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 orafter the operative date as defined in § 38.2-3209. Except as provided insubsection C of this section, the adjusted premium for any life insurancepolicy issued on or after the operative date stated in § 38.2-3214 shall becalculated on an annual basis and shall be a uniform percentage of therespective premiums specified in the policy for each policy year, excludingany extra premiums charged because of impairments or special hazards, so thatthe present value at the date of issue of the policy of all adjusted premiumsis equal to the sum of: (i) the then present value of the future guaranteedbenefits provided for by the policy; (ii) two percent of the amount ofinsurance, if the insurance is uniform in amount, or of the equivalentuniform amount as defined in subsection B of this section if the amount ofinsurance varies with the duration of the policy; (iii) forty percent of theadjusted premium for the first policy year; and (iv) twenty-five percent ofeither the adjusted premium for the first policy year or the adjusted premiumfor a whole life policy of the same uniform or equivalent uniform amount withuniform premiums for the whole of life issued at the same age for the sameamount of insurance, whichever is less. However, in applying the percentagesspecified in (iii) and (iv) of this subsection, no adjusted premium shall bedeemed to exceed four percent of the amount of insurance or level amountequivalent to the amount of insurance. The date of issue of a policy for thepurpose of this section shall be the date as of which the rated age of theinsured is determined.
B. The equivalent uniform amount of a policy providing an amount of insurancevarying with the duration of the policy is the level amount of insuranceprovided by an otherwise similar policy, containing the same endowmentbenefit 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 whichhave the same present value at the date of issue as the benefits under thepolicy. However, for a policy providing a varying amount of insurance issuedon the life of a child under age ten, the equivalent uniform amount may becomputed as though the amount of insurance provided by the policy prior tothe 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 bya rider or a supplemental policy provision shall equal (i) the adjustedpremiums for an otherwise similar policy issued at the same age without theterm insurance benefits, increased, during the period for which premiums forthe term insurance benefits are payable by (ii) the adjusted premiums for theterm insurance. Items (i) and (ii) of this subsection shall be calculatedseparately and as specified in subsections A and B of this section. For thepurposes of items (ii), (iii), and (iv) of subsection A of this section, theamount of insurance or equivalent uniform amount of insurance used in thecalculation of the adjusted premiums referred to in item (ii) of thissubsection shall equal the excess of the corresponding amount determined forthe entire policy over the amount used in the calculation of the adjustedpremiums 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.)