Which of the following statements is correct about a policy loan against a life insurance contract

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Article 1. Life Insurance Policies; Annuities.

A. No individual life insurance policy shall be delivered or issued for delivery in this Commonwealth unless it contains in substance all of the requirements prescribed in §§ 38.2-3301 through 38.2-3315 of this article.

B. As used in this article, "individual life insurance" means any life insurance other than group life insurance, industrial life insurance, annuities, credit life insurance, and pure endowments, with or without return of premiums or of premiums and interest. However, for the purposes of § 38.2-3308, "policy" includes annuity contracts that provide for policy loans and certificates issued by a fraternal benefit society.

C. The requirements of §§ 38.2-3300 through 38.2-3315 shall not apply to policies of reinsurance or to policies issued or granted in exchange for lapsed or surrendered policies.

Code 1950, §§ 38-371, 38-373; 1952, c. 317, §§ 38.1-390, 38.1-405; 1977, c. 174; 1986, c. 562.

No individual life insurance policy shall be delivered or issued for delivery in this Commonwealth unless it has printed on it a notice stating in substance that if, during a ten-day period from the date the policy is delivered to the policyowner, the policy is surrendered to the insurer or its agent with a written request for cancellation, the policy shall be void from the beginning and the insurer shall refund any premium paid for the policy. Nothing in this section shall prohibit an insurer from extending the right to examine period to more than ten days if the period is specified in the policy.

1977, c. 174, § 38.1-390.1; 1986, c. 562.

A. For purposes of determining the commencement of the period during which the owner of an individual life insurance policy may exercise any statutory right to examine, surrender, or return the policy for cancellation, the date of delivery of the policy shall be:

1. The date of the signed receipt of delivery if the life insurance policy is (i) delivered by United States mail or other postal delivery system, or (ii) physically delivered to the owner by a representative of the insurer; or

2. The date of electronic transmission of the policy, provided the electronic transmission has been effected in accordance with this title and any other state or federal laws governing the electronic transmission of documents and information. The insurer shall retain evidence of electronic transmittal for the entire period of the life insurance policy.

B. If an insurer does not deliver a policy by the means set forth in subsection A, the burden of proof shall be on the insurer to establish that the policy was delivered, in the event of a dispute with the owner of the policy.

C. Notwithstanding subsections A and B, a policy shall be deemed to have been received by the owner of the policy as of the date of its issuance if six months have passed since its issuance and the owner of the policy has paid the premiums pursuant to the contract for those six months.

2009, c. 299.

Each individual life insurance policy shall have a provision that all premiums after the first premium shall be payable in advance.

Code 1950, § 38-371(1); 1950, p. 179; 1952, c. 317, § 38.1-391; 1986, c. 562.

A. Each individual life insurance policy shall contain a provision that the insured is entitled to a grace period of not less than thirty-one days within which the payment of any premium after the first premium may be made, subject at the insurer's option to an interest charge that is not to exceed six percent per year for the number of days of grace elapsing before the payment of the premium.

B. The provision shall also state that during the grace period the policy shall continue in full force, but if a claim arises under the policy during the grace period before the overdue premium or any overdue premium installment is paid, the amount of any earned overdue premium or installment through the policy month of death with interest may be deducted from any amount payable under the policy in settlement. The grace period shall start on the premium payment due date.

Code 1950, § 38-371(2); 1950, p. 179; 1952, c. 317, § 38.1-392; 1986, c. 562.

A. Each individual life insurance policy shall contain a provision that the policy, or the policy and the application for the policy if a copy of the application is endorsed upon or attached to the policy when issued or delivered, shall constitute the entire contract between the parties.

B. The provision shall also state that:

1. All statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties; and

2. No statement shall be used in defense of a claim under the policy unless it is contained in a written application that is endorsed upon or attached to the policy when issued or delivered.

C. As used in this section, "policy" shall include any riders, endorsements or amendments.

Code 1950, § 38-371(3); 1950, p. 179; 1952, c. 317, § 38.1-393; 1986, c. 562; 1990, c. 223.

A. Each individual life insurance policy shall contain a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured for two years from its date of issue except for nonpayment of premiums.

B. Provisions relating to benefits in event of disability, and provisions granting additional insurance specifically against death by accident or accidental means, may be excepted in the incontestability provision.

Code 1950, § 38-371(3); 1950, p. 179; 1952, c. 317, § 38.1-394; 1986, c. 562.

Each individual life insurance policy shall contain a provision that if, at any time before final settlement under the policy, the age of the insured, or the age of any other person if considered in determining the premium, is found to have been misstated, the amount payable under the policy shall equal the amount that the premium would have purchased at the insured's or other person's correct age at the time the policy was issued.

Code 1950, § 38-371(4); 1950, p. 179; 1952, c. 317, § 38.1-395; 1986, c. 562.

A. Each participating individual life insurance policy shall contain a provision that the policy shall participate in the surplus of the insurer. Any policy containing a 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. The policyowner under any annual dividend policy shall have the right each year to have the dividend arising from the participation paid in cash. If the policy provides other dividend options, it shall also state which of the options shall be effective if the insured does not elect any option on or before the expiration of the grace period allowed for the payment of the premium.

B. This section 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.

Code 1950, § 38-371 (5); 1950, p. 180; 1952, c. 317, § 38.1-396; 1986, c. 562.

A. Each individual life insurance policy shall contain a provision that after the policy has been in force three policy years the insurer shall at any time, while the policy is in force other than as extended term insurance, advance, on proper assignment or pledge of the policy and on the sole security of the policy, a sum equal to or, at the option of the policyowner, less than the amount required by § 38.2-3218, under the conditions specified by that section.

B. Each individual life insurance policy issued after July 1, 1975, and prior to July 1, 1981, shall contain only one of the following policy loan interest rate provisions:

1. A provision that a policy loan shall bear interest at a specified rate not exceeding eight percent per year; or

2. A provision that all loans under the policy, including outstanding loans, shall bear interest at a variable rate not exceeding eight percent per year, specified from time to time by the insurer. The effective date of any increase in the variable rate shall be not less than one year after the effective date of the establishment of the previous rate. If the interest rate is increased, the amount of the increase shall not exceed one percent per year. The variable rate may be decreased without restriction as to amount or frequency. With respect to policies providing for a variable rate, the insurer shall give notice of:

a. The variable rate currently effective when a loan is made and when notification of interest due is furnished;

b. Any increase in the variable rate at least thirty days before the effective date for any loans outstanding forty days before that date; and

c. The increase at the time a loan is made for any loans made during the forty days before the effective date of the increase. The notice shall be given as directed by the policyowner and any assignee as shown on the records of the insurer at its home office.

C. 1. Each individual life insurance policy issued after July 1, 1981, shall contain a policy loan interest rate provision permitting either:

a. A maximum fixed interest rate of not more than eight percent per year; or

b. An adjustable maximum interest rate established from time to time by the insurer as permitted by law.

2. The interest rate charged on a policy loan made under subdivision 1 b of this subsection shall not exceed the greater of:

a. The Published Monthly Average for the calendar month ending two months before the date on which the rate is determined; or

b. The rate used to compute the cash surrender values under the policy during the applicable period plus one percent per year.

3. For the purposes of this subsection, the "Published Monthly Average" means:

a. Moody's Corporate Bond Yield Average -- Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto; or

b. If the Moody's Corporate Bond Yield Average -- Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the Commission.

4. If the maximum interest rate is determined pursuant to subdivision 1 b of this subsection, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.

5. The maximum interest rate for each policy shall be determined at regular intervals at least once every twelve months, but not more frequently than once every three months. At the intervals specified in the policy:

a. The rate being charged may be increased whenever the increase as determined under subdivision 2 of this subsection would increase that rate by one-half percent or more per year;

b. The rate being charged shall be reduced whenever the reduction as determined under subdivision 2 of this subsection would decrease that rate by one-half percent or more per year.

6. The insurer shall:

a. Notify the policyowner at the time a cash loan is made of the initial interest rate;

b. Notify the policyowner of the initial interest rates on a premium loan as soon as it is reasonably practical to do so after making the loan. Notice need not be given to the policyowner when a further premium loan is added, except as provided in subdivision 6 c below;

c. Send reasonable advance notice of any increase in the rates to policyowners with loans; and

d. Include the substance of the pertinent provisions of subdivisions 1 and 4 of this subsection in the notices required above.

7. No policy shall terminate in a policy year as the sole result of a change in the interest rate during that policy year, and the insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.

8. The substance of the pertinent provisions of subdivisions 1 and 4 of this subsection shall be set forth in the policies to which they apply.

9. For the purposes of this section:

a. The interest rate on policy loans permitted under this section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.

b. The term "policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the insurer as they fell due.

c. The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts that provide for policy loans.

10. No other provision of law, including Chapter 3 (§ 6.2-300 et seq.) of Title 6.2, shall apply to policy loan interest rates unless made specifically applicable to the rates.

D. The insurer may deduct from the loan value any indebtedness not already deducted in determining the value of any unpaid balance of the premium for the current policy year and any interest that may be allowable on the loan to the end of the current policy year. 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.

E. A policy loan provision shall not be required in term insurance policies.

1981, c. 46, § 38.1-397.1; 1986, c. 562.

A. Each individual life insurance policy shall contain a provision for nonforfeiture benefits. The provision shall specify the options to which the policyowner is entitled, in accordance with the requirements of § 38.2-3202.

B. Each individual life insurance policy shall have a provision for cash surrender values in accordance with the requirements of § 38.2-3203.

Code 1950, § 38-371(7), (8); 1950, p. 180; 1952, c. 317, § 38.1-398; 1986, c. 562.

Each individual life insurance policy shall contain a table showing the loan values in figures, line by line. The table shall also show any options 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 it is less than twenty years.

Code 1950, § 38-371(9); 1950, p. 180; 1952, c. 317, § 38.1-399; 1986, c. 562.

Each individual life insurance policy shall have a provision that in the event of default in premium payments, if (i) the value of the policy has been applied automatically to the purchase of other insurance as provided for in this article, (ii) the insurance is in force, and (iii) the original policy has not been surrendered to the insurer and cancelled, the policy may be reinstated within three years from default, upon:

1. Evidence of insurability satisfactory to the insurer;

2. Payment of premiums in arrears with interest at a rate not exceeding six percent per year payable annually; and

3. The payment or reinstatement of any other indebtedness to the insurer upon the policy, with interest at the rate set forth in the policy for the indebtedness.

Code 1950, § 38-371(10); 1950, p. 180; 1952, c. 317, § 38.1-400; 1986, c. 562.

Each individual life insurance policy shall contain a provision that when a death claim arises under the policy, settlement shall be made upon receipt of due proof of death.

Code 1950, § 38-371(11); 1950, p. 181; 1952, c. 317, § 38.1-401; 1986, c. 562.

If an individual life insurance policy provides that the proceeds may be payable in installments that are determinable prior to the maturity of the policy, the policy shall have a table showing the guaranteed installments.

Code 1950, § 38-371(12); 1950, p. 181; 1952, c. 317, § 38.1-402; 1986, c. 562.

Each individual life insurance policy shall have a title on its face that shall briefly and accurately describe the nature and form of the policy.

Code 1950, § 38-371(13); 1950, p. 181; 1952, c. 317, § 38.1-403; 1986, c. 562.

A. Any of the requirements of §§ 38.2-3300 through 38.2-3314 not applicable to single premium, nonparticipating, term, variable, or flexible premium life insurance policies shall to that extent, as approved by the Commission, be appropriately modified or not be incorporated in these policies.

B. Any individual life insurance policy that, in the opinion of the Commission, contains provisions more favorable to the policyholder than those required by §§ 38.2-3300 through 38.2-3314, may be delivered or issued for delivery in this Commonwealth after approval by the Commission.

Code 1950, § 38-372; 1952, c. 317, § 38.1-404; 1976, c. 562; 1986, c. 562.

No individual life insurance policy shall be delivered or issued for delivery in this Commonwealth if it contains any provision:

1. 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 accrues;

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

3. For forfeiture of the policy for failure to repay any loan on the policy, or to pay interest on any policy loan, while the total indebtedness on the policy, including interest, is less than the loan value of the policy; or

4. To the effect that the agent soliciting the insurance is the agent of the person insured under the policy, or making the acts or representations of the agent binding upon the person insured under the policy.

Code 1950, § 38-386; 1952, c. 317, § 38.1-406; 1956, c. 417; 1986, c. 562.

Individual life insurance policies issued by any foreign or alien insurer for delivery in this Commonwealth may contain any provision that is prescribed by the laws of its domiciliary jurisdiction and that is not in conflict with the laws of this Commonwealth. Policies issued by any domestic insurer for delivery in any other jurisdiction may contain any provision required by the laws of that jurisdiction.

Code 1950, § 38-387; 1952, c. 317, § 38.1-407; 1986, c. 562.

What is correct about a policy loan against a life insurance contract?

Which among the following is true regarding life insurance contracts?

What is a policy loan?

What is the loan value of a life insurance policy?