20-1207

20-1207. Dividends

There shall be a provision in participating policies that, beginning not later than
the end of the third policy year, the insurer shall annually ascertain and apportion the
divisible surplus, if any, that will accrue on the policy anniversary or other dividend
date specified in the policy provided the policy is in force and all premiums to that
date are paid. Except as provided in this section, any dividend so apportioned shall, at
the option of the party entitled to elect such option, be either payable in cash or
applied to any one of such other dividend options as may be provided by the policy. If
any such other dividend options are provided, the policy shall further state which option
shall be automatically effective if the party has not elected some other option. If the
policy specifies a period within which the other dividend option may be elected, such
period shall be not less than thirty days following the date on which the dividend is due
and payable. The annually apportioned dividend shall be deemed to be payable in cash
even though the policy provides that payment of the dividend is to be deferred for a
specified period, but such period shall not exceed six years from the date of
apportionment and interest shall be added to the dividend at a specified rate. If a
participating policy provides that the benefit under any paid-up nonforfeiture provision
is to be participating, it may provide that any divisible surplus apportioned while the
insurance is in force under the nonforfeiture provision shall be applied in the manner
set forth in the policy.