Virginia § 38.2-3205 - Same; calculation of adjusted premiums

§ 38.2-3205. Same; calculation of adjusted premiums

A. The provisions of this section shall not apply to policies issued on or after the operative date as defined in § 38.2-3209. Except as provided in subsection C of this section, the adjusted premium for any life insurance policy issued on or after the operative date stated in § 38.2-3214 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 any extra premiums charged because of impairments or special hazards, so that the present value at the date of issue of the policy of all adjusted premiums is equal to the sum of: (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) two percent of the amount of insurance, if the insurance is uniform in amount, or of the equivalent uniform amount as defined in subsection B of this section if the amount of insurance varies with the duration of the policy; (iii) forty percent of the adjusted premium for the first policy year; and (iv) twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. However, in applying the percentages specified in (iii) and (iv) of this subsection, no adjusted premium shall be deemed to exceed four percent of the amount of insurance or level amount equivalent to the amount of insurance. 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 equivalent uniform amount of a policy providing an amount of insurance varying with the duration of the policy is the level amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy. However, for a policy providing a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by the policy at age ten.

C. The adjusted premiums for any policy providing term insurance benefits by a rider or a supplemental policy provision shall equal (i) the adjusted premiums for an otherwise similar policy issued at the same age without the term insurance benefits, increased, during the period for which premiums for the term insurance benefits are payable by (ii) the adjusted premiums for the term insurance. Items (i) and (ii) of this subsection shall be calculated separately and as specified in subsections A and B of this section. For the purposes of items (ii), (iii), and (iv) of subsection A of this section, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in item (ii) of this subsection shall equal the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in item (i) of this subsection.

Code 1950, § 38-379; 1952, c. 317, § 38.1-464; 1962, c. 562; 1982, c. 228; 1986, c. 562.