§431:10D-102  Standard provisions required. (a)  No policy of life insurance shall be delivered or issued for delivery inthis State unless it contains in substance all of the following provisions:

(1)  Grace period.  A grace period of thirty daysshall be allowed during which the policy shall continue in full force.  If aclaim arises under the policy during the grace period and before an overduepremium is paid, the amount of such premium may be deducted from the policyproceeds.

(2)  Entire contract.  The policy, or the policy andthe application therefor, shall constitute the entire contract between theparties.  All statements contained in the application shall, in the absence offraud, be deemed representations and not warranties.  The application shall notconstitute a part of the entire contract unless a copy of the application isendorsed upon or attached to the policy when issued.

(3)  Incontestability.  The policy, exclusive ofprovisions relating to disability benefits or to additional benefits in theevent of death by accident or accidental means, shall be incontestable, exceptfor nonpayment of premiums, after it has been in force during the lifetime ofthe insured for a period of two years from its date of issue.

(4)  Misstatement of age.  If the age of the insuredor of any other person whose age is considered in determining the premium hasbeen misstated, any amount payable or benefit accruing under the policy shallbe such as the premium would have purchased at the correct age or ages.

(5)  Reinstatement.  The policy will be reinstated atany time within three years from the date of premium default, unless the policyhas been surrendered for its cash surrender value or unless the paid-up terminsurance has expired, upon:

(A)  Written application for reinstatement;

(B)  The production of evidence of insurabilitysatisfactory to the insurer;

(C)  The payment of all premiums in arrears;and

(D)  The payment or reinstatement of any otherindebtedness to the insurer upon the policy, all with interest at a rate notexceeding six per cent a year compounded annually.

(6)  Participation in surplus.

(A)  In participating policies, that beginningnot later than the end of the third policy year, the insurer shall annuallyascertain and apportion the divisible surplus, if any, accruing on the policyanniversary or other dividend date specified in the policy.  Except ashereinafter provided, any dividend becoming payable shall at the option of theparty entitled to elect such option be either:

(i)  Payable in cash, or

(ii)  Applied to any one of the other dividendoptions as may be provided by the policy.

(B)  If any other dividend options areprovided, the policy shall state which option shall be automatically effectiveif the party shall not have elected some other option before the expiration ofthe period not less than thirty days following the date on which the dividendis due and payable.  The annually apportioned dividend shall be deemed to bepayable in cash within the meaning of [subparagraph] (A)(i) even though thepolicy provides that payment of the dividend is to be deferred for a specifiedperiod, provided such period does not exceed six years from the date ofapportionment, and that interest will be added to the dividend at a specified rate. If a policy provides that the benefit under any paid-up nonforfeiture provisionis to be participating, it may provide that any divisible surplus becomingpayable or apportioned while the insurance is in force under the nonforfeitureprovision shall be applied in the manner set forth in the policy.

(7)  Table of installments.  A table showing theamounts of the guaranteed installments in instances where the policy providesthat the proceeds may be payable in installments which are determinable priorto maturity of the policy.

(8)  Policy loan.

(A)  (i)  In the case of policies issued prior tothe operative date of the Standard Nonforfeiture Law (section 431:10D-104), aprovision that after the policy has been in force three full years, the insurerat any time, while the policy is in force, will:

(I)  Advanceon proper assignment or pledge of the policy and on the sole security thereof,at a specified rate of interest, a sum equal to or, at the option of theinsured, less than the reserve at the end of the current policy year on thepolicy and on any dividend additions thereto, computed according to a mortalitytable, interest rate, and method of valuation permitted by section 431:5-307,less a sum of not more than two and one-half per cent of the amount insured bythe policy and of any dividend additions thereto; and

(II)  Deductfrom the loan value any existing indebtedness on the policy and any unpaidbalance of the premium for the current policy year, and may collect interest inadvance on the loan to the end of the current policy year.

The policy may further provide that theloan may be deferred for not exceeding six months after the application ismade.

(ii)  This subsection shall not be required interm insurance, nor shall it apply to temporary insurance or pure endowmentinsurance, issued or granted in exchange for lapsed or surrendered policies.

(B)  (i)  In the case of policies issued on or afterthe operative date of the Standard Nonforfeiture Law (section 431:10D-104), aprovision that after the policy has a cash surrender value and while no premiumis in default, the insurer will advance, on proper assignment or pledge of thepolicy and on the sole security thereof, at a rate of interest not exceedingeight per cent a year, an amount at the option of the party entitled thereto,not to exceed the loan value less any prior indebtedness on the policy.  If thepolicy shall provide for a rate of return in excess of six per cent a year, thecommissioner may require of the insurers that the holders of such policies willbenefit through higher dividends or lower premiums.  The policy shall alsoprovide for a loan value at least equal to the cash surrender value of thepolicy without indebtedness at the end of the then current policy year, less anyunpaid balance of the premium for the current policy year, and less interest onthe loan to the end of the current policy year.  The policy shall reserve tothe insurer the right to defer the granting of a loan, other than for thepayment of any premium to the insurer, for six months after application ismade.

(ii)  The policy may also provide that ifinterest on any indebtedness is not paid when due, it shall then be added tothe existing indebtedness and shall bear interest at the same rate, and that ifand when the total indebtedness on the policy including interest due oraccrued, equals or exceeds the amount of the loan value thereof, then thepolicy shall terminate and become void.

(iii)  This subsection shall not apply to termpolicies nor to term insurance benefits provided by rider or supplementalpolicy provisions.

(9)  Nonforfeiture benefits and cash surrender values.

(A)  (i)  In the case of policies issued prior tothe operative date of the Standard Nonforfeiture Law (section 431:10D-104), aprovision that in event of default in premium payments, after premiums shallhave been paid for three years, the insured shall be entitled to a stipulatedform of insurance the net value of which shall be at least equal to the reserveat the date of default on the policy and on dividend additions thereto, if any,computed according to a mortality table, interest rate, and method of valuationpermitted by section 431:5-307, less a percentage (not more than two andone-half) of the amount insured by the policy and of existing dividendadditions thereto, if any, and less any existing indebtedness to the insurer onor secured by the policy; provided that:

(I)  Ifthe benefits under the policy are calculated according to a more modern tablethan the American Experience Table of Mortality, the value of any extended terminsurance, with accompanying pure endowment, if any, may be calculatedaccording to rates of mortality not exceeding one hundred thirty per cent ofthe rates according to such more modern table;

(II)  Thepolicy may be surrendered to the insurer at its home office within one month ofdate of default for a specified cash value at least equal to the sum whichwould otherwise be available for the purchase of insurance as aforesaid; and

(III)  Theinsurer may defer payment for not more than six months after the application ismade.

(ii)  The policy shall also contain a provisionspecifying the options to which the policyholder is entitled in the event ofdefault in a premium payment after three full annual premiums have been paid.

(iii)  The policy shall also contain a tableshowing in figures the loan values and the options available under the policyeach year upon default in premium payments, during at least the first twentyyears of the policy or during the premium paying period if less than twentyyears.

(iv)  A provision may be inserted in the policythat in event of default in a premium payment before the options becomeavailable, the reserve on any dividend additions then in force may at theoption of the insurer be paid in cash or applied as a net premium to thepurchase of paid-up term insurance for any amount not in excess of the face ofthe original policy.

(v)  This subsection shall not be required interm insurance of twenty years or less.

(B)  In the case of policies issued on or afterthe operative date of the Standard Nonforfeiture Law (section 431:10D-104), aprovision for nonforfeiture benefits and cash surrender values in accordancewith the requirements of section 431:10D-104.

(b)  Any of the provisions or portions of[subsection (a)](1) through (9) not applicable to single premium policies shallto that extent not be incorporated therein.  This section shall not apply to:

(1)  Any provision of a life insurance policy relatingto disability benefits;

(2)  Additional benefits in the event of death byaccident or accidental means;

(3)  Annuities; or

(4)  Pure endowment contracts. [L 1987, c 347, pt of§2; am L 2004, c 122, §43]