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2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3709. Annuity contracts—Assignability of rights

§ 3709. Annuity contracts—Assignability of rights
(a) The benefits, rights, privileges, and options which under any annuity contract heretofore or hereafter issued are due or prospectively due the annuitant, shall not be subject to execution nor shall the annuitant be compelled to exercise any such rights, powers, or options, nor shall creditors be allowed to interfere with or terminate the contract, except:
(1) As to considerations paid for any such annuity with intent to defraud creditors, with interest thereon, and of which the creditor has given the insurer written notice at its home office prior to the making of the payments to the annuitant out of which the creditor seeks to recover. Any such notice shall specify the amount claimed or such facts as will enable the insurer to ascertain such amount and shall set forth such facts as will enable the insurer to ascertain the annuity contract, the annuitant and the payments sought to be avoided on the ground of fraud.
(2) The total exemption of benefits presently due and payable to any annuitant periodically or at stated times under all annuity contracts under which he or she is an annuitant, shall not at any time exceed $350.00 per month for the length of time represented by such installments, and that such periodic payments in excess of $350.00 per month shall be subject to garnishee execution.
(3) If the total benefits presently due and payable to any annuitant under all annuity contracts under which he or she is an annuitant, shall at any time exceed payment at the rate of $350.00 per month, then the court may order such annuitant to pay to a judgment creditor or apply on the judgment, in installments, such portion of such excess benefits as to the court may appear just and proper, after due regard for the reasonable requirements of the judgment debtor and his or her family if dependent upon him or her, as well as any payments required to be made by the annuitant to other creditors under prior court orders.
(b) If the contract so provides, the benefits, rights, privileges, or options accruing under such contract to a beneficiary or assignee shall not be transferable nor subject to commutation, and if the benefits are payable periodically or at stated times, the same exemptions and exceptions contained herein for the annuitant, shall apply with respect to such beneficiary or assignee. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 9).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3710. Power to contract—Purchase of annuities or insurance by minors

§ 3710. Power to contract—Purchase of annuities or insurance by minors
(a) Any person of competent legal capacity may contract for insurance.
(b) Any minor not less than 15 years of age, notwithstanding his or her minority, may contract for or own annuities or insurance or affirm by novation or otherwise preexisting contracts for annuities or insurance upon his or her own life, body, health, property, liabilities, or other interests, or on the person of another in whom the minor has an insurable interest. Such a minor shall, notwithstanding such minority, be deemed competent to exercise all rights and powers with respect to or under (i) any contract for annuity or for insurance upon his or her own life, body or health, or (ii) any contract such minor effected upon his or her own property, liabilities or other interests, or (iii) any contract effected or owned by the minor, on the person of another, as might be exercised by a person of full legal age, and may at any time surrender his or her interest in any such contracts and give valid discharge for any benefit accruing or money payable thereunder. Such a minor shall not, by reason of his or her minority, be entitled to rescind, avoid, or repudiate the contract, nor to rescind, avoid, or repudiate any exercise of a right or privilege thereunder, except that such a minor not otherwise emancipated, shall not be bound by any unperformed agreement to pay by promissory note or otherwise, any consideration or premium on any such annuity or insurance contract.
(c) Any annuity contract or policy of life or disability insurance procured by or for a minor under subsection (b) of this section shall be made payable either to the minor or his or her estate or to a person having an insurable interest in the life of the minor. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 10).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3711. Charitable life gifts

§ 3711. Charitable life gifts
(a) A life insurance contract may be entered into in which a person paying the consideration for such insurance has no insurable interest in the life of the individual insured, provided that a charitable, benevolent, educational, or religious institution or its agency or any other organization that qualifies under Section 501(c)(3) of the Internal Revenue Code is irrevocably designated as the owner and beneficiary of the contract.
(b) In making such a contract, both the owner and the insured shall make and sign the joint application. The person paying the premium shall irrevocably designate a charitable, benevolent, educational, or religious institution, or an agency of such an institution or any other organization that qualifies under Section 501(c)(3) of the Internal Revenue Code, as the irrevocable owner and beneficiary of such contract.
(c) If a prospective insured applies jointly for a life insurance policy which irrevocably names a 501(c)(3) organization or nonprofit as owner and beneficiary then, at the time of such joint application, an insurable interest is created for the entity in the prospective insured’s life. Before an application may be made for such a policy, the insurer shall provide the prospective insured with a written disclosure to remind the prospective insured to consider his or her current state of health and to consult with a tax advisor or estate planner.
(d) Nothing in this section shall prohibit any combination of the applicant, premium payer, owner, and beneficiary from being the same person.
(e) This section does not alter the insurable interest requirements of any other law. (Added 2003, No. 20, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3712. Payment discharges insurer

§ 3712. Payment discharges insurer
Whenever the proceeds of or payments under a life or disability insurance policy or annuity contract heretofore or hereafter issued become payable in accordance with the terms of such policy or contract, or the exercise of any right or privilege thereunder, and the insurer makes payment thereof in accordance therewith or in accordance with any written assignment thereof, the person then designated as being entitled thereto shall be entitled to receive such proceeds or payments and to give full acquittance therefor, and such payments shall fully discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that such other person claims to be entitled to such payment or some interest in the policy or contract. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 12).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3713. Assignment of insurance policies or annuity contracts

§ 3713. Assignment of insurance policies or annuity contracts
(a) A policy of insurance or an annuity contract may be assignable or not assignable, as provided by its terms. Subject to its terms relating to assignability, any such policy or contract, whether heretofore or hereafter issued, under the terms of which the beneficiary may be changed upon the sole request of the insured or owner, may be assigned either by pledge or transfer of title, by an assignment executed by the insured or owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any such assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy or contract in accordance with the terms of the assignment, until the insurer has received at its home office written notice of termination of the assignment or pledge, or written notice by or on behalf of some other person claiming some interest in the policy or contract in conflict with the assignment.
(b) Notwithstanding any provision of law, a person whose life is insured under any policy of group life insurance may make an assignment of all or any part of his or her incidents of ownership in the insurance, including any right to designate a beneficiary or beneficiaries thereunder and any right to have an individual policy issued in lieu of such group insurance coverage upon termination either of employment or of the policy of group life insurance, provided that the insurer and the group policy holder may prohibit or restrict such an assignment by appropriate policy provisions. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 13); amended 1971, No. 58.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3714. Life policy as separate property of married woman

§ 3714. Life policy as separate property of married woman
Every policy of life insurance heretofore or hereafter made payable to or for the benefit of a married woman, or after its issue heretofore or hereafter assigned, transferred or in any way made payable to a married woman, or to any person in trust for her or for her benefit, whether procured by herself, her husband, or any other person, and whether the assignment or transfer is made by her husband, or by any other person, shall, unless contrary to the terms of the policy, inure to her separate use and benefit. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 14).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3715. Forms for proof of loss to be furnished

§ 3715. Forms for proof of loss to be furnished
An insurer shall furnish upon written request of any person claiming to have a loss under an insurance policy issued by such insurer, forms of proof of loss for completion by such person, but such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 15).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3716. Claims administration not waiver

§ 3716. Claims administration not waiver
Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder:
(1) Acknowledgment of the receipt of notice of loss or claim under the policy.
(2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted.
(3) Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 16).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3717. Annuity contracts

§ 3717. Annuity contracts
A company authorized to transact the business of life insurance may grant annuities. An annuity is a contract issued for a valuable consideration under which the obligations are assumed with respect to periodic payments for a specified term or terms or where the making or continuance of all or of some of such payments, or the amount of any such payments, is dependent upon the continuance of human life. Such a contract which includes extra benefits of the kind set forth in subdivisions 3301(a)(1) and (2) of this title relating to life and health insurance shall nevertheless be deemed to be an annuity if such extra benefits constitute a subsidiary or incidental part of the entire contract. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 17).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3718. Annuity considerations

§ 3718. Annuity considerations
Insurers shall be subject to taxation according to the provisions of Title 32; provided, however, that no tax shall be due or payable as to considerations received for annuity contracts. Payment by an insurer of the tax as in Title 32 required shall be in lieu of all taxes imposed by the State upon premiums or upon income, and of franchise, privilege or other taxes measured by income of the insurer. The provisions of this section shall not be modified or repealed by any law of general application hereafter enacted unless expressly referred to or expressly repealed therein. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 1, § 18).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3718a. Charitable gift annuities

§ 3718a. Charitable gift annuities
(a) Charitable gift annuity is not insurance. The issuance of a charitable gift annuity by a qualified charitable organization does not constitute engaging in the business of insurance in this State.
(b) Not unfair or deceptive trade practice. The issuance of a charitable gift annuity does not constitute a violation of section 4724 of this title. (Added 2001, No. 37, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3719. Valuation of bonds, etc

§ 3719. Valuation of bonds, etc
Bonds or other evidences of debt having a fixed term and rate held by a life insurance company, assessment life association, or fraternal beneficiary association authorized to do business in this State, if amply secured and not in default as to principal and interest, shall be valued as follows: At their market value on December 31 preceding the filing of its return with the Commissioner; or, at the option of the company, as follows: If purchased at par, at the par value; if purchased above or below par, on the basis of the purchase price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made; provided, that the purchase price shall in no case be taken at a higher figure than the actual market value at the time of purchase; and provided, further, that the Commissioner shall have full discretion in determining the method of calculating values according to the foregoing rule. A company having selected one of the foregoing methods of valuation shall not change such method without the consent and approval of the Commissioner. At any time, in his or her discretion, the Commissioner may require any insurance corporation, other than a life insurance corporation, authorized to do business in this State, to value its bonds or other evidences of debt in accordance with the foregoing rule. Provided, however, that any valuation method used shall be consistent with the valuation method promulgated by the National Association of Insurance Commissioners. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 3, § 1); amended 1993, No. 12, § 12, eff. April 26, 1993.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3732. “Industrial life insurance” defined

§ 3732. “Industrial life insurance” defined
For the purposes of this subchapter “industrial life insurance” is that form of life insurance written under policies of face amount of $1,000.00 or less bearing the words “industrial policy” imprinted on the face thereof as part of the descriptive matter, and under which premiums are payable monthly or more often. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 2, § 14).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3733. Excluded or restricted coverage in life insurance policies

§ 3733. Excluded or restricted coverage in life insurance policies
A clause in any policy of life insurance providing that such policy shall be incontestable after a specified period shall preclude only a contest of the validity of the policy, and shall not preclude the assertion at any time of defenses based upon provisions in the policy which exclude or restrict coverage, whether or not such restrictions or exclusions are excepted in such clause. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 2, § 15).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3734. Incontestability and limitation of liability after reinstatement

§ 3734. Incontestability and limitation of liability after reinstatement
(a) A reinstated policy of life insurance or annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestability after original issuance.
(b) When any life insurance policy or annuity contract is reinstated, such reinstated policy or contract may exclude or restrict liability to the same extent that such liability could have been or was excluded or restricted when the policy or contract was originally issued, and such exclusion or restriction shall be effective from the date of reinstatement. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 2, § 16).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3735. Application as evidence

§ 3735. Application as evidence
(a) No application for the issuance of any life or disability insurance policy or annuity contract shall be admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy or contract when issued. This provision shall not apply to industrial life insurance policies.
(b) If any policy of life or disability insurance delivered in this State is reinstated or renewed, and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall, within 15 days after receipt of such request at its home office, deliver or mail to the person making such request a copy of such application reproduced by any legible means. If such copy is not so delivered or mailed after having been so requested, the insurer shall be precluded from introducing the application in evidence in any action or proceeding based upon or involving the policy or its reinstatement or renewal. In the case of such a request from a beneficiary, the time within which the insurer is required to furnish a copy of such application shall not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary’s vested interest in the policy or contract. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 2, § 17).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3736. Representations in applications

§ 3736. Representations in applications
All statements and descriptions in any application for a life insurance policy or annuity contract, by or in behalf of the insured or annuitant, shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless either:
(1) fraudulent; or
(2) material either to the acceptance of the risk, or to the hazard assumed by the insurer; or
(3) the insurer in good faith would either not have issued the policy or contract, or would not have issued it at the same premium rate, or would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise. (Added 1967, No. 344 (Adj. Sess.), § 1 (ch. 2, subch. 2, § 18).)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3761. Definitions

§ 3761. Definitions
As used in this subchapter, “operative date of the Valuation Manual” means January 1 of the first calendar year that the Valuation Manual as defined in subchapter 4a of this chapter is effective. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3763. Computation of cash surrender value

§ 3763. Computation of cash surrender value
(a) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by section 3762 of this subchapter, shall be an amount not less than the excess, if any, of the present value, on the anniversary, of the future guaranteed benefits that would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of:
(1) the then present value of the adjusted premiums as defined in sections 3765-3768 of this subchapter, corresponding to premiums which would have fallen due on and after the anniversary; and
(2) the amount of any indebtedness to the company on the policy.
(b) Notwithstanding subsection (a) of this section, for a policy issued on or after the operative date of section 3768 of this subchapter that provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in subsection (a) of this section shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without the rider or supplemental policy provision and the cash surrender value as defined in subsection (a) of this section for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.
(c) For a family policy issued on or after the operative date of section 3768 of this subchapter that defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse turns 71 years of age, the cash surrender value referred to in subsection (a) of this section shall be an amount not less than the sum of the cash surrender value for an otherwise similar policy issued at the same age without term insurance on the life of the spouse and the cash surrender value as defined in subsection (a) of this section for a policy that provides only the benefits otherwise provided by term insurance on the life of the spouse.
(d) A cash surrender value available within 30 days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required under section 3762 of this subchapter, shall be an amount not less than the present value, on the anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3764. Computation of paid-up nonforfeiture benefits

§ 3764. Computation of paid-up nonforfeiture benefits
A paid-up nonforfeiture benefit available under a policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of the anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value that would have been required under this subchapter in the absence of the condition that premiums shall have been paid for at least a specified period. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3766. Calculation of adjusted premiums; ordinary policies

§ 3766. Calculation of adjusted premiums; ordinary policies
(a) This section does not apply to ordinary policies issued on or after the operative date of section 3768 of this subchapter. In the case of ordinary policies issued on or after the operative date of this section, all adjusted premiums and present values referred to in this subchapter shall be calculated on the basis of the Commissioners’ 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that such rate of interest shall not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after April 12, 1973, and prior to January 1, 1980, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after January 1, 1980, except that for any single premium whole life or endowment insurance policy, a rate of interest not exceeding six and one-half percent per annum may be used, provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may not be more than those shown in the Commissioners’ 1958 Extended Term Insurance Table. For insurance issued on a substandard basis, the calculation of any adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the Commissioner.
(b) After the effective date of this section, any company may file with the Commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1966. After the filing of such notice, upon the specified date (which shall be the operative date of this section for that company), this section shall become operative with respect to the ordinary policies thereafter issued by the company. If a company makes no election, the operative date of this section for the company shall be January 1, 1966. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3767. Calculation of adjusted premiums; industrial policies

§ 3767. Calculation of adjusted premiums; industrial policies
(a) This section does not apply to industrial policies issued on or after the operative date of section 3768 of this subchapter. In the case of industrial policies issued on or after the operative date of this section, all adjusted premiums and present values referred to in this subchapter shall be calculated on the basis of the Commissioners’ 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits provided that such rate of interest shall not exceed three and one-half percent per annum, except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after April 12, 1973, and prior to January 1, 1980, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after January 1, 1980, except that for any single premium whole life or endowment insurance policy, a rate of interest not exceeding six and one-half percent per annum may be used. In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners’ 1961 Industrial Extended Term Insurance Table. For insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the Commissioner.
(b) After the effective date of this section, any company may file with the Commissioner a written notice of its election to comply with the provisions of this section after a specified date before January 1, 1968. After the filing of such notice, upon the specified date, which shall be the operative date of this section for that company, this section shall become operative with respect to the industrial policies thereafter issued by the company. If a company makes no election, the operative date of this section for the company shall be January 1, 1968. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3769. Nonforfeiture benefits for indeterminate premium plans

§ 3769. Nonforfeiture benefits for indeterminate premium plans
In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in sections 3762-3768 of this subchapter:
(1) The Commissioner must be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by sections 3762-3768 of this subchapter.
(2) The Commissioner must be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds.
(3) The cash surrender values and paid-up nonforfeiture benefits provided by such plan must not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this Standard Nonforfeiture Law for Life Insurance, as determined by subchapter 4a of this chapter and any rules adopted thereunder. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3770. Proration of values; net value of paid-up additions

§ 3770. Proration of values; net value of paid-up additions
Any cash surrender value and any paid-up nonforfeiture benefit available under a policy in the event of default in a premium payment due at any time other than on the policy anniversary shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in sections 3763-3768 of this subchapter may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall not be less than the amounts used to provide such additions. Notwithstanding the provisions of section 3763 of this subchapter, additional benefits shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required under this subchapter, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits. As used in this section, “additional benefits” means benefits payable:
(1) in the event of death or dismemberment by accident or accidental means;
(2) in the event of total and permanent disability;
(3) as reversionary annuity or deferred reversionary annuity benefits;
(4) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this subchapter would not apply;
(5) as term insurance in the life on a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child turns 26 years of age, is uniform in amount after the child’s age is one year of age, and has not become paid-up by reason of the death of a parent of the child; or
(6) as other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3772. Exceptions

§ 3772. Exceptions
(a) This subchapter shall not apply to:
(1) reinsurance;
(2) group insurance;
(3) pure endowment;
(4) an annuity or reversionary annuity contract;
(5) a term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of 20 years or less expiring before 71 years of age, for which uniform premiums are payable during the entire term of the policy;
(6) a term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in section 3765, 3766, 3767, or 3768 of this subchapter, is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, that provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of 20 years or less expiring before 71 years of age, for which uniform premiums are payable during the entire term of the policy;
(7) a policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in section 3763, 3764, 3765, 3766, 3767, or 3768 of this subchapter, exceeds two and one-half percent of the amount of insurance at the beginning of the same policy year; nor
(8) a policy delivered outside this State through an agent or other representative of the company issuing the policy.
(b) For purposes of determining the applicability of this subchapter, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3773. Effective date; applicability

§ 3773. Effective date; applicability
After the effective date of this subchapter, any company may file with the Commissioner a written notice of its election to comply with the provisions of this subchapter after a specified date before January 1, 1948. After the filing of such notice, then upon the specified date (which shall be the operative date for the company), this subchapter shall become operative with respect to the policies thereafter issued by the company. If a company makes no such election, the operative date of this subchapter for the company shall be January 1, 1948. (Added 2015, No. 63, § 2, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791a. Definitions

§ 3791a. Definitions
As used in this subchapter:
(1) “Accident and health insurance” means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the Valuation Manual.
(2) “Appointed actuary” means a qualified actuary who is appointed in accordance with the Valuation Manual to prepare the actuarial opinion required in subsection 3791c(b) of this subchapter.
(3) “Company” means an entity that:
(A) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and has at least one such policy in force or on claim; or
(B) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this State.
(4) “Deposit-type contract” means contracts that do not incorporate mortality or morbidity risks and as may be specified in the Valuation Manual.
(5) “Life insurance” means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the Valuation Manual.
(6) “NAIC” means the National Association of Insurance Commissioners.
(7) “Policyholder behavior” means any action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this subchapter including, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.
(8) “Principle-based valuation” means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with section 3791o of this subchapter as specified in the Valuation Manual.
(9) “Qualified actuary” means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the Valuation Manual.
(10) “Tail risk” means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.
(11) “Valuation Manual” means the manual of valuation instructions adopted by the NAIC as specified in this subchapter or as subsequently amended. (Added 2015, No. 63, § 1, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791h. Reserve valuation method—annuity and pure endowment benefits

§ 3791h. Reserve valuation method—annuity and pure endowment benefits
(a) This section shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as may be amended.
(b) Reserves according to the Commissioner’s annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by the contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of the contract, that become payable prior to the end of the respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in the contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of the contracts to determine nonforfeiture values. (Added 2015, No. 63, § 1.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791i. Minimum reserves

§ 3791i. Minimum reserves
(a) In no event shall a company’s aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after July 1, 1968 be less than the aggregate reserves calculated in accordance with the methods set forth in sections 3791g, 3791h, 3791k, and 3791l of this subchapter and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies.
(b) In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by section 3791c of this subchapter. (Added 2015, No. 63, § 1, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791j. Optional reserve calculation

§ 3791j. Optional reserve calculation
(a) Reserves for policies and contracts issued prior to July 1, 1968 may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by the laws in effect immediately prior to that date.
(b) Reserves for any category of policies, contracts or benefits established by the Commissioner, issued on or after July 1, 1968 may be calculated, at the option of the company, according to any standards that produce greater aggregate reserves for the category than those calculated according to the minimum standard provided herein, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be greater than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided in the policies or contracts.
(c) A company, which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this subchapter, may adopt a lower standard of valuation with the approval of the Commissioner, but not lower than the minimum provided herein; provided that, for the purposes of this section, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by section 3791c of this subchapter shall not be deemed to be the adoption of a higher standard of valuation. (Added 2015, No. 63, § 1, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791k. Reserve calculation—valuation net premium exceeding the gross premium charged

§ 3791k. Reserve calculation—valuation net premium exceeding the gross premium charged
(a) If in any contract year the gross premium charged by a company on a policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for the policy or contract, or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this section are those standards stated in sections 3791d and 3791f of this subchapter.
(b) For a life insurance policy issued on or after January 1, 1987, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for the excess and which provides an endowment benefit or a cash surrender value or a combination in an amount greater than the excess premium, the provisions of this section shall be applied as if the method actually used in calculating the reserve for the policy were the method described in section 3791g of this subchapter, ignoring the subsection 3791g(b) of this subchapter. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with section 3791g of this subchapter, including the subsection (b) of that section, and the minimum reserve calculated in accordance with this section. (Added 2015, No. 63, § 1, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791l. Reserve calculation—indeterminate premium plans

§ 3791l. Reserve calculation—indeterminate premium plans
In the case of a plan of life insurance that provides for future premium determination, the amounts of which are to be determined by the company based on then estimates of future experience, or in the case of a plan of life insurance or annuity that is of such a nature that the minimum reserves cannot be determined by the methods described in sections 3791g, 3791h, and 3791k of this subchapter, the reserves that are held under the plan shall:
(1) be appropriate in relation to the benefits and the pattern of premiums for that plan; and
(2) be computed by a method that is consistent with the principles of this Standard Valuation Law, as determined by rules adopted by the Commissioner. (Added 2015, No. 63, § 1, eff. June 17, 2015.)
2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 103 - Life Insurance Policies and Annuity Contracts › § 3791m. Minimum standard for accident and health insurance contracts

§ 3791m. Minimum standard for accident and health insurance contracts
For accident and health insurance contracts issued on or after the operative date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection 3791b(b) of this subchapter. For disability, accident and sickness, accident and health insurance contracts issued on or after July 1, 1968 and prior to the operative date of the Valuation Manual the minimum standard of valuation is the standard adopted by the Commissioner by rule. (Added 2015, No. 63, § 1, eff. June 17, 2015.)