This chapter, except as to § 2932 of this title, applies only to contracts of life insurance and annuities, other than reinsurance,
group life insurance and group annuities.
18 Del. C. 1953, § 2901; 56 Del. Laws, c. 380, § 1.;
§ 2902. "Annuity" defined.
For this title an "annuity" is a contract, issued by a person which is not classified by the Internal Revenue Service as exempt
from taxation under § 501(c)(3) of the Internal Revenue Code of 1954 [26 U.S.C. § 501(c)(3)], as subsequently amended, under
which obligations are assumed as to periodic payments for specific term or terms or where the making or continuance of all
or some such payments, or the amount of any such payment, is dependent upon continuance of human life. Such a contract which
includes extra benefits of kinds set forth in §§ 902 ("life insurance" defined) and 903 ("health insurance" defined) of this
title shall nevertheless be deemed to be an annuity if such extra benefits constitute a subsidiary or incidental part of the
entire contract.
18 Del. C. 1953, § 2902; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 155, § 1.;
§ 2903. "Industrial life insurance" defined.
For the purposes of this title "industrial life insurance" is that form of life insurance written under policies of face amount
of $1,000 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.
18 Del. C. 1953, § 2903; 56 Del. Laws, c. 380, § 1.;
§ 2904. Standard provisions required.
(a) No policy of life insurance, other than pure endowments with or without return of premiums or of premiums and interest,
shall be delivered or issued for delivery in this State unless it contains in substance all of the applicable provisions required
by §§ 2905-2916, inclusive, of this title. This section shall not apply to annuity contracts nor to any provision of a life
insurance policy, or contract supplemental thereto, relating to disability benefits or to additional benefits in the event
of death by accident or accidental means.
(b) Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance
granted in exchange for lapsed or surrendered policies shall to that extent not be incorporated therein.
18 Del. C. 1953, § 2904; 56 Del. Laws, c. 380, § 1.;
§ 2905. Payment of premiums.
There shall be a provision relating to the time and place of payment of premiums.
18 Del. C. 1953, § 2905; 56 Del. Laws, c. 380, § 1.;
§ 2906. Grace period.
There shall be a provision that a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30
days, or of 4 weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than
monthly shall be allowed within which the payment of any premium after the first may be made, during which period of grace
the policy shall continue in full force. The insurer may impose an interest charge not in excess of 6% per annum for the number
of days of grace elapsing before the payment of the premium, and, whether or not such interest charge is imposed, if a claim
arises under the policy during such period of grace, the amount of any premium due or overdue, together with interest and
any deferred installment of the annual premium, may be deducted from the policy proceeds. Grace shall date from the premium
due date specified in the policy.
18 Del. C. 1953, § 2906; 56 Del. Laws, c. 380, § 1.;
§ 2907. Entire contract.
There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if
a copy of such application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between
the parties and that all statements contained in the application shall, in the absence of fraud, be deemed representations
and not warranties.
18 Del. C. 1953, § 2907; 56 Del. Laws, c. 380, § 1.;
§ 2908. Incontestability.
There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured
for a period of not more than 2 years after its date of issue, except for (1) nonpayment of premiums, and (2) at the insurer's
option, provisions relating to benefits in the event of total and permanent disability and provisions granting additional
benefits specifically against death by accident or accidental means.
18 Del. C. 1953, § 2908; 56 Del. Laws, c. 380.;
§ 2909. Misstatement of age.
There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the
premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium
would have purchased at the correct age or ages.
18 Del. C. 1953, § 2909; 56 Del. Laws, c. 380, § 1.;
§ 2910. Dividends.
(a) 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 hereinafter provided, any dividends becoming payable shall at the option of the party entitled to elect such option be
either:
(1) Payable in cash; or
(2) 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 such party shall not have elected
some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall
be not less than 30 days following the date on which such dividend is due and payable. The annually apportioned dividend shall
be deemed to be payable in cash within the meaning of subdivision (1) above even though the policy provides that payment of
such dividend is to be deferred for a specified period, provided such period does not exceed 6 years from the date of apportionment
and that interest will be added to such dividend at a specified rate.
(b) Renewable term policies of 10 years or less may provide that the surplus accrued to such policies shall be determined
and apportioned each year after the second policy year and accumulated during each renewal period and that at the end of the
renewal period, on renewal of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for
the next succeeding renewal term in the reduction of premiums.
(c) In participating industrial life insurance policies, in lieu of the provision required in subsection (a) above, there
shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually
in the divisible surplus, if any, in the manner set forth in the policy.
(d) This section does not apply to insurance issued under nonforfeiture provisions of lapsed or surrendered policies.
18 Del. C. 1953, § 2910; 56 Del. Laws, c. 380, § 1.;
§ 2911. Policy loan.
(a) There shall be a provision that after 3 full years' premiums have been paid and after the policy has a cash surrender
value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment
or pledge of the policy and on the sole security thereof, at a rate of interest not exceeding 8% per annum (if payable in
advance such interest shall not exceed the rate of 7.4% per annum for policies issued prior to January 1, 1983) an amount
equal to or, at the option of the party entitled thereto, less than the loan value of the policy. Before approving any policy
provision providing for a rate of interest in excess of 6%, the Commissioner may require assurances by the insurer that the
holders of such policies will benefit from the increased earning of the insurer resulting from the use of such higher rates,
through the use of higher dividends or lower premiums, or both. The loan value of the policy shall be at least equal to the
cash surrender value at the end of the then current policy year, and the insurer may deduct, either from such loan value or
from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including
any interest then accrued but not due, any unpaid balance of the premium for the current policy year and interest on the loan
to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due
it shall then be added to the existing indebtedness and shall bear interest at the same rate and that if and when the total
indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then
the policy shall terminate and become void, but not until at least 30 days' notice has been mailed by the insurer to the last
address on record with the insurer of the insured or other policy owner and of any assignee of record at the insurer's home
office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any
premium to the insurer, for 6 months after application therefor. Such provision shall also contain a table showing in figures
the loan values each year during the first 20 years of the policy or during the term of the policy whichever is shorter. The
policy, at the insurer's option, may provide for an automatic premium loan.
(b)(1) Policies issued on or after January 1, 1983, shall provide for policy loan interest rates as follows:
a. A provision permitting a maximum interest rate of not more than 8% per annum; or
b. A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted
by law.
(2) The rate of interest charged on a policy loan made under paragraph (1)b. of this subsection shall not exceed the higher
of the following:
a. The published monthly average for the calendar month ending 2 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 1% per annum.
(3) The term "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. In the event that the Moody's Corporate Bond Yield Average -- Monthly Average Corporates is no longer published, a substantially
similar average, established by regulation issued by the Commissioner.
(4) If the maximum rate of interest is determined pursuant to paragraph (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 rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently
than once in any 3-month period. At the intervals specified in the policy:
a. The rate being charged may be increased whenever such increase as determined under paragraph (2) of this subsection would
increase that rate by 1/2% or more per annum;
b. The rate being charged must be reduced whenever such reduction as determined under paragraph (2) of this subsection would
decrease that rate by 1/2% or more per annum.
(6) The life insurer shall:
a. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
b. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably
practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan
is added, except as provided in subparagraph c. below;
c. Send to policyholders with loans reasonable advance notice of any increase in the rate; and
d. Include in the notices required above the substance of the pertinent provisions of paragraphs (1) and (4) of this subsection.
(7) The loan value of the policy shall be determined in accordance with subsection (a) of this section, but 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 life 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 paragraphs (1) and (4) of this subsection shall be set forth in the policies
to which they apply.
(9) For purposes of this section:
a. The rate of interest on policy loans permitted under this subsection 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 1 or more premiums that were not paid to the
life insurer as they fell due.
c. The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records
of the life insurer.
d. The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy
loans.
(10) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
(11) This subsection shall not apply to any insurance contract issued before January 1, 1983, unless the policyholder agrees
in writing to the applicability of such provisions.
(c) This section shall not apply to term policies or to term insurance benefits provided by rider or supplemental policy provisions
or to industrial life insurance policies.
18 Del. C. 1953, § 2911; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 195, § 1; 63 Del. Laws, c. 399, § 1.;
§ 2912. Table of installments.
In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy,
there shall be a table showing the amounts of the guaranteed installments.
18 Del. C. 1953, § 2912; 56 Del. Laws, c. 380, § 1.;
§ 2913. Reinstatement.
There shall be a provision that unless: (1) the policy has been surrendered for its cash surrender value; (2) its cash surrender
value has been exhausted; or (3) the paid-up term insurance, if any, has expired; the policy will be reinstated at any time
within 3 years (or 2 years in the case of industrial life insurance policies) from the date of premium default upon written
application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums
in arrears with interest at a rate not exceeding 6% per annum compounded annually, and the payment or reinstatement of any
indebtedness to the insurer upon the policy with interest as provided in § 2911 of this title.
18 Del. C. 1953, § 2913; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 399, § 2.;
§ 2914. Payment of claims.
There shall be a provision that when the benefits under the policy shall become payable by reason of the death of the insured,
settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy and/or proof
of the interest of the claimant. If an insurer shall specify a particular period prior to the expiration of which settlement
shall be made, such period shall not exceed 2 months from the receipt of such proofs.
18 Del. C. 1953, § 2914; 56 Del. Laws, c. 380, § 1.;
§ 2915. Beneficiary, industrial policies.
An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other
form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance
of the policy, unless such beneficiary be irrevocably designated. The policy may also provide that no designation or change
of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer and that the insurer may refuse
to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life
of the insured. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the
policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be
less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies
before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder
to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection
by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary,
or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also
include a similar provision applicable to any other payment due under the policy.
18 Del. C. 1953, § 2915; 56 Del. Laws, c. 380, § 1.;
§ 2916. Title.
There shall be a title on the policy, briefly describing the same.
18 Del. C. 1953, § 2916; 56 Del. Laws, c. 380, § 1.;
§ 2917. Excluded or restricted coverage.
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.
18 Del. C. 1953, § 2917; 56 Del. Laws, c. 380, § 1.;
§ 2918. Standard provisions; annuity and pure endowment contracts.
(a) No annuity or pure endowment contract, other than reversionary annuities (also called survivorship annuities) or group
annuities and except as stated herein, shall be delivered or issued for delivery in this State unless it contains in substance
each of the provisions specified in §§ 2919-2924, inclusive, of this title. Any of such provisions not applicable to single
premium annuities or single premium pure endowment contracts shall not, to that extent, be incorporated therein.
(b) This section shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under,
life insurance policies.
18 Del. C. 1953, § 2918; 56 Del. Laws, c. 380, § 1.;
§ 2919. Grace period; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that there shall be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer
falling due after the first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be
specified in the contract but not exceeding 6% per annum for the number of days of grace elapsing before such payment, during
which period of grace the contract shall continue in full force, but in case a claim arises under the contract on account
of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of
the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted
from any amount payable under the contract in settlement.
18 Del. C. 1953, § 2919; 56 Del. Laws, c. 380, § 1.;
§ 2920. Incontestability; annuities.
If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or
pure endowment contract, other than a reversionary, survivorship or group annuity, and subject to § 2922 of this title, there
shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person
or of each of the persons as to whom such statements are required, for a period of 2 years from its date of issue, except
for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions
relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident
or accidental means.
18 Del. C. 1953, § 2920; 56 Del. Laws, c. 380, § 1.;
§ 2921. Entire contract; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that the contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon
or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire
contract between the parties.
18 Del. C. 1953, § 2921; 56 Del. Laws, c. 380, § 1.;
§ 2922. Misstatement of age or sex; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been
misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments
to the insurer would have purchased according to the correct age or sex and that if the insurer shall make or has made any
overpayment or overpayments on account of any such misstatement, the amount thereof with interest at the rate to be specified
in the contract but not exceeding 6% per annum, may be charged against the current or next succeeding payment or payments
to be made by the insurer under the contract.
18 Del. C. 1953, § 2922; 56 Del. Laws, c. 380, § 1.;
§ 2923. Dividends; annuities.
If an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, is participating, there
shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.
18 Del. C. 1953, § 2923; 56 Del. Laws, c. 380, § 1.;
§ 2924. Reinstatement; annuities.
In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the
contract may be reinstated at any time within 1 year from the default in making stipulated payments to the insurer, unless
the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract
shall be paid or reinstated with interest thereon at a rate to be specified in the contract, but not exceeding 6% per annum
payable annually, and, in cases where applicable, the insurer may also include a requirement of evidence of insurability satisfactory
to the insurer.
18 Del. C. 1953, § 2924; 56 Del. Laws, c. 380, § 1.;
§ 2925. Standard provisions; reversionary annuities.
(a) Except as stated herein, no contract for a reversionary annuity shall be delivered or issued for delivery in this State
unless it contains in substance each of the following provisions:
(1) Any such reversionary annuity contract shall contain the provisions specified in §§ 2919-2923 of this title except that
under § 2919 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement
of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the
contract;
(2) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within
3 years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability
satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of
the contract be paid, or, within the limits permitted by the then cash values of the contract, reinstated, with interest as
to both payments and indebtedness at a rate to be specified in the contract but not exceeding 6% per annum compounded annually.
(b) This section shall not apply to group annuities or to annuities included in life insurance policies and any of such provisions
not applicable to single premium annuities shall not to that extent be incorporated therein.
18 Del. C. 1953, § 2925; 56 Del. Laws, c. 380, § 1.;
§ 2926. Limitation of liability.
(a) No policy of life insurance shall be delivered or issued for delivery in this State if it contains any of the following
provisions:
(1) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than
3 years after the cause of action has accrued;
(2) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the
insured has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified
therein in the event of death under any one or more of the following circumstances:
a. Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act
or hazard of such war or action, or of service in the military, naval or air forces or in civilian forces auxiliary thereto,
or from any cause while a member of such military, naval or air forces of any country at war, declared or undeclared, or of
any country engaged in such military action;
b. Death as a result of aviation or any air travel or flight;
c. Death as a result of a specified hazardous occupation or occupations or avocation;
d. Death while the insured is a resident outside continental United States and Canada; or
e. Death within 2 years from the date of issue of the policy as a result of suicide, while sane or insane.
(b) A policy which contains any exclusion or restriction pursuant to subdivision (2) of subsection (a) shall also provide
that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will
pay an amount not less than a reserve determined according to the Commissioner's reserve valuation method upon the basis of
the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits (or if the policy
provides for no such benefits, computed according to a mortality table and interest rate determined by the insurer and specified
in the policy) with adjustment for indebtedness or dividend credit.
(c) This section shall not apply to group life insurance, health insurance, reinsurance or annuities or to any provision in
a life insurance policy or contract supplemental thereto relating to disability benefits or to additional benefits in the
event of death by accident or accidental means.
(d) Nothing contained in this section shall prohibit any provision which in the opinion of the Commissioner is more favorable
to the policyholder than a provision permitted by this section.
18 Del. C. 1953, § 2926; 56 Del. Laws, c. 380, § 1.;
§ 2927. Prohibited provisions.
(a) No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this State,
if it contains any of the following provisions:
(1) A provision by which the policy purports to be issued or to take effect more than 1 year before the original application
for the insurance was made;
(2) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy,
plus dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that
may by the terms of the policy be deducted;
(3) A provision 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 such agent binding upon the person so insured under the policy.
(b) No policy of industrial life insurance shall contain any of the following provisions:
(1) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained
other insurance from the same insurer;
(2) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment,
whether specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention,
except a provision which gives the insurer the right to declare the policy void if the insured has, within 2 years prior to
the issuance of the policy, received institutional, hospital, medical or surgical treatment or attention and if the insured
or claimant under the policy fails to show that the condition occasioning such treatment or attention was not of a serious
nature or was not material to the risk;
(3) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance,
unless such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal
by the insurer to make such contract.
18 Del. C. 1953, § 2927; 56 Del. Laws, c. 380, § 1.;
§ 2928. Provisions required by law of other jurisdiction.
The policies of a foreign life insurer when issued in this State may contain any provision which the law of the state, territory,
district or country under which the insurer is organized prescribes shall be in such policies, and the policies of a domestic
life insurer may, when issued or delivered in any other state, territory, district or country, contain any provisions required
by the laws thereof, anything in this chapter to the contrary notwithstanding.
18 Del. C. 1953, § 2928; 56 Del. Laws, c. 380, § 1.;
§ 2929. Standard nonforfeiture law -- Generally.
(a) In the case of policies issued on and after the operative date of this section as defined in subsection (l) of this section,
no policy of life insurance, except as stated in subsection (k) of this section, shall be delivered or issued for delivery
in this State unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion
of the Commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements
hereinafter specified and are essentially in compliance with subsection (j) of this section:
(1) That, in the event of default in any premium payment, the insurer will grant, upon proper request not later than 60 days
after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective
as of such due date, of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit,
the insurer may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially
equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or,
if applicable, a greater amount or earlier payment of endowment benefits.
(2) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums
have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance,
the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter
specified.
(3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled
to make such election elects another available option not later than 60 days after the due date of the premium in default.
(4) That if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or
the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within
30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.
(5) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality
table, interest rate and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available
under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating
the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing
the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary
either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to
be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is
no indebtedness to the insurer on the policy.
(6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less
than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered;
an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the
existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed
statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that
such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered;
and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available
under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively
shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable,
be omitted from the policy.
The insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand
therefor with surrender of the policy.
(b) 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 subsection (a) of this section, shall be an amount not less than the excess, if any, of the present
value, on such anniversary, of the future guaranteed benefits which 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 subsections (d), (e), (f) and (g) of this section, corresponding to premiums which would have fallen due on
and after such anniversary, and (2) the amount of any indebtedness to the insurer on the policy.
Provided, however, that for any policy issued on or after the operative date of subsection (g) of this section as defined
therein, which 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 the first paragraph
of this subsection shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an
otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender
value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental
policy provision.
Provided, further, that for any family policy issued on or after the operative date of subsection (g) of this section as defined
therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring
before the spouse's age 71, the cash surrender value referred to in the first paragraph of this subsection shall be an amount
not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the
same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for
a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
Any 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 by subsection (a)
of this section, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits
provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the
policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy
anniversary shall be such that its present value as of such 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 which would have been required by this
section in the absence of the condition that premiums shall have been paid for at least a specified period.
(d) This subsection shall not apply to policies issued on or after the operative date of subsection (g) of this section as
defined therein. Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall
be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for
each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (1) the then
present value of the future guaranteed benefits provided for by the policy; (2) 2% of the amount of insurance, if the insurance
be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with
duration of the policy; (3) 40% of the adjusted premium for the first policy year; (4) 25% of either the adjusted premium
for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount
with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. In
applying the percentages specified in (3) and (4) above, no adjusted premium shall be deemed to exceed 4% of the amount of
insurance or level amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the
date as of which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount
thereof for the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise
similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the
amount of which does not vary with duration and the benefits under which have the same present value at the date of issue
as the benefits under the policy, provided, however, that in the case of a policy providing a varying amount of insurance
issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance
provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be
equal to (1) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits,
increased, during the period for which premiums for such term insurance benefits are payable, by (2) the adjusted premiums
for such term insurance, the foregoing items (1) and (2) being calculated separately and as specified in the first 2 paragraphs
of this subsection except that, for the purposes of (2), (3) and (4) of the first such paragraph, the amount of insurance
or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (2) shall be equal
to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the
adjusted premiums in (1).
Except as otherwise provided in subsections (e) and (f) of this section, all adjusted premiums and present values referred
to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard
Ordinary Mortality Table, 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 3 years younger than the actual age of the insured and
such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality
Table. All calculations shall be made on the basis of the rate of interest, not exceeding 31/2% per annum, specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits. 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 130% of the rates of mortality according to such applicable table. For insurance issued on a substandard
basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may
be specified by the insurer and approved by the Commissioner.
(e) This subsection shall not apply to ordinary policies issued on or after the operative date of subsection (g) of this section
as defined therein. In the case of ordinary policies issued on or after the operative date of this subsection as defined herein,
all adjusted premiums and present values referred to in this section 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 31/2% per annum except that a rate
of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior to July 8, 1980,
and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8, 1980, and 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 6 years younger than the actual age of the insured. Provided, however, that in calculating
the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table. Provided,
further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values
may be based on such other table of mortality as may be specified by the insurer and approved by the Commissioner.
After May 21, 1959, any insurer may file with the Commissioner a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1966. After the filing of such notice, then upon such specified
date (which shall be the operative date of this subsection for such insurer), this subsection shall become operative with
respect to the ordinary policies thereafter issued by such insurer. If an insurer makes no such election, the operative date
of this subsection for such insurer shall be January 1, 1966.
(f) This subsection shall not apply to industrial policies issued on or after the operative date of subsection (g) of this
section as defined therein. In the case of industrial policies issued on or after the operative date of this subsection, as
defined herein, all adjusted premiums and present values referred to in this section 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 31/2% per annum,
except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior
to July 8, 1980, and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8,
1980. Provided, however, that 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. Provided, further, that 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
insurer and approved by the Commissioner.
After July 7, 1964, any insurer may file with the Commissioner, a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1968. After the filing of such notice, then upon such date (which
shall be the operative date of this subsection for such insurer), this subsection shall become operative with respect to the
industrial policies thereafter issued by such insurer. If an insurer makes no such election, the operative date of this subsection
for such insurer shall be January 1, 1968.
(g)(1) This subsection shall apply to all policies issued on or after the operative date of this subsection as defined herein.
Except as provided in the seventh paragraph of this subsection, the adjusted premiums for any policy shall be calculated on
an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender
values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums
shall be equal to the sum of: (i) The then present value of the future guaranteed benefits provided for by the policy; (ii)
1 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at
the beginning of each of the first 10 policy years; and (iii) 125 percent of the nonforfeiture net level premium as hereinafter
defined. Provided, however, that in applying the percentage specified in (iii) above no nonforfeiture net level premium shall
be deemed to exceed 4 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount
of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this
subsection shall be the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed
benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of 1 per
annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
(3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and
present values shall initially be calculated on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted
premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits
and premiums do not change from those stipulated by the policy immediately after the change.
(4) Except as otherwise provided in the seventh paragraph of this subsection, the recalculated future adjusted premiums for
any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy
year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform
annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash
surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits
or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of (i) the then present value
of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over
(B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum
of: (i) 1 percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10
policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of
the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change,
the date of issue of the policy; and (ii) 125 percent of the increase, if positive, in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A)
equals the sum of (i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity
of 1 per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would
have fallen due had the change not occurred, and (ii) the present value of the increase in future guaranteed benefits provided
for by the policy, and (B) equals the present value of an annuity of 1 per annum payable on each anniversary of the policy
on or subsequent to the date of change on which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard
basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality
costs as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted
premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform
amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section shall for all policies or ordinary insurance be calculated
on the basis of (i) the Commissioners 1980 Standard Ordinary Mortality table or (ii) at the election of the insurer for any
1 or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with 10-Year Select
Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of
a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection, for policies issued in that
calendar year. Provided, however, that:
a. At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis
of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in
the immediately preceding calendar year.
b. Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (a) of this section, shall be calculated on the basis of the mortality table and rate
of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
c. An insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under
the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
d. 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 1980 Extended Term Insurance
Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table
for policies of industrial insurance.
e. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based
on appropriate modifications of the aforementioned tables.
f. Any ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1980 Standard Ordinary Mortality Table with or without 10-Year Select Mortality Factors or for the Commissioners
1980 Extended Term Insurance Table.
g. Any industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance
Table.
(9) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125 percent
of the calendar year statutory valuation interest rate for such policy as defined in the standard valuation law, rounded to
the nearer one-quarter of 1 percent.
(10) Notwithstanding any other provision in this Code to the contrary, any refiling of nonforfeiture values or their methods
of computation for any previously approved policy form which involves only a change in the interest rate or mortality table
used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
(11) After June 21, 1983, any insurer may file with the Commissioner a written notice of its election to comply with this
subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such insurer.
If an insurer makes no such election, the operative date of this subsection for such insurer shall be January 1, 1989.
(h) 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 insurer based on then 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 subsection (a), (b), (c), (d), (e),
(f) or (g) herein, then:
(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 subsection (a), (b), (c), (d), (f) or (g) herein;
(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 regulations promulgated by the Commissioner.
(i) Any cash surrender value and any paid-up nonforfeiture benefit, available under the 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 subsections
(b), (c), (d), (e), (f) and (g) of this section 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 be not
less than the amounts used to provide such additions. Notwithstanding subsection (b) of this section, additional 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 section would not apply, (5) as
term insurance on the life of 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's age is 26, is uniform in amount after the child's age is 1, and has not
become paid up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance
and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender
values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included
in any paid-up nonforfeiture benefits.
(j) This subsection, in addition to all other applicable subsections of this law, shall apply to all policies issued on or
after January 1, 1987. Any cash surrender value available under the policy in the event of default in a premium payment due
on any policy anniversary shall be in an amount which does not differ by more than two-tenths of 1 percent of either the amount
of insurance, if the insurance be uniform i
This chapter, except as to § 2932 of this title, applies only to contracts of life insurance and annuities, other than reinsurance,
group life insurance and group annuities.
18 Del. C. 1953, § 2901; 56 Del. Laws, c. 380, § 1.;
§ 2902. "Annuity" defined.
For this title an "annuity" is a contract, issued by a person which is not classified by the Internal Revenue Service as exempt
from taxation under § 501(c)(3) of the Internal Revenue Code of 1954 [26 U.S.C. § 501(c)(3)], as subsequently amended, under
which obligations are assumed as to periodic payments for specific term or terms or where the making or continuance of all
or some such payments, or the amount of any such payment, is dependent upon continuance of human life. Such a contract which
includes extra benefits of kinds set forth in §§ 902 ("life insurance" defined) and 903 ("health insurance" defined) of this
title shall nevertheless be deemed to be an annuity if such extra benefits constitute a subsidiary or incidental part of the
entire contract.
18 Del. C. 1953, § 2902; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 155, § 1.;
§ 2903. "Industrial life insurance" defined.
For the purposes of this title "industrial life insurance" is that form of life insurance written under policies of face amount
of $1,000 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.
18 Del. C. 1953, § 2903; 56 Del. Laws, c. 380, § 1.;
§ 2904. Standard provisions required.
(a) No policy of life insurance, other than pure endowments with or without return of premiums or of premiums and interest,
shall be delivered or issued for delivery in this State unless it contains in substance all of the applicable provisions required
by §§ 2905-2916, inclusive, of this title. This section shall not apply to annuity contracts nor to any provision of a life
insurance policy, or contract supplemental thereto, relating to disability benefits or to additional benefits in the event
of death by accident or accidental means.
(b) Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance
granted in exchange for lapsed or surrendered policies shall to that extent not be incorporated therein.
18 Del. C. 1953, § 2904; 56 Del. Laws, c. 380, § 1.;
§ 2905. Payment of premiums.
There shall be a provision relating to the time and place of payment of premiums.
18 Del. C. 1953, § 2905; 56 Del. Laws, c. 380, § 1.;
§ 2906. Grace period.
There shall be a provision that a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30
days, or of 4 weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than
monthly shall be allowed within which the payment of any premium after the first may be made, during which period of grace
the policy shall continue in full force. The insurer may impose an interest charge not in excess of 6% per annum for the number
of days of grace elapsing before the payment of the premium, and, whether or not such interest charge is imposed, if a claim
arises under the policy during such period of grace, the amount of any premium due or overdue, together with interest and
any deferred installment of the annual premium, may be deducted from the policy proceeds. Grace shall date from the premium
due date specified in the policy.
18 Del. C. 1953, § 2906; 56 Del. Laws, c. 380, § 1.;
§ 2907. Entire contract.
There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if
a copy of such application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between
the parties and that all statements contained in the application shall, in the absence of fraud, be deemed representations
and not warranties.
18 Del. C. 1953, § 2907; 56 Del. Laws, c. 380, § 1.;
§ 2908. Incontestability.
There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured
for a period of not more than 2 years after its date of issue, except for (1) nonpayment of premiums, and (2) at the insurer's
option, provisions relating to benefits in the event of total and permanent disability and provisions granting additional
benefits specifically against death by accident or accidental means.
18 Del. C. 1953, § 2908; 56 Del. Laws, c. 380.;
§ 2909. Misstatement of age.
There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the
premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium
would have purchased at the correct age or ages.
18 Del. C. 1953, § 2909; 56 Del. Laws, c. 380, § 1.;
§ 2910. Dividends.
(a) 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 hereinafter provided, any dividends becoming payable shall at the option of the party entitled to elect such option be
either:
(1) Payable in cash; or
(2) 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 such party shall not have elected
some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall
be not less than 30 days following the date on which such dividend is due and payable. The annually apportioned dividend shall
be deemed to be payable in cash within the meaning of subdivision (1) above even though the policy provides that payment of
such dividend is to be deferred for a specified period, provided such period does not exceed 6 years from the date of apportionment
and that interest will be added to such dividend at a specified rate.
(b) Renewable term policies of 10 years or less may provide that the surplus accrued to such policies shall be determined
and apportioned each year after the second policy year and accumulated during each renewal period and that at the end of the
renewal period, on renewal of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for
the next succeeding renewal term in the reduction of premiums.
(c) In participating industrial life insurance policies, in lieu of the provision required in subsection (a) above, there
shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually
in the divisible surplus, if any, in the manner set forth in the policy.
(d) This section does not apply to insurance issued under nonforfeiture provisions of lapsed or surrendered policies.
18 Del. C. 1953, § 2910; 56 Del. Laws, c. 380, § 1.;
§ 2911. Policy loan.
(a) There shall be a provision that after 3 full years' premiums have been paid and after the policy has a cash surrender
value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment
or pledge of the policy and on the sole security thereof, at a rate of interest not exceeding 8% per annum (if payable in
advance such interest shall not exceed the rate of 7.4% per annum for policies issued prior to January 1, 1983) an amount
equal to or, at the option of the party entitled thereto, less than the loan value of the policy. Before approving any policy
provision providing for a rate of interest in excess of 6%, the Commissioner may require assurances by the insurer that the
holders of such policies will benefit from the increased earning of the insurer resulting from the use of such higher rates,
through the use of higher dividends or lower premiums, or both. The loan value of the policy shall be at least equal to the
cash surrender value at the end of the then current policy year, and the insurer may deduct, either from such loan value or
from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including
any interest then accrued but not due, any unpaid balance of the premium for the current policy year and interest on the loan
to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due
it shall then be added to the existing indebtedness and shall bear interest at the same rate and that if and when the total
indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then
the policy shall terminate and become void, but not until at least 30 days' notice has been mailed by the insurer to the last
address on record with the insurer of the insured or other policy owner and of any assignee of record at the insurer's home
office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any
premium to the insurer, for 6 months after application therefor. Such provision shall also contain a table showing in figures
the loan values each year during the first 20 years of the policy or during the term of the policy whichever is shorter. The
policy, at the insurer's option, may provide for an automatic premium loan.
(b)(1) Policies issued on or after January 1, 1983, shall provide for policy loan interest rates as follows:
a. A provision permitting a maximum interest rate of not more than 8% per annum; or
b. A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted
by law.
(2) The rate of interest charged on a policy loan made under paragraph (1)b. of this subsection shall not exceed the higher
of the following:
a. The published monthly average for the calendar month ending 2 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 1% per annum.
(3) The term "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. In the event that the Moody's Corporate Bond Yield Average -- Monthly Average Corporates is no longer published, a substantially
similar average, established by regulation issued by the Commissioner.
(4) If the maximum rate of interest is determined pursuant to paragraph (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 rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently
than once in any 3-month period. At the intervals specified in the policy:
a. The rate being charged may be increased whenever such increase as determined under paragraph (2) of this subsection would
increase that rate by 1/2% or more per annum;
b. The rate being charged must be reduced whenever such reduction as determined under paragraph (2) of this subsection would
decrease that rate by 1/2% or more per annum.
(6) The life insurer shall:
a. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
b. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably
practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan
is added, except as provided in subparagraph c. below;
c. Send to policyholders with loans reasonable advance notice of any increase in the rate; and
d. Include in the notices required above the substance of the pertinent provisions of paragraphs (1) and (4) of this subsection.
(7) The loan value of the policy shall be determined in accordance with subsection (a) of this section, but 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 life 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 paragraphs (1) and (4) of this subsection shall be set forth in the policies
to which they apply.
(9) For purposes of this section:
a. The rate of interest on policy loans permitted under this subsection 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 1 or more premiums that were not paid to the
life insurer as they fell due.
c. The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records
of the life insurer.
d. The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy
loans.
(10) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
(11) This subsection shall not apply to any insurance contract issued before January 1, 1983, unless the policyholder agrees
in writing to the applicability of such provisions.
(c) This section shall not apply to term policies or to term insurance benefits provided by rider or supplemental policy provisions
or to industrial life insurance policies.
18 Del. C. 1953, § 2911; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 195, § 1; 63 Del. Laws, c. 399, § 1.;
§ 2912. Table of installments.
In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy,
there shall be a table showing the amounts of the guaranteed installments.
18 Del. C. 1953, § 2912; 56 Del. Laws, c. 380, § 1.;
§ 2913. Reinstatement.
There shall be a provision that unless: (1) the policy has been surrendered for its cash surrender value; (2) its cash surrender
value has been exhausted; or (3) the paid-up term insurance, if any, has expired; the policy will be reinstated at any time
within 3 years (or 2 years in the case of industrial life insurance policies) from the date of premium default upon written
application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums
in arrears with interest at a rate not exceeding 6% per annum compounded annually, and the payment or reinstatement of any
indebtedness to the insurer upon the policy with interest as provided in § 2911 of this title.
18 Del. C. 1953, § 2913; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 399, § 2.;
§ 2914. Payment of claims.
There shall be a provision that when the benefits under the policy shall become payable by reason of the death of the insured,
settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy and/or proof
of the interest of the claimant. If an insurer shall specify a particular period prior to the expiration of which settlement
shall be made, such period shall not exceed 2 months from the receipt of such proofs.
18 Del. C. 1953, § 2914; 56 Del. Laws, c. 380, § 1.;
§ 2915. Beneficiary, industrial policies.
An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other
form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance
of the policy, unless such beneficiary be irrevocably designated. The policy may also provide that no designation or change
of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer and that the insurer may refuse
to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life
of the insured. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the
policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be
less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies
before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder
to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection
by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary,
or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also
include a similar provision applicable to any other payment due under the policy.
18 Del. C. 1953, § 2915; 56 Del. Laws, c. 380, § 1.;
§ 2916. Title.
There shall be a title on the policy, briefly describing the same.
18 Del. C. 1953, § 2916; 56 Del. Laws, c. 380, § 1.;
§ 2917. Excluded or restricted coverage.
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.
18 Del. C. 1953, § 2917; 56 Del. Laws, c. 380, § 1.;
§ 2918. Standard provisions; annuity and pure endowment contracts.
(a) No annuity or pure endowment contract, other than reversionary annuities (also called survivorship annuities) or group
annuities and except as stated herein, shall be delivered or issued for delivery in this State unless it contains in substance
each of the provisions specified in §§ 2919-2924, inclusive, of this title. Any of such provisions not applicable to single
premium annuities or single premium pure endowment contracts shall not, to that extent, be incorporated therein.
(b) This section shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under,
life insurance policies.
18 Del. C. 1953, § 2918; 56 Del. Laws, c. 380, § 1.;
§ 2919. Grace period; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that there shall be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer
falling due after the first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be
specified in the contract but not exceeding 6% per annum for the number of days of grace elapsing before such payment, during
which period of grace the contract shall continue in full force, but in case a claim arises under the contract on account
of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of
the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted
from any amount payable under the contract in settlement.
18 Del. C. 1953, § 2919; 56 Del. Laws, c. 380, § 1.;
§ 2920. Incontestability; annuities.
If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or
pure endowment contract, other than a reversionary, survivorship or group annuity, and subject to § 2922 of this title, there
shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person
or of each of the persons as to whom such statements are required, for a period of 2 years from its date of issue, except
for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions
relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident
or accidental means.
18 Del. C. 1953, § 2920; 56 Del. Laws, c. 380, § 1.;
§ 2921. Entire contract; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that the contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon
or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire
contract between the parties.
18 Del. C. 1953, § 2921; 56 Del. Laws, c. 380, § 1.;
§ 2922. Misstatement of age or sex; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been
misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments
to the insurer would have purchased according to the correct age or sex and that if the insurer shall make or has made any
overpayment or overpayments on account of any such misstatement, the amount thereof with interest at the rate to be specified
in the contract but not exceeding 6% per annum, may be charged against the current or next succeeding payment or payments
to be made by the insurer under the contract.
18 Del. C. 1953, § 2922; 56 Del. Laws, c. 380, § 1.;
§ 2923. Dividends; annuities.
If an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, is participating, there
shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.
18 Del. C. 1953, § 2923; 56 Del. Laws, c. 380, § 1.;
§ 2924. Reinstatement; annuities.
In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the
contract may be reinstated at any time within 1 year from the default in making stipulated payments to the insurer, unless
the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract
shall be paid or reinstated with interest thereon at a rate to be specified in the contract, but not exceeding 6% per annum
payable annually, and, in cases where applicable, the insurer may also include a requirement of evidence of insurability satisfactory
to the insurer.
18 Del. C. 1953, § 2924; 56 Del. Laws, c. 380, § 1.;
§ 2925. Standard provisions; reversionary annuities.
(a) Except as stated herein, no contract for a reversionary annuity shall be delivered or issued for delivery in this State
unless it contains in substance each of the following provisions:
(1) Any such reversionary annuity contract shall contain the provisions specified in §§ 2919-2923 of this title except that
under § 2919 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement
of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the
contract;
(2) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within
3 years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability
satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of
the contract be paid, or, within the limits permitted by the then cash values of the contract, reinstated, with interest as
to both payments and indebtedness at a rate to be specified in the contract but not exceeding 6% per annum compounded annually.
(b) This section shall not apply to group annuities or to annuities included in life insurance policies and any of such provisions
not applicable to single premium annuities shall not to that extent be incorporated therein.
18 Del. C. 1953, § 2925; 56 Del. Laws, c. 380, § 1.;
§ 2926. Limitation of liability.
(a) No policy of life insurance shall be delivered or issued for delivery in this State if it contains any of the following
provisions:
(1) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than
3 years after the cause of action has accrued;
(2) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the
insured has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified
therein in the event of death under any one or more of the following circumstances:
a. Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act
or hazard of such war or action, or of service in the military, naval or air forces or in civilian forces auxiliary thereto,
or from any cause while a member of such military, naval or air forces of any country at war, declared or undeclared, or of
any country engaged in such military action;
b. Death as a result of aviation or any air travel or flight;
c. Death as a result of a specified hazardous occupation or occupations or avocation;
d. Death while the insured is a resident outside continental United States and Canada; or
e. Death within 2 years from the date of issue of the policy as a result of suicide, while sane or insane.
(b) A policy which contains any exclusion or restriction pursuant to subdivision (2) of subsection (a) shall also provide
that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will
pay an amount not less than a reserve determined according to the Commissioner's reserve valuation method upon the basis of
the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits (or if the policy
provides for no such benefits, computed according to a mortality table and interest rate determined by the insurer and specified
in the policy) with adjustment for indebtedness or dividend credit.
(c) This section shall not apply to group life insurance, health insurance, reinsurance or annuities or to any provision in
a life insurance policy or contract supplemental thereto relating to disability benefits or to additional benefits in the
event of death by accident or accidental means.
(d) Nothing contained in this section shall prohibit any provision which in the opinion of the Commissioner is more favorable
to the policyholder than a provision permitted by this section.
18 Del. C. 1953, § 2926; 56 Del. Laws, c. 380, § 1.;
§ 2927. Prohibited provisions.
(a) No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this State,
if it contains any of the following provisions:
(1) A provision by which the policy purports to be issued or to take effect more than 1 year before the original application
for the insurance was made;
(2) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy,
plus dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that
may by the terms of the policy be deducted;
(3) A provision 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 such agent binding upon the person so insured under the policy.
(b) No policy of industrial life insurance shall contain any of the following provisions:
(1) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained
other insurance from the same insurer;
(2) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment,
whether specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention,
except a provision which gives the insurer the right to declare the policy void if the insured has, within 2 years prior to
the issuance of the policy, received institutional, hospital, medical or surgical treatment or attention and if the insured
or claimant under the policy fails to show that the condition occasioning such treatment or attention was not of a serious
nature or was not material to the risk;
(3) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance,
unless such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal
by the insurer to make such contract.
18 Del. C. 1953, § 2927; 56 Del. Laws, c. 380, § 1.;
§ 2928. Provisions required by law of other jurisdiction.
The policies of a foreign life insurer when issued in this State may contain any provision which the law of the state, territory,
district or country under which the insurer is organized prescribes shall be in such policies, and the policies of a domestic
life insurer may, when issued or delivered in any other state, territory, district or country, contain any provisions required
by the laws thereof, anything in this chapter to the contrary notwithstanding.
18 Del. C. 1953, § 2928; 56 Del. Laws, c. 380, § 1.;
§ 2929. Standard nonforfeiture law -- Generally.
(a) In the case of policies issued on and after the operative date of this section as defined in subsection (l) of this section,
no policy of life insurance, except as stated in subsection (k) of this section, shall be delivered or issued for delivery
in this State unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion
of the Commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements
hereinafter specified and are essentially in compliance with subsection (j) of this section:
(1) That, in the event of default in any premium payment, the insurer will grant, upon proper request not later than 60 days
after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective
as of such due date, of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit,
the insurer may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially
equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or,
if applicable, a greater amount or earlier payment of endowment benefits.
(2) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums
have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance,
the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter
specified.
(3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled
to make such election elects another available option not later than 60 days after the due date of the premium in default.
(4) That if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or
the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within
30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.
(5) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality
table, interest rate and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available
under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating
the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing
the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary
either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to
be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is
no indebtedness to the insurer on the policy.
(6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less
than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered;
an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the
existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed
statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that
such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered;
and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available
under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively
shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable,
be omitted from the policy.
The insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand
therefor with surrender of the policy.
(b) 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 subsection (a) of this section, shall be an amount not less than the excess, if any, of the present
value, on such anniversary, of the future guaranteed benefits which 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 subsections (d), (e), (f) and (g) of this section, corresponding to premiums which would have fallen due on
and after such anniversary, and (2) the amount of any indebtedness to the insurer on the policy.
Provided, however, that for any policy issued on or after the operative date of subsection (g) of this section as defined
therein, which 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 the first paragraph
of this subsection shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an
otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender
value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental
policy provision.
Provided, further, that for any family policy issued on or after the operative date of subsection (g) of this section as defined
therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring
before the spouse's age 71, the cash surrender value referred to in the first paragraph of this subsection shall be an amount
not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the
same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for
a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
Any 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 by subsection (a)
of this section, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits
provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the
policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy
anniversary shall be such that its present value as of such 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 which would have been required by this
section in the absence of the condition that premiums shall have been paid for at least a specified period.
(d) This subsection shall not apply to policies issued on or after the operative date of subsection (g) of this section as
defined therein. Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall
be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for
each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (1) the then
present value of the future guaranteed benefits provided for by the policy; (2) 2% of the amount of insurance, if the insurance
be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with
duration of the policy; (3) 40% of the adjusted premium for the first policy year; (4) 25% of either the adjusted premium
for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount
with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. In
applying the percentages specified in (3) and (4) above, no adjusted premium shall be deemed to exceed 4% of the amount of
insurance or level amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the
date as of which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount
thereof for the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise
similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the
amount of which does not vary with duration and the benefits under which have the same present value at the date of issue
as the benefits under the policy, provided, however, that in the case of a policy providing a varying amount of insurance
issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance
provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be
equal to (1) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits,
increased, during the period for which premiums for such term insurance benefits are payable, by (2) the adjusted premiums
for such term insurance, the foregoing items (1) and (2) being calculated separately and as specified in the first 2 paragraphs
of this subsection except that, for the purposes of (2), (3) and (4) of the first such paragraph, the amount of insurance
or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (2) shall be equal
to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the
adjusted premiums in (1).
Except as otherwise provided in subsections (e) and (f) of this section, all adjusted premiums and present values referred
to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard
Ordinary Mortality Table, 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 3 years younger than the actual age of the insured and
such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality
Table. All calculations shall be made on the basis of the rate of interest, not exceeding 31/2% per annum, specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits. 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 130% of the rates of mortality according to such applicable table. For insurance issued on a substandard
basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may
be specified by the insurer and approved by the Commissioner.
(e) This subsection shall not apply to ordinary policies issued on or after the operative date of subsection (g) of this section
as defined therein. In the case of ordinary policies issued on or after the operative date of this subsection as defined herein,
all adjusted premiums and present values referred to in this section 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 31/2% per annum except that a rate
of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior to July 8, 1980,
and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8, 1980, and 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 6 years younger than the actual age of the insured. Provided, however, that in calculating
the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table. Provided,
further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values
may be based on such other table of mortality as may be specified by the insurer and approved by the Commissioner.
After May 21, 1959, any insurer may file with the Commissioner a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1966. After the filing of such notice, then upon such specified
date (which shall be the operative date of this subsection for such insurer), this subsection shall become operative with
respect to the ordinary policies thereafter issued by such insurer. If an insurer makes no such election, the operative date
of this subsection for such insurer shall be January 1, 1966.
(f) This subsection shall not apply to industrial policies issued on or after the operative date of subsection (g) of this
section as defined therein. In the case of industrial policies issued on or after the operative date of this subsection, as
defined herein, all adjusted premiums and present values referred to in this section 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 31/2% per annum,
except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior
to July 8, 1980, and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8,
1980. Provided, however, that 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. Provided, further, that 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
insurer and approved by the Commissioner.
After July 7, 1964, any insurer may file with the Commissioner, a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1968. After the filing of such notice, then upon such date (which
shall be the operative date of this subsection for such insurer), this subsection shall become operative with respect to the
industrial policies thereafter issued by such insurer. If an insurer makes no such election, the operative date of this subsection
for such insurer shall be January 1, 1968.
(g)(1) This subsection shall apply to all policies issued on or after the operative date of this subsection as defined herein.
Except as provided in the seventh paragraph of this subsection, the adjusted premiums for any policy shall be calculated on
an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender
values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums
shall be equal to the sum of: (i) The then present value of the future guaranteed benefits provided for by the policy; (ii)
1 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at
the beginning of each of the first 10 policy years; and (iii) 125 percent of the nonforfeiture net level premium as hereinafter
defined. Provided, however, that in applying the percentage specified in (iii) above no nonforfeiture net level premium shall
be deemed to exceed 4 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount
of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this
subsection shall be the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed
benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of 1 per
annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
(3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and
present values shall initially be calculated on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted
premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits
and premiums do not change from those stipulated by the policy immediately after the change.
(4) Except as otherwise provided in the seventh paragraph of this subsection, the recalculated future adjusted premiums for
any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy
year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform
annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash
surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits
or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of (i) the then present value
of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over
(B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum
of: (i) 1 percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10
policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of
the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change,
the date of issue of the policy; and (ii) 125 percent of the increase, if positive, in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A)
equals the sum of (i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity
of 1 per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would
have fallen due had the change not occurred, and (ii) the present value of the increase in future guaranteed benefits provided
for by the policy, and (B) equals the present value of an annuity of 1 per annum payable on each anniversary of the policy
on or subsequent to the date of change on which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard
basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality
costs as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted
premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform
amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section shall for all policies or ordinary insurance be calculated
on the basis of (i) the Commissioners 1980 Standard Ordinary Mortality table or (ii) at the election of the insurer for any
1 or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with 10-Year Select
Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of
a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection, for policies issued in that
calendar year. Provided, however, that:
a. At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis
of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in
the immediately preceding calendar year.
b. Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (a) of this section, shall be calculated on the basis of the mortality table and rate
of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
c. An insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under
the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
d. 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 1980 Extended Term Insurance
Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table
for policies of industrial insurance.
e. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based
on appropriate modifications of the aforementioned tables.
f. Any ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1980 Standard Ordinary Mortality Table with or without 10-Year Select Mortality Factors or for the Commissioners
1980 Extended Term Insurance Table.
g. Any industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance
Table.
(9) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125 percent
of the calendar year statutory valuation interest rate for such policy as defined in the standard valuation law, rounded to
the nearer one-quarter of 1 percent.
(10) Notwithstanding any other provision in this Code to the contrary, any refiling of nonforfeiture values or their methods
of computation for any previously approved policy form which involves only a change in the interest rate or mortality table
used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
(11) After June 21, 1983, any insurer may file with the Commissioner a written notice of its election to comply with this
subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such insurer.
If an insurer makes no such election, the operative date of this subsection for such insurer shall be January 1, 1989.
(h) 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 insurer based on then 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 subsection (a), (b), (c), (d), (e),
(f) or (g) herein, then:
(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 subsection (a), (b), (c), (d), (f) or (g) herein;
(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 regulations promulgated by the Commissioner.
(i) Any cash surrender value and any paid-up nonforfeiture benefit, available under the 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 subsections
(b), (c), (d), (e), (f) and (g) of this section 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 be not
less than the amounts used to provide such additions. Notwithstanding subsection (b) of this section, additional 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 section would not apply, (5) as
term insurance on the life of 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's age is 26, is uniform in amount after the child's age is 1, and has not
become paid up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance
and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender
values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included
in any paid-up nonforfeiture benefits.
(j) This subsection, in addition to all other applicable subsections of this law, shall apply to all policies issued on or
after January 1, 1987. Any cash surrender value available under the policy in the event of default in a premium payment due
on any policy anniversary shall be in an amount which does not differ by more than two-tenths of 1 percent of either the amount
of insurance, if the insurance be uniform i
This chapter, except as to § 2932 of this title, applies only to contracts of life insurance and annuities, other than reinsurance,
group life insurance and group annuities.
18 Del. C. 1953, § 2901; 56 Del. Laws, c. 380, § 1.;
§ 2902. "Annuity" defined.
For this title an "annuity" is a contract, issued by a person which is not classified by the Internal Revenue Service as exempt
from taxation under § 501(c)(3) of the Internal Revenue Code of 1954 [26 U.S.C. § 501(c)(3)], as subsequently amended, under
which obligations are assumed as to periodic payments for specific term or terms or where the making or continuance of all
or some such payments, or the amount of any such payment, is dependent upon continuance of human life. Such a contract which
includes extra benefits of kinds set forth in §§ 902 ("life insurance" defined) and 903 ("health insurance" defined) of this
title shall nevertheless be deemed to be an annuity if such extra benefits constitute a subsidiary or incidental part of the
entire contract.
18 Del. C. 1953, § 2902; 56 Del. Laws, c. 380, § 1; 64 Del. Laws, c. 155, § 1.;
§ 2903. "Industrial life insurance" defined.
For the purposes of this title "industrial life insurance" is that form of life insurance written under policies of face amount
of $1,000 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.
18 Del. C. 1953, § 2903; 56 Del. Laws, c. 380, § 1.;
§ 2904. Standard provisions required.
(a) No policy of life insurance, other than pure endowments with or without return of premiums or of premiums and interest,
shall be delivered or issued for delivery in this State unless it contains in substance all of the applicable provisions required
by §§ 2905-2916, inclusive, of this title. This section shall not apply to annuity contracts nor to any provision of a life
insurance policy, or contract supplemental thereto, relating to disability benefits or to additional benefits in the event
of death by accident or accidental means.
(b) Any of such provisions or portions thereof not applicable to single premium or nonparticipating or term policies or insurance
granted in exchange for lapsed or surrendered policies shall to that extent not be incorporated therein.
18 Del. C. 1953, § 2904; 56 Del. Laws, c. 380, § 1.;
§ 2905. Payment of premiums.
There shall be a provision relating to the time and place of payment of premiums.
18 Del. C. 1953, § 2905; 56 Del. Laws, c. 380, § 1.;
§ 2906. Grace period.
There shall be a provision that a grace period of 30 days or, at the option of the insurer, of 1 month of not less than 30
days, or of 4 weeks in the case of industrial life insurance policies the premiums for which are payable more frequently than
monthly shall be allowed within which the payment of any premium after the first may be made, during which period of grace
the policy shall continue in full force. The insurer may impose an interest charge not in excess of 6% per annum for the number
of days of grace elapsing before the payment of the premium, and, whether or not such interest charge is imposed, if a claim
arises under the policy during such period of grace, the amount of any premium due or overdue, together with interest and
any deferred installment of the annual premium, may be deducted from the policy proceeds. Grace shall date from the premium
due date specified in the policy.
18 Del. C. 1953, § 2906; 56 Del. Laws, c. 380, § 1.;
§ 2907. Entire contract.
There shall be a provision that except as otherwise expressly provided by law, the policy and the application therefor, if
a copy of such application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between
the parties and that all statements contained in the application shall, in the absence of fraud, be deemed representations
and not warranties.
18 Del. C. 1953, § 2907; 56 Del. Laws, c. 380, § 1.;
§ 2908. Incontestability.
There shall be a provision that the policy shall be incontestable after it has been in force during the lifetime of the insured
for a period of not more than 2 years after its date of issue, except for (1) nonpayment of premiums, and (2) at the insurer's
option, provisions relating to benefits in the event of total and permanent disability and provisions granting additional
benefits specifically against death by accident or accidental means.
18 Del. C. 1953, § 2908; 56 Del. Laws, c. 380.;
§ 2909. Misstatement of age.
There shall be a provision that if the age of the insured or of any other person whose age is considered in determining the
premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium
would have purchased at the correct age or ages.
18 Del. C. 1953, § 2909; 56 Del. Laws, c. 380, § 1.;
§ 2910. Dividends.
(a) 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 hereinafter provided, any dividends becoming payable shall at the option of the party entitled to elect such option be
either:
(1) Payable in cash; or
(2) 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 such party shall not have elected
some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall
be not less than 30 days following the date on which such dividend is due and payable. The annually apportioned dividend shall
be deemed to be payable in cash within the meaning of subdivision (1) above even though the policy provides that payment of
such dividend is to be deferred for a specified period, provided such period does not exceed 6 years from the date of apportionment
and that interest will be added to such dividend at a specified rate.
(b) Renewable term policies of 10 years or less may provide that the surplus accrued to such policies shall be determined
and apportioned each year after the second policy year and accumulated during each renewal period and that at the end of the
renewal period, on renewal of the policy by the insured, the insurer shall apply the accumulated surplus as an annuity for
the next succeeding renewal term in the reduction of premiums.
(c) In participating industrial life insurance policies, in lieu of the provision required in subsection (a) above, there
shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually
in the divisible surplus, if any, in the manner set forth in the policy.
(d) This section does not apply to insurance issued under nonforfeiture provisions of lapsed or surrendered policies.
18 Del. C. 1953, § 2910; 56 Del. Laws, c. 380, § 1.;
§ 2911. Policy loan.
(a) There shall be a provision that after 3 full years' premiums have been paid and after the policy has a cash surrender
value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment
or pledge of the policy and on the sole security thereof, at a rate of interest not exceeding 8% per annum (if payable in
advance such interest shall not exceed the rate of 7.4% per annum for policies issued prior to January 1, 1983) an amount
equal to or, at the option of the party entitled thereto, less than the loan value of the policy. Before approving any policy
provision providing for a rate of interest in excess of 6%, the Commissioner may require assurances by the insurer that the
holders of such policies will benefit from the increased earning of the insurer resulting from the use of such higher rates,
through the use of higher dividends or lower premiums, or both. The loan value of the policy shall be at least equal to the
cash surrender value at the end of the then current policy year, and the insurer may deduct, either from such loan value or
from the proceeds of the loan, any existing indebtedness not already deducted in determining such cash surrender value, including
any interest then accrued but not due, any unpaid balance of the premium for the current policy year and interest on the loan
to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due
it shall then be added to the existing indebtedness and shall bear interest at the same rate and that if and when the total
indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then
the policy shall terminate and become void, but not until at least 30 days' notice has been mailed by the insurer to the last
address on record with the insurer of the insured or other policy owner and of any assignee of record at the insurer's home
office. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any
premium to the insurer, for 6 months after application therefor. Such provision shall also contain a table showing in figures
the loan values each year during the first 20 years of the policy or during the term of the policy whichever is shorter. The
policy, at the insurer's option, may provide for an automatic premium loan.
(b)(1) Policies issued on or after January 1, 1983, shall provide for policy loan interest rates as follows:
a. A provision permitting a maximum interest rate of not more than 8% per annum; or
b. A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted
by law.
(2) The rate of interest charged on a policy loan made under paragraph (1)b. of this subsection shall not exceed the higher
of the following:
a. The published monthly average for the calendar month ending 2 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 1% per annum.
(3) The term "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. In the event that the Moody's Corporate Bond Yield Average -- Monthly Average Corporates is no longer published, a substantially
similar average, established by regulation issued by the Commissioner.
(4) If the maximum rate of interest is determined pursuant to paragraph (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 rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently
than once in any 3-month period. At the intervals specified in the policy:
a. The rate being charged may be increased whenever such increase as determined under paragraph (2) of this subsection would
increase that rate by 1/2% or more per annum;
b. The rate being charged must be reduced whenever such reduction as determined under paragraph (2) of this subsection would
decrease that rate by 1/2% or more per annum.
(6) The life insurer shall:
a. Notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
b. Notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably
practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan
is added, except as provided in subparagraph c. below;
c. Send to policyholders with loans reasonable advance notice of any increase in the rate; and
d. Include in the notices required above the substance of the pertinent provisions of paragraphs (1) and (4) of this subsection.
(7) The loan value of the policy shall be determined in accordance with subsection (a) of this section, but 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 life 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 paragraphs (1) and (4) of this subsection shall be set forth in the policies
to which they apply.
(9) For purposes of this section:
a. The rate of interest on policy loans permitted under this subsection 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 1 or more premiums that were not paid to the
life insurer as they fell due.
c. The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records
of the life insurer.
d. The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy
loans.
(10) No other provision of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
(11) This subsection shall not apply to any insurance contract issued before January 1, 1983, unless the policyholder agrees
in writing to the applicability of such provisions.
(c) This section shall not apply to term policies or to term insurance benefits provided by rider or supplemental policy provisions
or to industrial life insurance policies.
18 Del. C. 1953, § 2911; 56 Del. Laws, c. 380, § 1; 60 Del. Laws, c. 195, § 1; 63 Del. Laws, c. 399, § 1.;
§ 2912. Table of installments.
In case the policy provides that the proceeds may be payable in installments which are determinable at issue of the policy,
there shall be a table showing the amounts of the guaranteed installments.
18 Del. C. 1953, § 2912; 56 Del. Laws, c. 380, § 1.;
§ 2913. Reinstatement.
There shall be a provision that unless: (1) the policy has been surrendered for its cash surrender value; (2) its cash surrender
value has been exhausted; or (3) the paid-up term insurance, if any, has expired; the policy will be reinstated at any time
within 3 years (or 2 years in the case of industrial life insurance policies) from the date of premium default upon written
application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums
in arrears with interest at a rate not exceeding 6% per annum compounded annually, and the payment or reinstatement of any
indebtedness to the insurer upon the policy with interest as provided in § 2911 of this title.
18 Del. C. 1953, § 2913; 56 Del. Laws, c. 380, § 1; 63 Del. Laws, c. 399, § 2.;
§ 2914. Payment of claims.
There shall be a provision that when the benefits under the policy shall become payable by reason of the death of the insured,
settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy and/or proof
of the interest of the claimant. If an insurer shall specify a particular period prior to the expiration of which settlement
shall be made, such period shall not exceed 2 months from the receipt of such proofs.
18 Del. C. 1953, § 2914; 56 Del. Laws, c. 380, § 1.;
§ 2915. Beneficiary, industrial policies.
An industrial life insurance policy shall have the name of the beneficiary designated thereon or in the application or other
form if attached to the policy, with a reservation of the right to designate or change the beneficiary after the issuance
of the policy, unless such beneficiary be irrevocably designated. The policy may also provide that no designation or change
of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer and that the insurer may refuse
to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life
of the insured. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the
policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be
less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies
before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder
to the executor or administrator of the insured, or to any relative of the insured by blood or legal adoption or connection
by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary,
or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also
include a similar provision applicable to any other payment due under the policy.
18 Del. C. 1953, § 2915; 56 Del. Laws, c. 380, § 1.;
§ 2916. Title.
There shall be a title on the policy, briefly describing the same.
18 Del. C. 1953, § 2916; 56 Del. Laws, c. 380, § 1.;
§ 2917. Excluded or restricted coverage.
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.
18 Del. C. 1953, § 2917; 56 Del. Laws, c. 380, § 1.;
§ 2918. Standard provisions; annuity and pure endowment contracts.
(a) No annuity or pure endowment contract, other than reversionary annuities (also called survivorship annuities) or group
annuities and except as stated herein, shall be delivered or issued for delivery in this State unless it contains in substance
each of the provisions specified in §§ 2919-2924, inclusive, of this title. Any of such provisions not applicable to single
premium annuities or single premium pure endowment contracts shall not, to that extent, be incorporated therein.
(b) This section shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under,
life insurance policies.
18 Del. C. 1953, § 2918; 56 Del. Laws, c. 380, § 1.;
§ 2919. Grace period; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that there shall be a period of grace of 1 month, but not less than 30 days, within which any stipulated payment to the insurer
falling due after the first may be made, subject at the option of the insurer to an interest charge thereon at a rate to be
specified in the contract but not exceeding 6% per annum for the number of days of grace elapsing before such payment, during
which period of grace the contract shall continue in full force, but in case a claim arises under the contract on account
of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of
the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted
from any amount payable under the contract in settlement.
18 Del. C. 1953, § 2919; 56 Del. Laws, c. 380, § 1.;
§ 2920. Incontestability; annuities.
If any statements, other than those relating to age, sex and identity are required as a condition to issuing an annuity or
pure endowment contract, other than a reversionary, survivorship or group annuity, and subject to § 2922 of this title, there
shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person
or of each of the persons as to whom such statements are required, for a period of 2 years from its date of issue, except
for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions
relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accident
or accidental means.
18 Del. C. 1953, § 2920; 56 Del. Laws, c. 380, § 1.;
§ 2921. Entire contract; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that the contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon
or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire
contract between the parties.
18 Del. C. 1953, § 2921; 56 Del. Laws, c. 380, § 1.;
§ 2922. Misstatement of age or sex; annuities.
In an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, there shall be a provision
that if the age or sex of the person or persons upon whose life or lives the contract is made, or of any of them has been
misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payment or payments
to the insurer would have purchased according to the correct age or sex and that if the insurer shall make or has made any
overpayment or overpayments on account of any such misstatement, the amount thereof with interest at the rate to be specified
in the contract but not exceeding 6% per annum, may be charged against the current or next succeeding payment or payments
to be made by the insurer under the contract.
18 Del. C. 1953, § 2922; 56 Del. Laws, c. 380, § 1.;
§ 2923. Dividends; annuities.
If an annuity or pure endowment contract, other than a reversionary, survivorship or group annuity, is participating, there
shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.
18 Del. C. 1953, § 2923; 56 Del. Laws, c. 380, § 1.;
§ 2924. Reinstatement; annuities.
In an annuity or pure endowment contract, other than a reversionary or group annuity, there shall be a provision that the
contract may be reinstated at any time within 1 year from the default in making stipulated payments to the insurer, unless
the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract
shall be paid or reinstated with interest thereon at a rate to be specified in the contract, but not exceeding 6% per annum
payable annually, and, in cases where applicable, the insurer may also include a requirement of evidence of insurability satisfactory
to the insurer.
18 Del. C. 1953, § 2924; 56 Del. Laws, c. 380, § 1.;
§ 2925. Standard provisions; reversionary annuities.
(a) Except as stated herein, no contract for a reversionary annuity shall be delivered or issued for delivery in this State
unless it contains in substance each of the following provisions:
(1) Any such reversionary annuity contract shall contain the provisions specified in §§ 2919-2923 of this title except that
under § 2919 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement
of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the
contract;
(2) In such reversionary annuity contracts there shall be a provision that the contract may be reinstated at any time within
3 years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability
satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of
the contract be paid, or, within the limits permitted by the then cash values of the contract, reinstated, with interest as
to both payments and indebtedness at a rate to be specified in the contract but not exceeding 6% per annum compounded annually.
(b) This section shall not apply to group annuities or to annuities included in life insurance policies and any of such provisions
not applicable to single premium annuities shall not to that extent be incorporated therein.
18 Del. C. 1953, § 2925; 56 Del. Laws, c. 380, § 1.;
§ 2926. Limitation of liability.
(a) No policy of life insurance shall be delivered or issued for delivery in this State if it contains any of the following
provisions:
(1) A provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than
3 years after the cause of action has accrued;
(2) A provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the
insured has a specified status, except that a policy may contain provisions excluding or restricting coverage as specified
therein in the event of death under any one or more of the following circumstances:
a. Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act
or hazard of such war or action, or of service in the military, naval or air forces or in civilian forces auxiliary thereto,
or from any cause while a member of such military, naval or air forces of any country at war, declared or undeclared, or of
any country engaged in such military action;
b. Death as a result of aviation or any air travel or flight;
c. Death as a result of a specified hazardous occupation or occupations or avocation;
d. Death while the insured is a resident outside continental United States and Canada; or
e. Death within 2 years from the date of issue of the policy as a result of suicide, while sane or insane.
(b) A policy which contains any exclusion or restriction pursuant to subdivision (2) of subsection (a) shall also provide
that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will
pay an amount not less than a reserve determined according to the Commissioner's reserve valuation method upon the basis of
the mortality table and interest rate specified in the policy for the calculation of nonforfeiture benefits (or if the policy
provides for no such benefits, computed according to a mortality table and interest rate determined by the insurer and specified
in the policy) with adjustment for indebtedness or dividend credit.
(c) This section shall not apply to group life insurance, health insurance, reinsurance or annuities or to any provision in
a life insurance policy or contract supplemental thereto relating to disability benefits or to additional benefits in the
event of death by accident or accidental means.
(d) Nothing contained in this section shall prohibit any provision which in the opinion of the Commissioner is more favorable
to the policyholder than a provision permitted by this section.
18 Del. C. 1953, § 2926; 56 Del. Laws, c. 380, § 1.;
§ 2927. Prohibited provisions.
(a) No life insurance policy, other than industrial life insurance, shall be delivered or issued for delivery in this State,
if it contains any of the following provisions:
(1) A provision by which the policy purports to be issued or to take effect more than 1 year before the original application
for the insurance was made;
(2) A provision for any mode of settlement at maturity of the policy of less value than the amount insured under the policy,
plus dividend additions, if any, less any indebtedness to the insurer on or secured by the policy and less any premium that
may by the terms of the policy be deducted;
(3) A provision 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 such agent binding upon the person so insured under the policy.
(b) No policy of industrial life insurance shall contain any of the following provisions:
(1) A provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained
other insurance from the same insurer;
(2) A provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment,
whether specified or not, or because the insured has received institutional, hospital, medical or surgical treatment or attention,
except a provision which gives the insurer the right to declare the policy void if the insured has, within 2 years prior to
the issuance of the policy, received institutional, hospital, medical or surgical treatment or attention and if the insured
or claimant under the policy fails to show that the condition occasioning such treatment or attention was not of a serious
nature or was not material to the risk;
(3) A provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance,
unless such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal
by the insurer to make such contract.
18 Del. C. 1953, § 2927; 56 Del. Laws, c. 380, § 1.;
§ 2928. Provisions required by law of other jurisdiction.
The policies of a foreign life insurer when issued in this State may contain any provision which the law of the state, territory,
district or country under which the insurer is organized prescribes shall be in such policies, and the policies of a domestic
life insurer may, when issued or delivered in any other state, territory, district or country, contain any provisions required
by the laws thereof, anything in this chapter to the contrary notwithstanding.
18 Del. C. 1953, § 2928; 56 Del. Laws, c. 380, § 1.;
§ 2929. Standard nonforfeiture law -- Generally.
(a) In the case of policies issued on and after the operative date of this section as defined in subsection (l) of this section,
no policy of life insurance, except as stated in subsection (k) of this section, shall be delivered or issued for delivery
in this State unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion
of the Commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements
hereinafter specified and are essentially in compliance with subsection (j) of this section:
(1) That, in the event of default in any premium payment, the insurer will grant, upon proper request not later than 60 days
after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective
as of such due date, of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit,
the insurer may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially
equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or,
if applicable, a greater amount or earlier payment of endowment benefits.
(2) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums
have been paid for at least 3 full years in the case of ordinary insurance or 5 full years in the case of industrial insurance,
the insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter
specified.
(3) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled
to make such election elects another available option not later than 60 days after the due date of the premium in default.
(4) That if the policy shall have become paid up by completion of all premium payments or if it is continued under any paid-up
nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance or
the fifth policy anniversary in the case of industrial insurance, the insurer will pay, upon surrender of the policy within
30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.
(5) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality
table, interest rate and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available
under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating
the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing
the cash surrender value, if any, and paid-up nonforfeiture benefits, if any, available under the policy on each policy anniversary
either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to
be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is
no indebtedness to the insurer on the policy.
(6) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less
than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered;
an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the
existence of any paid-up additions credited to the policy or any indebtedness to the insurer on the policy; if a detailed
statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that
such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered;
and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available
under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively
shown in the policy.
Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable,
be omitted from the policy.
The insurer shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand
therefor with surrender of the policy.
(b) 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 subsection (a) of this section, shall be an amount not less than the excess, if any, of the present
value, on such anniversary, of the future guaranteed benefits which 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 subsections (d), (e), (f) and (g) of this section, corresponding to premiums which would have fallen due on
and after such anniversary, and (2) the amount of any indebtedness to the insurer on the policy.
Provided, however, that for any policy issued on or after the operative date of subsection (g) of this section as defined
therein, which 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 the first paragraph
of this subsection shall be an amount not less than the sum of the cash surrender value as defined in such paragraph for an
otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender
value as defined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental
policy provision.
Provided, further, that for any family policy issued on or after the operative date of subsection (g) of this section as defined
therein, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring
before the spouse's age 71, the cash surrender value referred to in the first paragraph of this subsection shall be an amount
not less than the sum of the cash surrender value as defined in such paragraph for an otherwise similar policy issued at the
same age without such term insurance on the life of the spouse and the cash surrender value as defined in such paragraph for
a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
Any 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 by subsection (a)
of this section, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits
provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the
policy.
(c) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy
anniversary shall be such that its present value as of such 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 which would have been required by this
section in the absence of the condition that premiums shall have been paid for at least a specified period.
(d) This subsection shall not apply to policies issued on or after the operative date of subsection (g) of this section as
defined therein. Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall
be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for
each policy year, excluding amounts stated in the policy as extra premiums to cover impairments or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (1) the then
present value of the future guaranteed benefits provided for by the policy; (2) 2% of the amount of insurance, if the insurance
be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with
duration of the policy; (3) 40% of the adjusted premium for the first policy year; (4) 25% of either the adjusted premium
for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount
with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. In
applying the percentages specified in (3) and (4) above, no adjusted premium shall be deemed to exceed 4% of the amount of
insurance or level amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the
date as of which the rated age of the insured is determined.
In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount
thereof for the purpose of this subsection shall be deemed to be the uniform amount of insurance provided by an otherwise
similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the
amount of which does not vary with duration and the benefits under which have the same present value at the date of issue
as the benefits under the policy, provided, however, that in the case of a policy providing a varying amount of insurance
issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance
provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.
The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be
equal to (1) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits,
increased, during the period for which premiums for such term insurance benefits are payable, by (2) the adjusted premiums
for such term insurance, the foregoing items (1) and (2) being calculated separately and as specified in the first 2 paragraphs
of this subsection except that, for the purposes of (2), (3) and (4) of the first such paragraph, the amount of insurance
or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (2) shall be equal
to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the
adjusted premiums in (1).
Except as otherwise provided in subsections (e) and (f) of this section, all adjusted premiums and present values referred
to in this section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 Standard
Ordinary Mortality Table, 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 3 years younger than the actual age of the insured and
such calculations for all policies of industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality
Table. All calculations shall be made on the basis of the rate of interest, not exceeding 31/2% per annum, specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits. 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 130% of the rates of mortality according to such applicable table. For insurance issued on a substandard
basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may
be specified by the insurer and approved by the Commissioner.
(e) This subsection shall not apply to ordinary policies issued on or after the operative date of subsection (g) of this section
as defined therein. In the case of ordinary policies issued on or after the operative date of this subsection as defined herein,
all adjusted premiums and present values referred to in this section 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 31/2% per annum except that a rate
of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior to July 8, 1980,
and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8, 1980, and 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 6 years younger than the actual age of the insured. Provided, however, that in calculating
the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table. Provided,
further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values
may be based on such other table of mortality as may be specified by the insurer and approved by the Commissioner.
After May 21, 1959, any insurer may file with the Commissioner a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1966. After the filing of such notice, then upon such specified
date (which shall be the operative date of this subsection for such insurer), this subsection shall become operative with
respect to the ordinary policies thereafter issued by such insurer. If an insurer makes no such election, the operative date
of this subsection for such insurer shall be January 1, 1966.
(f) This subsection shall not apply to industrial policies issued on or after the operative date of subsection (g) of this
section as defined therein. In the case of industrial policies issued on or after the operative date of this subsection, as
defined herein, all adjusted premiums and present values referred to in this section 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 31/2% per annum,
except that a rate of interest not exceeding 4% per annum may be used for policies issued on or after June 21, 1973, and prior
to July 8, 1980, and a rate of interest not exceeding 51/2% per annum may be used for policies issued on or after July 8,
1980. Provided, however, that 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. Provided, further, that 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
insurer and approved by the Commissioner.
After July 7, 1964, any insurer may file with the Commissioner, a written notice of its election to comply with the provisions
of this subsection after a specified date before January 1, 1968. After the filing of such notice, then upon such date (which
shall be the operative date of this subsection for such insurer), this subsection shall become operative with respect to the
industrial policies thereafter issued by such insurer. If an insurer makes no such election, the operative date of this subsection
for such insurer shall be January 1, 1968.
(g)(1) This subsection shall apply to all policies issued on or after the operative date of this subsection as defined herein.
Except as provided in the seventh paragraph of this subsection, the adjusted premiums for any policy shall be calculated on
an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender
values and paid-up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums
shall be equal to the sum of: (i) The then present value of the future guaranteed benefits provided for by the policy; (ii)
1 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at
the beginning of each of the first 10 policy years; and (iii) 125 percent of the nonforfeiture net level premium as hereinafter
defined. Provided, however, that in applying the percentage specified in (iii) above no nonforfeiture net level premium shall
be deemed to exceed 4 percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount
of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this
subsection shall be the date as of which the rated age of the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present value, at the date of issue of the policy, of the guaranteed
benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of 1 per
annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
(3) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or
which provide an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and
present values shall initially be calculated on the assumption that future benefits and premiums do not change from those
stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums the future adjusted
premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits
and premiums do not change from those stipulated by the policy immediately after the change.
(4) Except as otherwise provided in the seventh paragraph of this subsection, the recalculated future adjusted premiums for
any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy
year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform
annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash
surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits
or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of (i) the then present value
of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over
(B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the newly defined benefits or premiums, shall be the sum
of: (i) 1 percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10
policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of
the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change,
the date of issue of the policy; and (ii) 125 percent of the increase, if positive, in the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A)
equals the sum of (i) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity
of 1 per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would
have fallen due had the change not occurred, and (ii) the present value of the increase in future guaranteed benefits provided
for by the policy, and (B) equals the present value of an annuity of 1 per annum payable on each anniversary of the policy
on or subsequent to the date of change on which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard
basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality
costs as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted
premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform
amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section shall for all policies or ordinary insurance be calculated
on the basis of (i) the Commissioners 1980 Standard Ordinary Mortality table or (ii) at the election of the insurer for any
1 or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with 10-Year Select
Mortality Factors; shall for all policies of industrial insurance be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table; and shall for all policies issued in a particular calendar year be calculated on the basis of
a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection, for policies issued in that
calendar year. Provided, however, that:
a. At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis
of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in
the immediately preceding calendar year.
b. Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (a) of this section, shall be calculated on the basis of the mortality table and rate
of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
c. An insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under
the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
d. 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 1980 Extended Term Insurance
Table for policies of ordinary insurance and not more than the Commissioners 1961 Industrial Extended Term Insurance Table
for policies of industrial insurance.
e. For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based
on appropriate modifications of the aforementioned tables.
f. Any ordinary mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1980 Standard Ordinary Mortality Table with or without 10-Year Select Mortality Factors or for the Commissioners
1980 Extended Term Insurance Table.
g. Any industrial mortality tables, adopted after 1980 by the National Association of Insurance Commissioners, that are approved
by regulation promulgated by the Commissioner for use in determining the minimum nonforfeiture standard may be substituted
for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance
Table.
(9) The nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125 percent
of the calendar year statutory valuation interest rate for such policy as defined in the standard valuation law, rounded to
the nearer one-quarter of 1 percent.
(10) Notwithstanding any other provision in this Code to the contrary, any refiling of nonforfeiture values or their methods
of computation for any previously approved policy form which involves only a change in the interest rate or mortality table
used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
(11) After June 21, 1983, any insurer may file with the Commissioner a written notice of its election to comply with this
subsection after a specified date before January 1, 1989, which shall be the operative date of this subsection for such insurer.
If an insurer makes no such election, the operative date of this subsection for such insurer shall be January 1, 1989.
(h) 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 insurer based on then 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 subsection (a), (b), (c), (d), (e),
(f) or (g) herein, then:
(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 subsection (a), (b), (c), (d), (f) or (g) herein;
(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 regulations promulgated by the Commissioner.
(i) Any cash surrender value and any paid-up nonforfeiture benefit, available under the 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 subsections
(b), (c), (d), (e), (f) and (g) of this section 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 be not
less than the amounts used to provide such additions. Notwithstanding subsection (b) of this section, additional 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 section would not apply, (5) as
term insurance on the life of 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's age is 26, is uniform in amount after the child's age is 1, and has not
become paid up by reason of the death of a parent of the child, and (6) as other policy benefits additional to life insurance
and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender
values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included
in any paid-up nonforfeiture benefits.
(j) This subsection, in addition to all other applicable subsections of this law, shall apply to all policies issued on or
after January 1, 1987. Any cash surrender value available under the policy in the event of default in a premium payment due
on any policy anniversary shall be in an amount which does not differ by more than two-tenths of 1 percent of either the amount
of insurance, if the insurance be uniform i
