Virginia Administrative Code
Title 14 - INSURANCE
Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE
Chapter 70 - RULES GOVERNING ACCELERATED BENEFITS PROVISIONS
Section 14VAC5-70-120 - Actuarial standards; financing options; effect on cash value; effect of outstanding policy loans
Universal Citation: 4 VA Admin Code 5-70-120
Current through Register Vol. 41, No. 3, September 23, 2024
A.
1. The insurer may require a premium charge
or cost of insurance charge for the accelerated benefit. These charges shall be
based on sound actuarial principles. In the case of group insurance, the
additional cost may also be reflected in the experience rating.
2. The insurer may pay a present value of the
face amount. The calculation shall be based on any applicable actuarial
discount appropriate to the policy design. The interest rate or interest rate
methodology used in the calculation shall be based on sound actuarial
principles and disclosed in the contract or actuarial memorandum. The maximum
interest rate used shall be no greater than the greater of:
a. The current yield on 90 day treasury
bills; or
b. The current maximum
statutory adjustable policy loan interest rate.
3. The insurer may accrue an interest charge
on the amount of the accelerated benefits. The interest rate or interest rate
methodology used in the calculation shall be based on sound actuarial
principles and disclosed in the contract or actuarial memorandum. The maximum
interest rate used shall be no greater than the greater of:
a. The current yield on 90 day treasury
bills; or
b. The current maximum
statutory adjustable policy loan interest rate.
The interest rate accrued on the portion of the lien which is equal in amount to the cash value of the contract at the time of the benefit acceleration shall be no more than the policy loan interest rate stated in the contract.
B.
1.
Except as provided in subsection B2 of this section, when an accelerated
benefit is payable, there shall be no more than a pro rata reduction in the
cash value based on the percentage of death benefits accelerated to produce the
accelerated benefit payment.
2.
Alternatively, the payment of accelerated benefits, any administrative expense
charges, any future premiums and any accrued interest can be considered a lien
against the death benefit of the policy or rider and the access to the cash
value may be restricted to any excess of the cash value over the sum of any
other outstanding loans and the lien. Future access to additional policy loans
could also be limited to any excess of the cash value over the sum of the lien
and any other outstanding policy loans.
C. When payment of an accelerated benefit results in a pro rata reduction in the cash value, the payment may not be applied toward repaying an amount greater than a pro rata portion of any outstanding policy loans.
Statutory Authority
§ 38.2-223 of the Code of Virginia.
Disclaimer: These regulations may not be the most recent version. Virginia may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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