§431:10D-104  Standard nonforfeiture law;
life insurance contracts.  (a)  This section shall be known as the Standard
Nonforfeiture Law for Life Insurance.



(b)  Nonforfeiture provisions - life:



(1)  In the case of policies issued on or after the
operative date of this section as defined in subsection (i), no policy of life
insurance, except as stated in subsection (h), shall be delivered or issued for
delivery in this State unless it contains 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 (g):



(A)  That, in the event of default in any
premium payment, the insurer will grant, upon proper request not later than
sixty 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 the
due date, of such value as may be hereinafter specified.  In lieu of such
stipulated paid-up nonforfeiture benefit, the insurer may substitute, upon
proper request no later than sixty 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.



(B)  That, upon surrender of the policy within
sixty days after the due date of any premium payment in default after premiums
have been paid for at least three full years in the case of ordinary insurance
or five 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.



(C)  That a specified paid-up nonforfeiture
benefit shall become effective as specified in the policy unless the person
entitled to make the election elects another available option not later than
sixty days after the due date of the premium in default.



(D)  That, if the policy has been 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 thirty days after any policy anniversary, a cash surrender value of such
amount as may be hereinafter specified.



(E)  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 benefit, if any, available under the policy on each policy
anniversary either during the first twenty 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.



(F)  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 jurisdiction 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 the method of computation has
been filed with the insurance supervisory official of the jurisdiction 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.



(2)  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.



(3)  The insurer shall reserve the right to defer the
payment of any cash surrender value for a period of six months after demand
therefor with surrender of the policy.



(c)  Cash surrender value - life:



(1)  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 (b), shall be an amount not
less than the excess, if any, of the present value, on the anniversary, of the
future guaranteed benefits that would have been provided for by the policy
including any existing paid-up additions, if there had been no default, over
the sum of:



(A)  The then present value of the adjusted
premiums as defined in subsection (e) corresponding to premiums that would have
fallen due on and after the anniversary; and



(B)  The amount of any indebtedness to the
insurer on account of or secured by the policy; provided that:



(i)  For any policy issued on or after the
operative date of subsection (e)(8) that provides supplemental life insurance
or annuity benefits at the option of the insured and for an identifiable
additional premium by rider or supplemental policy provision, the cash
surrender value referred to in this paragraph shall be an amount not less than
the sum of the cash surrender value for an otherwise similar policy issued at
the same age without such rider or supplemental policy provision and the cash
surrender value for a policy that provides only the benefits otherwise provided
by such rider or supplemental policy provision; and



(ii)  For any family policy issued on or after
the operative date of subsection (e)(8) that defines a primary insured and
provides term insurance on the life of the spouse of the primary insured
expiring before the spouse's seventy-first birthday, the cash surrender value
referred to in this paragraph shall be an amount not less than the sum of the
cash surrender value for an otherwise similar policy issued at the same age
without such term insurance on the life of the spouse and the cash surrender
value for an otherwise similar policy issued at the same age without such rider
or supplemental policy provision and the cash surrender value for a policy that
provides only the benefits otherwise provided by such term insurance on the
life of the spouse.



(2)  Any cash surrender value available within thirty
days after any policy anniversary, of the future guaranteed benefits provided
for by the policy including any existing paid-up additions, shall be decreased
by any indebtedness to the insurer on account of or secured by the policy.



(d)  Paid-up nonforfeiture benefit - life:  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 the anniversary shall be at least equal to the cash
surrender value then provided for by the policy or, if none is provided for,
that cash surrender value 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.



(e)  The adjusted premium - life:



(1)  This paragraph shall not apply to policies issued
on or after the operative date of paragraph (8) as defined therein.  Except as
provided in paragraph (4), 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
extra premiums on a substandard policy, that the present value, at the date of
issue of the policy, of all such adjusted premiums shall be equal to the sum
of:



(A)  The then present value of the future
guaranteed benefits provided for by the policy;



(B)  Two per cent of the amount of insurance,
if the insurance is uniform in amount, or of the equivalent uniform amount, as
hereinafter defined, if the amount of insurance varies with duration of the
policy;



(C)  Forty per cent of the adjusted premium for
the first policy year; and



(D)  Twenty-five per cent 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.



(2)  This paragraph shall not apply to policies issued
on or after the operative date of paragraph (8).  In applying the percentages
specified in paragraph (1)(C) and (D), no adjusted premium shall be deemed to
exceed four per cent of the amount of insurance or uniform amount equivalent
thereto.  Whenever the plan or term of a policy has been changed, either by
request of the insured or automatically in accordance with the policy, the date
of inception of the changed policy for the purposes of determining a nonforfeiture
benefit or cash surrender value shall be the date as of which the age of the
insured is determined for the purposes of the changed policy.



(3)  This paragraph shall not apply to policies issued
on or after the operative date of paragraph (8).  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 paragraph 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.  In the case of a policy providing a
varying amount of insurance issued on the life of a child under age ten, the
equivalent uniform amount may be computed as though the amount of insurance
provided by the policy prior to the attainment of age ten was the amount
provided by the policy at age ten.



(4)  This paragraph shall not apply to policies issued
on or after the operative date of paragraph (8).  The adjusted premiums for any
policy providing term insurance benefits by rider or supplemental policy
provision shall be equal to 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 the adjusted premiums for the term insurance.



The foregoing amounts in paragraph
(1)(A) and (B) being calculated separately and as specified in paragraphs (1),
(2), and (3), except that for the purposes of paragraph (1)(B), (C), and (D),
the amount of insurance or equivalent uniform amount of insurance used in the
calculation of the adjusted premiums referred to in paragraph (1)(B) 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
paragraph (1)(A).



(5)  This paragraph shall not apply to policies issued
on or after the operative date of paragraph (8).  Except as otherwise provided
in paragraphs (6) and (7), 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
three 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 three and one-half per cent a
year, 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
be not more than one hundred thirty per cent of the rates of mortality
according to the 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.



(6)  This paragraph shall not apply to ordinary
policies issued on or after the operative date of paragraph (8).  In the case
of ordinary policies issued on or after the operative date of this paragraph,
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.



The rate of interest specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits
shall not exceed three and one-half per cent a year, except that:



(A)  A rate of interest not exceeding four per
cent a year may be used for policies issued after June 1, 1976, and prior to
June 1, 1979;



(B)  A rate of interest not exceeding five and
one-half per cent a year may be used for policies issued on or after June 1,
1979; and



(C)  For any single premium whole life or
endowment insurance policy, a rate of interest not exceeding six and one-half
per cent a year may be used.



For any category of ordinary insurance
issued on female risks, adjusted premiums and present values may be calculated
according to an age not more than six years younger than the actual age of the
insured.



In calculating the
present value of any paid-up term insurance with accompanying pure endowment,
if any, offered as a nonforfeiture benefit, the rates of mortality assumed may
be not more than those shown in the Commissioners 1958 Extended Term Insurance
Table.



For insurance issued on a
substandard basis, the calculation of any adjusted premiums and present values
may be based on such other table of mortality as may be specified by the
insurer and approved by the commissioner.



After June 1, 1959, any insurer may file
with the commissioner a written notice of its election to comply with the
provisions of this paragraph 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 paragraph for such insurer), this paragraph 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
paragraph for such insurer shall be January 1, 1966.



(7)  This paragraph shall not apply to industrial
policies issued on or after the operative date of paragraph (8).  In the case
of industrial policies issued on or after the operative date of this paragraph,
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.



The rate of interest specified in the
policy for calculating cash surrender values and paid-up nonforfeiture benefits
shall not exceed three and one-half per cent a year, except that:



(A)  A rate of interest not exceeding four per
cent a year may be used for policies issued on or after June 1, 1976, and prior
to June 1, 1979;



(B)  A rate of interest not exceeding five and
one-half per cent a year may be used for policies issued on or after June 1,
1979; and



(C)  For any single premium whole life or endowment
insurance policy a rate of interest not exceeding six and one-half per cent a
year may be used.



In calculating the
present value of any paid-up term insurance with accompanying pure endowment,
if any, offered as a nonforfeiture benefit, the rates of mortality assumed may
be not more than those shown in the Commissioners 1961 Industrial Extended Term
Insurance Table.



For insurance issued
on a substandard basis, the calculation of any 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 8, 1965, any insurer
may file with the commissioner a written notice of its election to comply with
the provisions of this paragraph after a specified date before January 1,
1968.  After the filing of such notice, then upon such specified date (which
shall be the operative date of this paragraph for such insurer), this paragraph
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 paragraph for such insurer shall be January 1, 1968.



(8)  (A)  This paragraph shall apply to all
policies issued on or after the operative date of this paragraph.  Except as
provided in subparagraph (G), 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)  One per cent 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 ten policy years; and



(iii)  One hundred twenty-five per cent of the
nonforfeiture net level premium as hereinafter defined.



In applying the percentage specified
in clause (iii), no nonforfeiture net level premium shall be deemed to exceed
four per cent 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 ten policy years.  The date of issue of a policy for the purpose of this
paragraph shall be the date as of which the rated age of the insured is
determined.



(B)  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 one per annum payable on the
date of issue of the policy and on each anniversary of such policy on which a
premium falls due.



(C)  In the case of policies that cause on a
basis guaranteed in the policy unscheduled changes in benefits or premiums, or
that 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 immediately after the
change.  At the time of any such change in the benefit 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.



(D)  Except as otherwise provided in
subparagraph (G), 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 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 the then cash surrender value, if any, or present value of any paid-up
nonforfeiture benefit under the policy.



(E)  The additional expense allowance, at the
time of the change to the newly defined benefits or premiums, shall be the sum
of:



(i)  One per cent of the excess, if positive, of
the average amount of insurance at the beginning of each of the first ten
policy years subsequent to the change over the average amount of insurance
prior to the change at the beginning of each of the first ten 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)  One hundred twenty-five per cent of the
increase, if positive, in the nonforfeiture net level premium.



(F)  The recalculated nonforfeiture net level
premium shall be equal to the result obtained by dividing the value defined in
clause (i) by the value defined in clause (ii):



(i)  The nonforfeiture net level premium
applicable prior to the charge times the present value of an annuity of one per
annum payable on each anniversary of the policy on or subsequent to the date of
the charges on which a premium would have fallen due had the change not
occurred, plus the present value of the increase in future guaranteed benefits
provided for by the policy; and



(ii)  The present value of an annuity of one per
annum payable on each anniversary of the policy on or subsequent to the date of
charge on which a premium falls due.



(G)  Notwithstanding any other provision of
this paragraph to the contrary, in the case of a policy issued on a substandard
basis that provides reduced graded amounts of insurance so that, in each policy
year, such policy has the same tabular mortality cost as an otherwise similar
policy issued on the standard basis that 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.



(H)  All adjusted premiums and present values
referred to in this section shall:  for all policies of ordinary insurance be
calculated on the basis of either the Commissioners 1980 Standard Ordinary
Mortality Table, or at the election of the company for any one or more
specified plans of life insurance, the Commissioners 1980 Standard Ordinary
Mortality Table with Ten-Year Select Mortality Factors; for all policies of industrial
insurance be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table; and 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 paragraph for policies
issued in that calendar year; provided that:



(i)  At the option of the company, calculations
for all policies issued in a particular calendar year may be made on the basis
of a rate of interest not exceeding nonforfeiture interest rate, for policies
issued in the immediately preceding calendar year;



(ii)  Under any paid-up nonforfeiture benefit,
including any paid-up dividend additions, any cash surrender value available,
whether or not required by subsection (b), 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;



(iii)  A company 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;



(iv)  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;



(v)  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;



(vi)  Any ordinary mortality tables, adopted
after 1980 by the National Association of Insurance Commissioners, that are
approved by rule 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 Ten-Year Select Mortality Factors or
for the Commissioners 1980 Extended Term Insurance Table; and



(vii)  Any industrial mortality tables, adopted
after 1980 by the National Association of Insurance Commissioners, that are
approved by rule 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.



(I)  The nonforfeiture interest rate per annum
for any policy issued in a particular calendar year shall be equal to one
hundred twenty-five per cent 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 one per cent.



(J)  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 that 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.



(K)  After the effective date of this paragraph,
any company may file with the commissioner a written notice of its election to
comply with this paragraph after a specified date before January 1, 1989, which
shall be the operative date of this paragraph for such company.  If a company
makes no such election, the operative date of this paragraph for such company
shall be January 1, 1989.



(L)  In the case of any plan of life insurance
that provides for future premium determination, the amounts of which are to be
determined by the insurance company based on then estimates of future
experience, or in the case of any plan of life insurance that is of such a
nature that minimum values cannot be determined by the methods described in
subsections (b), (c), (d), and (e), then:



(i)  The commissioner shall be satisfied that
the benefits provided under the plan are substantially as favorable to
policyholders and insureds as the minimum benefits otherwise required by
subsections (b), (c), (d), and (e);



(ii)  The commissioner shall be satisfied that
the benefits and the pattern of premiums of that plan are not such as to
mislead prospective policyholders or insureds; and



(iii)  The cash surrender values and paid-up
nonforfeiture benefits provided by such plan shall 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 rules adopted by the commissioner.



(f)  Calculation of values - life:  Any cash
surrender value and any paid-up 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
(c), (d), and (e) 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 (c),
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 twenty-six, is
uniform in amount after the child's age is one, 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.



(g)  This subsection, in addition to all other
applicable subsections of this section, shall apply to all policies issued on
or after January 1, 1985.  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 that does not differ by more than two-tenths of one per
cent 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 ten
policy years, from the sum of the greater of zero and the basic cash value
hereinafter specified, and the present value of any existing paid-up additions
less the amount of any indebtedness to the company under the policy.



The basic cash value shall be equal to the
present value, on such anniversary, of the future guaranteed benefits that
would have been provided for by the policy, excluding any existing paid-up
additions and before deduction of any indebtedness to the company, if there had
been no default, less the then present value of the nonforfeiture factors, as
hereinafter defined, corresponding to premiums that would have fallen due on
and after such anniversary.  The effects on the basic cash value of
supplemental life insurance or annuity benefits or of family coverage, as
described in subsection (c) or (e)(1), (2), (3), (4), and (5), whichever is
applicable, shall be the same as are the effects specified in subsection (c) or
(e)(1), (2), (3), (4), and (5), whichever is applicable, on the cash surrender
values defined in that subsection.



The nonforfeiture factor for each policy year
shall be an amount equal to a percentage of the adjusted premium for the policy
year, as defined in subsection (e)(1), (2), (3), (4), and (5) or subsection
(e)(8), whichever is applicable.  Except as is required by the next succeeding
sentence of this paragraph, such percentage:



(1)  Shall be the same for each policy year between
the second policy anniversary and the later of:



(A)  The fifth policy anniversary; and



(B)  The first policy anniversary at which
there is available under the policy a cash surrender value in an amount, before
including any paid-up additions and before deducting any indebtedness, of at
least two-tenths of one per cent 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 ten policy years; and



(2)  Shall be such that no percentage after the later
of the two policy anniversaries specified in paragraph (1) may apply to fewer
than five consecutive policy years.



No basic cash value may be less than the value that
would be obtained if the adjusted premiums for the policy, as defined in
subsection (e)(1), (2), (3), (4), and (5) or subsection (e)(8), whichever is
applicable, were substituted for the nonforfeiture factors in the calculation
of the basic cash value.



All adjusted premiums and present values
referred to in this subsection shall for a particular policy be calculated on
the same mortality and interest bases as are used in demonstrating the policy's
compliance with the other subsections of this section.  The cash surrender
values referred to in this subsection shall include any endowment benefits
provided for by the policy.



Any cash surrender value available other than
in the event of default in a premium payment due on a policy anniversary, and
the amount of any paid-up nonforfeiture benefit available under the policy in
the event of default in a premium payment shall be determined in manners
consistent with the manners specified for determining the analogous minimum
amounts in subsections (b), (c), (d), (e)(8), and (f).  The amounts of any cash
surrender values and of any paid-up nonforfeiture benefits granted in
connection with additional benefits such as those listed as paragraphs (1)
through (6) in subsection (f) shall conform with the principles of this
subsection.



(h)  Exceptions.  This section shall not apply
to any of the following:



(1)  Reinsurance;



(2)  Group insurance;



(3)  Pure endowment;



(4)  Annuity or reversionary annuity contract;



(5)  Term policy uniform amount, which provides no
guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty
years or less expiring before age seventy-one for which uniform premiums are
payable during the entire term of the policy;



(6)  Term policy of decreasing amount, which provides
no guaranteed nonforfeiture or endowment benefits, issued at the same age and
for the same initial amount of insurance and for a term of twenty years or less
expiring before age seventy-one, for which uniform premiums are payable during
the entire term of the policy;



(7)  Policy, which provides no guaranteed
nonforfeiture or endowment benefits, for which no cash surrender value, if any,
or present value of any paid-up nonforfeiture benefit, at the beginning of any
policy year calculated as specified in subsections (c), (d), and (e), exceeds
two and one-half per cent of the amount on insurance at the beginning of the
policy year; and



(8)  Policy which shall be delivered outside this
State through a producer or other representative of the company issuing the
policy.



For purposes of determining the applicability
of this section, the age at expiry for a joint term life insurance policy shall
be the age at expiry of the oldest life.



(i)  Operative date.  After January 1, 1956,
any insurer may file with the commissioner a written notice of its election to
comply with the provisions of this section after a specified date within six
months from January 1, 1956.  After the filing of such notice, then upon such
specified date (which shall be the operative date for such insurer), this
section shall become operative with respect to the policies thereafter issued
by such insurer.  If an insurer makes no such election, the operative date of
this section for such insurer shall be six months from January 1, 1956. [L
1987, c 347, pt of §2; am L 2003, c 212, §86; am L 2004, c 122, §45]