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Virginia Administrative Code
Title 14. Insurance
Agency 5. State Corporation Commission, Bureau of Insurance
Chapter 80. Rules Governing Variable Life Insurance
1/22/2020

14VAC5-80-130. Mandatory Policy Provisions.

Each variable life insurance policy filed for approval in this Commonwealth shall in addition to other applicable statutory requirements, contain the following:

1. The first page of each policy shall contain:

a. A prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that the amount or duration of death benefits may be variable or fixed under specified conditions;

b. A prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;

c. A prominent statement in contrasting color and in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, describing any minimum death benefit required pursuant to subdivision 2 of 14VAC5-80-120;

d. A statement describing the method, or a reference to the policy provision which describes the method, for determining the amount of insurance payable at death;

e. When appropriate a prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that the policy loan value is less than 100% of the policy's cash value surrender value;

2.a. For scheduled premium policies, a provision for a grace period of not less than 31 days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date.

b. For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy. Such grace period shall end on a date not less than 61 days after the mailing date of the report to policyholders required by subdivision 3 of Article IX (14VAC5-80-320).

The death benefit payable during the grace period will equal the death benefit less any outstanding indebtedness and less any overdue charges at the time of the last valuation of the policy preceding the beginning of the grace period.

3.a. For scheduled premium policies, a provision that the policy will be reinstated at any time within three years from the date of default upon the written application of the insured, and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

(1) All overdue premiums with interest at a rate not exceeding 6.0% per year compounded annually and any indebtedness in effect at the end of the grace period following the date of default with interest at a rate as provided in § 38.2-3308 of the Code of Virginia; or

(2) 110% of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding 6.0% per annum compounded annually.

b. For flexible premium policies a provision that the policy will be reinstated at any time within three years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

(1) A charge not to exceed three months cost of insurance; or

(2) 110% of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding 6.0% per annum compounded annually.

4. A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy;

5. A provision designating the separate account to be used and stating that:

a. The assets of such separate account shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account;

b. The assets of such separate account shall be valued at least as often as any policy benefits vary but at least monthly.

6. A designation of the officers who are empowered to make an agreement or representation on behalf of the insurer;

7. A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation;

8. A statement of any conditions or requirements concerning the assignment of the policy;

9. A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured;

10. A provision stating that the investment policy of the separate account shall not be changed without the approval of the insurance supervisory official of the state of domicile of the insurer, and that the approval process is on file with the Commission;

11. A provision that payments of variable death benefits in excess of any minimum death benefits, cash values, policy loans, or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred;

a. For up to six months from the date of request, if such payments are based on policy values which do not depend on the investment performance of the separate account, or

b. Otherwise, for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make such payment impractical;

12. If settlement options are provided, at least one such option shall be provided on a fixed basis only;

13. A description of the basis for computing the cash value and the surrender value under the policy shall be included;

14. Premiums or charges for incidental insurance benefits shall be stated separately; and

15. The insurer may establish a reasonable minimum cash value below which any nonforfeiture insurance options will not be available. Upon termination of any policy if there is any cash value, the cash value shall be returned to the owner of the policy.

Statutory Authority

§§ 12.1-13 and 38.2-3313 of the Code of Virginia.

Historical Notes

Derived from Regulation 26, Case No. INS920077, Article V, § 3, eff. June 15, 1992.

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