38.2-3220 - Nonforfeiture requirements.
§ 38.2-3220. Nonforfeiture requirements.
A. For contracts issued on or after the operative date as defined in §38.2-3229, no contract of annuity, except as stated in § 38.2-3219, shall bedelivered or issued for delivery in this Commonwealth unless it contains insubstance the following provisions and statements, or correspondingprovisions and statements that in the opinion of the Commission are at leastas favorable to the contract holder, upon cessation of payment ofconsideration under the contract:
1. That upon cessation of payment of considerations under a contract, or uponthe written request of the contract holder, the insurer shall grant a paid-upannuity benefit on a plan stipulated in the contract of the value specifiedin §§ 38.2-3222 through 38.2-3225 and 38.2-3227.
2. If a contract provides for a lump sum settlement at maturity or at anyother time, a provision that upon surrender of the contract at or before thebeginning of any annuity payments, the insurer shall pay instead of anypaid-up annuity benefits a cash surrender benefit of the amount specified in§§ 38.2-3222, 38.2-3223, 38.2-3225 and 38.2-3227. The insurer may reserve theright to defer the payment of the cash surrender benefit for up to six monthsafter demand for payment with surrender of the contract after making writtenrequest and receiving the written approval of the Commission. The requestshall address the necessity and equitability to all contract holders of thedeferral.
3. A statement of the mortality table and interest rates used in calculatingany minimum paid-up annuity, cash surrender or death benefits that areguaranteed under the contract, together with sufficient information todetermine the amounts of those benefits.
4. That any paid-up annuity, cash surrender or death benefits that may beavailable under the contract are not less than the minimum benefits requiredby any statute of the state in which the contract is delivered and anexplanation of how the existence of any additional amounts credited by theinsurer to the contract, any indebtedness to the insurer on the contract orany prior withdrawals from or partial surrenders of the contract affects thebenefits.
B. Notwithstanding the requirements of this subsection, any deferred annuitycontract may provide that if no considerations have been received under acontract for a period of two full years and the portion of the paid-upannuity benefit at maturity on the plan stipulated in the contract arisingfrom considerations paid prior to that period would be less than $20 monthly,the insurer may at its option terminate the contract by payment in cash ofthe then present value of the portion of the paid-up annuity benefit,calculated on the basis of the mortality table, if any, and interest ratespecified in the contract for determining the paid-up annuity benefit. Thispayment shall relieve the insurer of any further obligation under thecontract.
(1979, c. 437, § 38.1-470.1; 1986, c. 562; 2004, c. 313.)