Chap. 417.—An ACT to amend the Code of Virginia by adding to Chapter 169
thereof four new sections numbered 4251-c, 4251-d, 4251l-e, and 4251-f, relating
to policies of life insurance and providing provisions which must be contained
therein, and provisions which must not be contained therein, permitting pro-
visions required by the laws of the place where the company is organized to
be included, and requiring forms of policies to be filed with the State Cor-
poration Commission. [S B 328]

Approved March 30, 1936

1. Be it enacted by the General Assembly of Virginia, That the
Code of Virginia be amended by adding to chapter one hundred and
sixty-nine thereof four new sections numbered forty-two hundred and
fifty-one-c, forty-two hundred and fifty-one-d, forty-two hundred
and fifty-one-e and forty-two hundred and fifty-one-f, which new
sections shall read as follows:

Section 4251-c. Standard Provisions Required in Life Insurance
Policies —(a) From and after the first day of January, nineteen
hundred and thirty-seven, no policy of life insurance, other than
industrial insurance, 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:

First. A provision that all premiums after the first premium shall
be payable 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.

Second. A provision that the insured is entitled to a 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 pay-
ment of the premium, during which period of grace the policy shall
continue in full force, but in case the policy becomes a claim during
the said period of grace before the overdue premium or the deferred
instalments of premium of the current policy year, if any, are paid,
the amount of such premium, or instalments, with interest on any
overdue premium, may be deducted from any amount payable under
the policy in settlement. Grace shall date from the premium-paying
date stated in the policy.

Third. A provision 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 not more than one year from
its date, except for non-payment of premiums and except for viola-
tion of the conditions of the policy relating to naval or military
service 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 statements 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.

Fourth. A provision that if it shall be found at any time before
final settlement 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, accord-
ing to the company’s published rate at date of issue.

Fifth. A provision 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 payment 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 such participation paid in cash, and if the
policy shall provide other dividend options, it shall further provide
which of said options shall be effective if the insured shall not elect
any such 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 surrendered policies, or to non-participating policies.

Sixth. A provision 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 reserve at the end of the
current policy year on the policy and on the dividend additions
thereto, if any, exclusive of the reserve on account of return premium
insurance and of total and permanent disability and additional acci-
dental death benefits, less a sum not more than two and one-half per
centum of the amount insured by the policy and of any dividend addi-
tions thereto (the policy to specify the mortality table and rate of
interest adopted for computing such reserve) ; and that the company
will deduct from such loan value any existing indebtedness on the
policy 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; which provision may further provide that
such loan may be deferred for not exceeding three months after the
application therefor is made. A company may, in lieu of the pro-
vision hereinabove permitted for the deduction from a loan on the
policy of a sum not more than two and one-half per centum of the
amount insured by the policy and of any dividend additions thereto,
insert in the policy a provision that one-fifth of the said reserve may
be deducted in case of a loan under the policy, or may provide therein
that the deduction may be the said two and one-half per centum or
the one-fifth of the said reserve at the option of the company. 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,

Seventh. A provision that in event of default in premium pay-
ments, after premiums shall have been paid for three full years (any
premium paid for the insured under any policy provision not being
considered as in default), the insured shall be entitled to a stipulated
form of insurance, effective from the due date of the defaulted
premium, the net value of which shall be at least equal to the reserve
at the date of default on the policy and on dividend additions thereto,
if any, exclusive of the reserve on account of return premium insur-
ance and on total and permanent disability and additional accidental
death benefits less a sum not more than two and one-half per centum
of the amount insured by the policy and of any dividend additions
thereto (the policy to specify the mortality table and rate of interest
adopted for computing such reserve), and less any existing indebted-
ness to the company on or secured by the policy; a company may,
however, in lieu of the provision herein permitted for the deduction
from the reserve of a sum not more than two and one-half per
centum of the amount insured by the policy, and of any dividend
additions thereto, insert in the policy a provision that one-fifth of
said reserve may be deducted, or may provide therein that a deduction
may be made of said two and one-half per centum or one-fifth of said
reserve, at the option of the company; the policy may be surrendered
to the company at its home office within one month of the due date
of the defaulted premium for a specific cash value at least equal to
the sum which would otherwise be available for the purchase of
insurance as aforesaid; and provided, further, that the company may
defer payment for not more than three months after the application
therefor is made.

Eighth. A provision specifying the options to which the policy-
holder is entitled in the event of default in a premium payment after
three full annual premiums shall have been paid, and providing which
of said options shall be effective if the insured shall not elect any
such option on or before the expiration of the period of grace
allowed for the payment of the premium. A provision may also be
inserted in the policy that in event of default in a premium payment
before such options become available the reserve on any dividend
additions then in force may at the option of the company be paid in
cash or applied as a net premium to the purchase of paid-up term
nel for any amount not in excess of the face of the original
policy.

Ninth. 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.

Tenth. A provision that if in event of default in premium pay-
ments 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 shall not
have been surrendered to the company and canceled, 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 reinstatement of any other indebted-
ness to the company upon said policy, with interest on said premium
and indebtedness at a rate not exceeding six per centum per annum
payable annually, and that such reinstated policy shall be contestable,
on account of fraud or misrepresentation of material facts pertaining
to the reinstatement, for the same period after reinstatement as pro-
vided in the policy with respect to original issue.

Eleventh. A provision 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.

Twelfth. A table showing the amount of instalments, if any, in
which the policy may provide its proceeds may be payable.

Thirteenth. Title on the face and on the back of the policy,
briefly and accurately describing its form.

(b) Any of the foregoing provisions or portions thereof not applicable
to single premium policies shall to that extent not be incorporated
therein; and any policy of life insurance may be issued or delivered
in this State which in the opinion of the State Corporation Com-
mission contains provisions on any one or more of the several fore-
going requirements more favorable to the policyholder than herein-
before required.

(c) The provisions of this section shall not apply to policies of
reinsurance, or to policies issued or granted in exchange for lapsed
or surrendered policies or to group insurance, nor to fraternal benefit
societies as defined and regulated in chapter one hundred and seventy-
one of the Code of Virginia. The provisions of sub-sections seventh
and eighth shall apply to policies of term insurance only if the term
is for more than twenty years.

Section 4251-d. Provisions Prohibited—On and after the first
day of January, nineteen hundred and thirty-seven, no policy of life
insurance other than industrial insurance, annuities and pure endow-
ments 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 if it
contains any of the following provisions:

First. A provision limiting the time within which any action at
law or in equity may be commenced to less than one year after the
cause of action shall accrue.

Second. A provision by which the policy shall take effect or pur-
port to take effect at an age lower than the actual age of the appli-
cant at the date of the original written application for insurance,
such actual age being considered the age as of nearest birthday.

Third. A provision for any mode of settlement at maturity of less
value than the amount insured on the face of the policy plus dividend
additions, if any, less any indebtedness to the company on or secured
by the policy, and less any premium, or portion thereof, that may
by the terms of the policy be deducted. This paragraph shall not
apply to any nonforfeiture provision which employs the cash value
less indebtedness, if any, to purchase paid-up or extended insurance,
and shall not prohibit the issuance of policies providing for a limita-
tion in the amount payable under certain specified conditions.

Fourth. A provision for forfeiture of the policy for failure to
repay any loan on the policy, or to pay interest on such loan, while
the total indebtedness on the policy, including interest, is less than
the loan value thereof.

Fifth. A provision to the effect that the agent soliciting the
insurance is the agent of the person insured under said policy, or
making the acts or representations of such agent binding upon the
person so insured under said policy.

Section 4251-e. When Provisions Required by the Laws of Other
States May be Included in Policies—Notwithstanding anything in
this chapter to the contrary, the policies of a life insurance company
not organized under the laws of this State may contain any provisions
which the law of the State, territory, district, or country under which
the company is organized prescribes shall be in such policies when
issued in this State, and the policies of a life company organized
under the law of this State, may, when issued or delivered in any
other state, territory, district, or country, contain any provisions
required by the laws of the state, territory, district, or country in
which the same are issued or delivered.

Section 4251-f. Life Insurance Policy Forms to be Filed With
State Corporation Commission.—No policy of life insurance shall be
issued or delivered in this State until the form of the same has been
filed with the State Corporation Commission, nor after written notice
from the said commission, given within thirty days of such filing to
the company filing such form, showing wherein the form of such
policy does not comply with the requirements of the laws of this
State.