                                 CODE OF VIRGINIA

THE BENEFIT CONTRACT (§ 38.2-4119)

A. Every society authorized to do business in this Commonwealth shall issue to
each owner of a benefit contract a certificate specifying the amount of benefits
provided thereby. The certificate, together with any attached riders or
endorsements, the laws of the society, the application for membership, the
application for insurance and declaration of insurability, if any, signed by the
applicant, and all amendments to each, shall constitute the benefit contract, as
of the date of issuance, between the society and the owner, and the certificate
shall so state. A copy of the application for insurance and declaration of
insurability, if any, shall be endorsed upon or attached to the certificate. All
statements on the application shall be representations and not warranties. Any
waiver of this provision shall be void.

B. Any changes, additions or amendments to the laws of the society duly made or
enacted subsequent to the issuance of the certificate, shall bind the owner and
the beneficiaries, and shall govern and control the benefit contract in all
respects the same as though such changes, additions or amendments had been made
prior to and were in force at the time of the application for insurance, except
that no change, addition or amendment shall destroy or diminish benefits which
the society contracted to give the owner as of the date of issuance.

C. Any person upon whose life a benefit contract is issued prior to attaining
the age of majority shall be bound by the terms of the application and
certificate and by all the laws and rules of the society to the same extent as
though the age of majority had been attained at the time of application.

D. A society shall provide in its laws that if its reserves as to all or any
class of certificates become impaired, its board of directors or corresponding
body may require that the owner shall pay to the society his equitable
proportion of such deficiency as ascertained by its board, and that if the
payment is not made, either (i) it shall stand as an indebtedness against the
certificate and draw interest not to exceed the rate specified for certificate
loans under the certificates; or (ii) in lieu of or in combination with (i), the
owner may accept a proportionate reduction in benefits under the certificate.
The society may specify the manner of the election and which alternative is to
be presumed if no election is made.

E. Copies of any documents mentioned in this section, certified by the secretary
or corresponding officer of the society, shall be received in evidence of the
terms and conditions thereof.

F. No certificate shall be delivered or issued for delivery in this Commonwealth
unless a copy of the form has been filed with and approved by the Commission in
the manner provided for in &#xA7; 38.2-316. Every life, accident, health, or
disability insurance certificate and every annuity certificate issued on or
after July 1, 1986, shall meet the standard contract provision requirements not
inconsistent with this chapter for like policies issued by life insurers in this
Commonwealth, except that a society may provide for a grace period for payment
of premiums of one full month in its certificates. The certificate shall also
contain a provision stating the amount of premiums which are payable under the
certificate and a provision reciting or setting forth the substance of any
sections of the society&#8217;s laws or rules in force at the time of issuance
of the certificate which, if violated, will result in the termination or
reduction of benefits payable under the certificate. If the laws of the society
provide for expulsion or suspension of a member, the certificate shall also
contain a provision that any member so expelled or suspended, except for
nonpayment of a premium or within the contestable period for material
misrepresentation in the application for membership or insurance, shall have the
privilege of maintaining the certificate in force by continuing payment of the
required premium.

G. Benefit contracts issued on the lives of persons below the society&#8217;s
minimum age for adult membership may provide for transfer of control or
ownership to the insured at an age specified in the certificate. A society may
require approval of an application for membership in order to effect this
transfer, and may provide in all other respects for the regulation, government
and control of such certificates and all rights, obligations and liabilities
incident thereto. Ownership rights prior to such transfer shall be specified in
the certificate.

H. A society may specify the terms and conditions on which benefit contracts may
be assigned.

HISTORY: Code 1950, §§ 38-280, 38-282, 38-286, 38-293, 38.1-596, 38.1-598,
38.1-602, 38.1-609; 1952, c. 317, §§ 38.1-638.28 through 38.1-638.30,
38.1-638.35; 1964, c. 355; 1968, c. 654; 1972, cc. 530, 825; 1986, c. 562.