CHAPTER 136

AN ACT to amend and reenact § 38-371 of the Code of Virginia
of 1950, relating to standard provisions required in life
insurance policies, and to amend the Code of Virginia of
1950 by adding thereto a new section numbered § 88-366.1,
providing a period during which reinstated life insurance
policies are contestable.

[ H 305 ]

Approved March 9, 1950
Be it enacted by the General Assembly of Virginia:
1. That § 38-371 of the Code of Virginia of 1950 be amended
and reenacted and the Code of Virginia be amended by adding
thereto a new section numbered § 38-366.1, so that the said
amended section and the said new section shall read as follows:

§ 38-371. Standard provisions required in life insurance
policies—No policy of life insurance, other than industrial in-
surance, annuities, and pure endowments with or without return
of premiums or of premiums and interest, shall be issued or
delivered in this State or be issued by a life insurance company
organized under the laws of this State, unless the same shall
contain in substance the following provisions:

(1) That all premiums after the first premium shall be pay-
able in advance, either at the home office of the company or to
an agent of the company, upon delivery of a receipt signed by
one or more of the officers who shall be designated in the policy;

(2) That the insured is entitled to a period of grace either
of thirty days or of one month within which the payment of
any premium after the first year may be made, subject at the
option of the company to an interest charge not in excess of six
per centum per annum for the number of days of grace elapsing
before the payment of the premium, during which period of
grace the policy shall continue in full force, but that in case the
policy becomes a claim during the period of grace before the
overdue premium or the deferred installments of premium of the
current policy year, if any, are paid, the amount of such pre-
mium, or installments, with interest on any overdue premium,
may be deducted from any amount payable under the policy in
settlement. The period of grace shall date from the premium-
paying date stated in the policy;

(3) That, except as otherwise expressly provided by law,
the policy shall constitute the entire contract between the parties
and shall be incontestable after it has been in force during the
lifetime of the insured for a period of * one year from its date,
except for nonpayment of premiums and except for violation
of the conditions of the policy relating to naval or military serv-
ice in time of war and, at the option of the company, provisions
relative to benefits in the event of total and permanent disability
and provisions which grant additional insurance specifically
against death by accident may also be excepted; that all state-
ments made by the insured shall, in the absence of fraud, be
deemed representations and not warranties; and that no such
statement or statements shall be used in defense of a claim
under the policy unless contained in a written application and
unless a copy of such statement or statements be endorsed upon
or attached to the policy when issued;

(4) That if it shall be found at any time before final settle-
ment under the policy that the age of the insured (or the age
of the beneficiary, if considered in determining the premium)
has been misstated, the amount payable under the policy shall
be such as the premium would have purchased at the correct
age, according to the company’s published rate at date of issue;

(5) That the policy shall participate in the surplus of the
company, and any policy containing provision for participation
at the end of the first policy year, and annually thereafter, may
also provide that each dividend shall be paid subject to the pay-
ment of the premiums for the next ensuing year; and the
insured under any annual dividend policy shall have the right
each year to have the dividend arising from the participation
paid in cash, and if the policy shall provide other dividend
options, it shall further provide which of the options shall be
effective if the insured shall not elect any option on or before
the expiration of the period of grace allowed for the payment
of the premium. This provision shall not apply to any form of
paid-up insurance, temporary insurance, or pure endowment
insurance, issued or granted in exchange for lapsed or surren-
dered policies, or to nonparticipating policies;

(6) That after the policy has been in force three full years,
the company at any time, while the policy is in force, will
advance, on proper assignment or pledge of the policy and on
the sole security thereof, at a specified rate of interest, a sum
equal to, or, at the option of the insured less than, the amount
required by § 38-385 under the conditions specified thereby;
and that the company will deduct from such loan value any
indebtedness not already deducted in determining the value and
any unpaid balance of the premium for the current policy year,
and may collect interest in advance on the loan to the end of
the current policy year. This provision shall not be required in
term insurance. The policy may further provide that if the
interest on the loan is not paid when due, it shall be added to
the existing loan, and shall bear interest at the same rate;

(7) For nonforfeiture benefits, specifying the options to
which the policyholder is entitled, in accordance with the re-
quirements of § 38-376;

(8) For cash surrender values in accordance with the
requirements of § 38-377;

(9) A table showing in figures the loan values and the
options, if any, available under the policy each year upon default
in premium payments, during at least the first twenty years of
the policy or during the premium-paying period if less than
twenty years;

(10) That if in event of default in premium payments the
value of the policy shall have been applied automatically to the
purchase of other insurance as provided for in this section, and
if such insurance shall be in force and the original policy shal]
not have been surrendered to the company and cancelled, the
policy may be reinstated within three years from such default,
upon evidence of insurability satisfactory to the company and
payment of arrears of premiums and the payment or reinstate-
ment of any other indebtedness to the company upon such policy,
with interest on such premiums and indebtedness at a rate not
exceeding six per centum per annum payable annually *

(11) That when a policy shall become a claim by the
death of the insured, settlement shall be made upon receipt of
due proof of death;

(12) A table showing the amount of installments, if any,
in which the policy may provide its proceeds may be payable;
and

(13) Title on the face and on the back of the policy, briefly
and accurately describing its form.

§ 38-366.1. Contestability of reinstated policy.—A rein-
stated policy of life insurance, whether heretofore or hereafter
issued, shall be contestable, on account of fraud or misrepresen-
tation of any material fact pertaining to the reinstatement con-
tained in a written application for reinstatement, or in any
written statement supplemental thereto, for the same period
after reinstatement as provided in the policy with respect to
original issue; this section shall not apply with respect to rein-
statements, effected prior to the effective date of this section,
of policies of life insurance for which standard provisions are
required by § 38-371.