2006 Code of Virginia § 38.2-3141 - Reserve calculation - Valuation net premium exceeding the gross premium charge

38.2-3141. Reserve calculation - Valuation net premium exceeding the grosspremium charge.

A. If in any contract year the gross premium charged by a life insurer on anypolicy or contract is less than the valuation net premium for the policy orcontract calculated by the method used in calculating the reserve on thepolicy or contract but using the minimum valuation standards of mortality andrate of interest, the minimum reserve required for the policy or contractshall be the greater of either the reserve calculated according to themortality table, rate of interest, and method actually used for the policy orcontract, or the reserve calculated by the method actually used for thepolicy or contract but using the minimum valuation standards of mortality andrate of interest and replacing the valuation net premium by the actual grosspremium in each contract year for which the valuation net premium exceeds theactual gross premium. The minimum valuation standards of mortality and rateof interest referred to in this section are those standards stated in 38.2-3130 through 38.2-3136.

B. For any life insurance policy issued on or after January 1, 1986, forwhich the gross premium in the first policy year exceeds that of the secondyear and for which no comparable additional benefit is provided in the firstyear for that excess and which provides an endowment benefit or a cashsurrender value or a combination of both in an amount greater than the excesspremium, the provisions of this section shall be applied as if the methodactually used in calculating the reserve for the policy were the methoddescribed in 38.2-3137, ignoring subsection B of 38.2-3137. The minimumreserve at each policy anniversary of such a policy shall be the greater ofthe minimum reserve calculated in accordance with 38.2-3137, and theminimum reserve calculated in accordance with this section.

(Code 1950, 38-394; 1952, c. 317, 38.1-456; 1959, Ex. Sess., c. 43; 1962,c. 562; 1975, c. 215; 1979, c. 437; 1982, c. 227; 1986, c. 562.)