan month have been
   earned, the refund is computed from the beginning of the loan month.

F. No refund of five dollars or less need be made.

G. Voluntary prepayment of indebtedness. If a debtor prepays the indebtedness
other than as a result of death:

   1. Any credit life insurance covering such indebtedness shall be terminated
   and an appropriate refund of the credit life insurance premium shall be paid
   or credited to the person entitled to the refund in accordance with this
   section; and

   2. Any credit accident and sickness insurance covering such indebtedness shall
   be terminated and an appropriate refund of the credit accident and sickness
   insurance premium shall be paid or credited to the person entitled to the
   refund in accordance with this section. If a claim under such coverage is in
   progress at the time of prepayment, the amount of refund may be determined as
   if the prepayment did not occur until the payment of benefits terminates. No
   refund need be paid during any period of disability for which credit accident
   and sickness benefits are payable. A refund shall be computed as if prepayment
   occurred at the end of the disability period.

H. Involuntary prepayment of indebtedness. If an indebtedness is prepaid by the
proceeds of a credit life insurance policy covering the debtor, then it shall be
the responsibility of the insurer to see that the following are paid to the
insured debtor, if living, or the beneficiary, other than the creditor, named by
the debtor or to the debtor&#8217;s estate:

   1. An appropriate refund of the credit accident and sickness insurance premium
   in accordance with this section; and

   2. The amount of benefits in excess of the amount required to repay the
   indebtedness after crediting any unearned interest or finance charges.

HISTORY: 1960, c. 67, § 38.1-482.8; 1982, c. 223, § 38.2-3711; 1986, c. 562;
1992, c. 586; 2002, c. 72; 2009, c. 643.