Vermont § 3771 - Consistency of progression of cash surrender values with increasing policy duration

§ 3771. Consistency of progression of cash surrender values with increasing policy duration

• (a) This section, in addition to all other applicable sections of this chapter, shall
  apply to all policies issued on or after January 1, 1987. Any cash surrender value
  available under the policy in the event of default in a premium payment due on any
  policy anniversary shall be in an amount that does not differ by more than two-tenths
  of one percent of either the amount of insurance, if the insurance be uniform in amount,
  or the average amount of insurance at the beginning of each of the first 10 policy
  years, from the sum of: (1) the greater of zero and the basic cash value specified in this section; and (2) the present value of any existing paid-up additions less the amount of any indebtedness
  to the company under the policy. (b) The basic cash value shall be equal to the present value, on such anniversary, of
  the future guaranteed benefits that would have been provided for by the policy, excluding
  any existing paid-up additions and before deduction of any indebtedness to the company,
  if there had been no default, less the then present value of the nonforfeiture factors,
  as defined in this subchapter, corresponding to premiums that would have fallen due
  on and after the anniversary. The effects on the basic cash value of supplemental
  life insurance or annuity benefits or of family coverage, as described in section
  3763 or 3765 of this subchapter, whichever is applicable, shall be the same as the
  effects specified in those sections, as applicable, on the cash surrender values defined
  therein. (c) The nonforfeiture factor for each policy year shall be an amount equal to a percentage
  of the adjusted premium for the policy year, as defined in section 3765 or section
  3768 of this subchapter, as applicable, except that the percentage: (1) must be the same percentage for each policy year between the second policy anniversary
  and the later of: (A) the fifth policy anniversary; or (B) the first policy anniversary at which there is available under the policy a cash surrender
  value in an amount, before including any paid-up additions and before deducting any
  indebtedness, of at least two-tenths of one percent of either the amount of insurance,
  if the insurance be uniform in amount, or the average amount of insurance at the beginning
  of each of the first 10 policy years; and (2) must be such that no percentage after the later of the two policy anniversaries specified
  in subsection (a) of this section may apply to fewer than five consecutive policy
  years. (d) Basic cash value shall not be less than the value that would be obtained if the adjusted
  premiums for the policy, as defined in section 3768 of this subchapter, were substituted
  for the nonforfeiture factors in the calculation of the basic cash value. (e) All adjusted premiums and present values referred to in this section shall for a particular
  policy be calculated on the same mortality and interest bases as are used in demonstrating
  the policy’s compliance with the other sections of this subchapter. The cash surrender
  values referred to in this section shall include any endowment benefits provided for
  by the policy. (f) A cash surrender value available other than in the event of default in a premium payment
  due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available
  under the policy in the event of default in a premium payment shall be determined
  in manners consistent with the manners specified for determining the analogous minimum
  amounts in sections 3762, 3763, 3764, 3768, and 3770 of this subchapter. The amounts
  of any cash surrender values and of any paid-up nonforfeiture benefits granted in
  connection with additional benefits such as those listed in subdivisions 3770(1)-(6)
  of this subchapter shall conform with the principles of this section. (Added 2015, No. 63, § 2, eff. June 17, 2015.)