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

(b)  Nonforfeiture provisions - life:

(1)  In the case of policies issued on or after theoperative date of this section as defined in subsection (i), no policy of lifeinsurance, except as stated in subsection (h), shall be delivered or issued fordelivery in this State unless it contains in substance the followingprovisions, or corresponding provisions which in the opinion of thecommissioner are at least as favorable to the defaulting or surrenderingpolicyholder as are the minimum requirements hereinafter specified and areessentially in compliance with subsection (g):

(A)  That, in the event of default in anypremium payment, the insurer will grant, upon proper request not later thansixty days after the due date of the premium in default, a paid-upnonforfeiture benefit on a plan stipulated in the policy, effective as of thedue date, of such value as may be hereinafter specified.  In lieu of suchstipulated paid-up nonforfeiture benefit, the insurer may substitute, uponproper request no later than sixty days after the due date of the premium indefault, an actuarially equivalent alternative paid-up nonforfeiture benefitwhich provides a greater amount or longer period of death benefits or, ifapplicable, a greater amount or earlier payment of endowment benefits.

(B)  That, upon surrender of the policy withinsixty days after the due date of any premium payment in default after premiumshave been paid for at least three full years in the case of ordinary insuranceor 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 suchamount as may be hereinafter specified.

(C)  That a specified paid-up nonforfeiturebenefit shall become effective as specified in the policy unless the personentitled to make the election elects another available option not later thansixty days after the due date of the premium in default.

(D)  That, if the policy has been paid-up bycompletion of all premium payments or if it is continued under any paid-upnonforfeiture benefit which became effective on or after the third policy anniversaryin the case of ordinary insurance or the fifth policy anniversary in the caseof industrial insurance, the insurer will pay, upon surrender of the policywithin thirty days after any policy anniversary, a cash surrender value of suchamount as may be hereinafter specified.

(E)  In the case of policies which cause on abasis guaranteed in the policy unscheduled changes in benefits or premiums, orwhich provide an option for changes in benefits or premiums other than a changeto a new policy, a statement of the mortality table, interest rate, and methodused in calculating cash surrender values and the paid-up nonforfeiturebenefits available under the policy.  In the case of all other policies, astatement of the mortality table and interest rate used in calculating the cashsurrender values and the paid-up nonforfeiture benefits available under thepolicy, together with a table showing the cash surrender value, if any, andpaid-up nonforfeiture benefit, if any, available under the policy on each policyanniversary either during the first twenty policy years or during the term ofthe policy, whichever is shorter, such values and benefits to be calculatedupon the assumption that there are no dividends or paid-up additions creditedto the policy and that there is no indebtedness to the insurer on the policy.

(F)  A statement that the cash surrender valuesand the paid-up nonforfeiture benefits available under the policy are not lessthan the minimum values and benefits required by or pursuant to the insurancelaw of the jurisdiction in which the policy is delivered; an explanation of themanner in which the cash surrender values and the paid-up nonforfeiturebenefits are altered by the existence of any paid-up additions credited to thepolicy or any indebtedness to the insurer on the policy; if a detailedstatement of the method of computation of the values and benefits shown in thepolicy is not stated therein, a statement that the method of computation hasbeen filed with the insurance supervisory official of the jurisdiction in whichthe policy is delivered; and a statement of the method to be used incalculating the cash surrender value and paid-up nonforfeiture benefitavailable under the policy on any policy anniversary beyond the last anniversaryfor which such values and benefits are consecutively shown in the policy.

(2)  Any of the foregoing provisions or portionsthereof not applicable by reason of the plan of insurance may, to the extentinapplicable, be omitted from the policy.

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

(c)  Cash surrender value - life:

(1)  Any cash surrender value available under thepolicy in the event of default in a premium payment due on any policyanniversary, whether or not required by subsection (b), shall be an amount notless than the excess, if any, of the present value, on the anniversary, of thefuture guaranteed benefits that would have been provided for by the policyincluding any existing paid-up additions, if there had been no default, overthe sum of:

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

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

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

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

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

(d)  Paid-up nonforfeiture benefit - life:  Anypaid-up nonforfeiture benefit available under the policy in the event ofdefault in a premium payment due on any policy anniversary shall be such thatits present value as of the anniversary shall be at least equal to the cashsurrender 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 theabsence of the condition that premiums shall have been paid for at least aspecified period.

(e)  The adjusted premium - life:

(1)  This paragraph shall not apply to policies issuedon or after the operative date of paragraph (8) as defined therein.  Except asprovided in paragraph (4), the adjusted premiums for any policy shall becalculated on an annual basis and shall be such uniform percentage of therespective premiums specified in the policy for each policy year, excludingextra premiums on a substandard policy, that the present value, at the date ofissue of the policy, of all such adjusted premiums shall be equal to the sumof:

(A)  The then present value of the futureguaranteed 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, ashereinafter defined, if the amount of insurance varies with duration of thepolicy;

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

(D)  Twenty-five per cent of either theadjusted premium for the first policy year or the adjusted premium for a wholelife policy of the same uniform or equivalent uniform amount with uniformpremiums for the whole of life issued at the same age for the same amount ofinsurance, whichever is less.

(2)  This paragraph shall not apply to policies issuedon or after the operative date of paragraph (8).  In applying the percentagesspecified in paragraph (1)(C) and (D), no adjusted premium shall be deemed toexceed four per cent of the amount of insurance or uniform amount equivalentthereto.  Whenever the plan or term of a policy has been changed, either byrequest of the insured or automatically in accordance with the policy, the dateof inception of the changed policy for the purposes of determining a nonforfeiturebenefit or cash surrender value shall be the date as of which the age of theinsured is determined for the purposes of the changed policy.

(3)  This paragraph shall not apply to policies issuedon or after the operative date of paragraph (8).  In the case of a policyproviding an amount of insurance varying with duration of the policy, theequivalent uniform amount thereof for the purpose of this paragraph shall bedeemed to be the uniform amount of insurance provided by an otherwise similarpolicy, containing the same endowment benefit or benefits, if any, issued atthe same age and for the same term, the amount of which does not vary withduration and the benefits under which have the same present value at the dateof issue as the benefits under the policy.  In the case of a policy providing avarying amount of insurance issued on the life of a child under age ten, theequivalent uniform amount may be computed as though the amount of insuranceprovided by the policy prior to the attainment of age ten was the amountprovided by the policy at age ten.

(4)  This paragraph shall not apply to policies issuedon or after the operative date of paragraph (8).  The adjusted premiums for anypolicy providing term insurance benefits by rider or supplemental policyprovision shall be equal to the adjusted premiums for an otherwise similarpolicy issued at the same age without such term insurance benefits, increased,during the period for which premiums for such term insurance benefits arepayable, 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 thecalculation of the adjusted premiums referred to in paragraph (1)(B) shall beequal to the excess of the corresponding amount determined for the entirepolicy over the amount used in the calculation of the adjusted premiums inparagraph (1)(A).

(5)  This paragraph shall not apply to policies issuedon or after the operative date of paragraph (8).  Except as otherwise providedin paragraphs (6) and (7), all adjusted premiums and present values referred toin this section shall for all policies of ordinary insurance be calculated onthe basis of the Commissioners 1941 Standard Ordinary Mortality Table; providedthat for any category of ordinary insurance issued on female risks, adjustedpremiums and present values may be calculated according to an age not more thanthree years younger than the actual age of the insured, and such calculationsfor all policies of industrial insurance shall be made on the basis of the 1941Standard Industrial Mortality Table.  All calculations shall be made on thebasis of the rate of interest, not exceeding three and one-half per cent ayear, specified in the policy for calculating cash surrender values and paid-upnonforfeiture benefits.

In calculating thepresent value of any paid-up term insurance with accompanying pure endowment,if any, offered as a nonforfeiture benefit, the rates of mortality assumed maybe not more than one hundred thirty per cent of the rates of mortalityaccording to the applicable table.

For insurance issued on asubstandard basis, the calculation of any such adjusted premiums and presentvalues may be based on such other table of mortality as may be specified by theinsurer and approved by the commissioner.

(6)  This paragraph shall not apply to ordinarypolicies issued on or after the operative date of paragraph (8).  In the caseof ordinary policies issued on or after the operative date of this paragraph,all adjusted premiums and present values referred to in this section shall becalculated on the basis of the Commissioners 1958 Standard Ordinary MortalityTable.

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

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

(B)  A rate of interest not exceeding five andone-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 orendowment insurance policy, a rate of interest not exceeding six and one-halfper cent a year may be used.

For any category of ordinary insuranceissued on female risks, adjusted premiums and present values may be calculatedaccording to an age not more than six years younger than the actual age of theinsured.

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

For insurance issued on asubstandard basis, the calculation of any adjusted premiums and present valuesmay be based on such other table of mortality as may be specified by theinsurer and approved by the commissioner.

After June 1, 1959, any insurer may filewith the commissioner a written notice of its election to comply with theprovisions of this paragraph after a specified date before January 1, 1966. After the filing of such notice, then upon such specified date (which shall bethe operative date of this paragraph for such insurer), this paragraph shallbecome operative with respect to the ordinary policies thereafter issued bysuch insurer.  If an insurer makes no such election, the operative date of thisparagraph for such insurer shall be January 1, 1966.

(7)  This paragraph shall not apply to industrialpolicies issued on or after the operative date of paragraph (8).  In the caseof industrial policies issued on or after the operative date of this paragraph,all adjusted premiums and present values referred to in this section shall becalculated on the basis of the Commissioners 1961 Standard Industrial MortalityTable.

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

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

(B)  A rate of interest not exceeding five andone-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 endowmentinsurance policy a rate of interest not exceeding six and one-half per cent ayear may be used.

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

For insurance issuedon a substandard basis, the calculation of any adjusted premiums and presentvalues may be based on such other table of mortality as may be specified by theinsurer and approved by the commissioner.

After May 8, 1965, any insurermay file with the commissioner a written notice of its election to comply withthe provisions of this paragraph after a specified date before January 1,1968.  After the filing of such notice, then upon such specified date (whichshall be the operative date of this paragraph for such insurer), this paragraphshall become operative with respect to the industrial policies thereafter issuedby such insurer.  If an insurer makes no such election, the operative date ofthis paragraph for such insurer shall be January 1, 1968.

(8)  (A)  This paragraph shall apply to allpolicies issued on or after the operative date of this paragraph.  Except asprovided in subparagraph (G), the adjusted premiums for any policy shall becalculated on an annual basis and shall be such uniform percentage of therespective premiums specified in the policy for each policy year, excludingamounts payable as extra premiums to cover impairments or special hazards andalso excluding any uniform annual contract charge or policy fee specified inthe policy in a statement of the method to be used in calculating the cashsurrender values and paid-up nonforfeiture benefits, that the present value, atthe date of issue of the policy, of all adjusted premiums shall be equal to thesum of:

(i)  The then present value of the futureguaranteed 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 atthe beginning of each of the first ten policy years; and

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

In applying the percentage specifiedin clause (iii), no nonforfeiture net level premium shall be deemed to exceedfour per cent of either the amount of insurance, if the insurance be uniform inamount, or the average amount of insurance at the beginning of each of thefirst ten policy years.  The date of issue of a policy for the purpose of thisparagraph shall be the date as of which the rated age of the insured isdetermined.

(B)  The nonforfeiture net level premium shallbe equal to the present value, at the date of issue of the policy, of theguaranteed benefits provided for by the policy divided by the present value, atthe date of issue of the policy, of an annuity of one per annum payable on thedate of issue of the policy and on each anniversary of such policy on which apremium falls due.

(C)  In the case of policies that cause on abasis guaranteed in the policy unscheduled changes in benefits or premiums, orthat provide an option for changes in benefits or premiums other than a changeto a new policy, the adjusted premiums and present values shall initially becalculated on the assumption that future benefits and premiums do not changefrom those stipulated at the date of issue of the policy immediately after thechange.  At the time of any such change in the benefit or premiums the futureadjusted premiums, nonforfeiture net level premiums and present values shall berecalculated on the assumption that future benefits and premiums do not changefrom those stipulated by the policy immediately after the change.

(D)  Except as otherwise provided insubparagraph (G), the recalculated future adjusted premiums for any such policyshall be such uniform percentage of the respective future premiums specified inthe policy for each policy year, excluding amounts payable as extra premiums tocover impairments and special hazards, and also excluding any uniform annualcontract charge or policy fee specified in the policy in a statement of themethod to be used in calculating the cash surrender values and paid-up nonforfeiturebenefits, that the present value, at the time of change to the newly definedbenefits or premiums, of all such future adjusted premiums shall be equal tothe excess of the sum of:

(i)  The then present value of the then futureguaranteed 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-upnonforfeiture benefit under the policy.

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

(i)  One per cent of the excess, if positive, ofthe average amount of insurance at the beginning of each of the first tenpolicy years subsequent to the change over the average amount of insuranceprior to the change at the beginning of each of the first ten policy yearssubsequent to the time of the most recent previous change, or, if there hasbeen no previous change, the date of issue of the policy; and

(ii)  One hundred twenty-five per cent of theincrease, if positive, in the nonforfeiture net level premium.

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

(i)  The nonforfeiture net level premiumapplicable prior to the charge times the present value of an annuity of one perannum payable on each anniversary of the policy on or subsequent to the date ofthe charges on which a premium would have fallen due had the change notoccurred, plus the present value of the increase in future guaranteed benefitsprovided for by the policy; and

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

(G)  Notwithstanding any other provision ofthis paragraph to the contrary, in the case of a policy issued on a substandardbasis that provides reduced graded amounts of insurance so that, in each policyyear, such policy has the same tabular mortality cost as an otherwise similarpolicy issued on the standard basis that provides higher uniform amounts ofinsurance, adjusted premiums and present values for such substandard policy maybe calculated as if it were issued to provide such higher uniform amounts ofinsurance on the standard basis.

(H)  All adjusted premiums and present valuesreferred to in this section shall:  for all policies of ordinary insurance becalculated on the basis of either the Commissioners 1980 Standard OrdinaryMortality Table, or at the election of the company for any one or morespecified plans of life insurance, the Commissioners 1980 Standard OrdinaryMortality Table with Ten-Year Select Mortality Factors; for all policies of industrialinsurance be calculated on the basis of the Commissioners 1961 StandardIndustrial Mortality Table; and for all policies issued in a particularcalendar year be calculated on the basis of a rate of interest not exceedingthe nonforfeiture interest rate as defined in this paragraph for policiesissued in that calendar year; provided that:

(i)  At the option of the company, calculationsfor all policies issued in a particular calendar year may be made on the basisof a rate of interest not exceeding nonforfeiture interest rate, for policiesissued 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 ofthe mortality table and rate of interest used in determining the amount of suchpaid-up nonforfeiture benefit and paid-up dividend additions, if any;

(iii)  A company may calculate the amount of anyguaranteed paid-up nonforfeiture benefit, including any paid-up additions underthe policy on the basis of an interest rate no lower than that specified in thepolicy for calculating cash surrender values;

(iv)  In calculating the present value of anypaid-up term insurance with accompanying pure endowment, if any, offered as anonforfeiture benefit, the rates of mortality assumed may be not more thanthose shown in the Commissioners 1980 Extended Term Insurance Table forpolicies of ordinary insurance and not more than the Commissioners 1961Industrial Extended Term Insurance Table for policies of industrial insurance;

(v)  For insurance issued on a substandardbasis, the calculation of any such adjusted premiums and present values may bebased on appropriate modifications of the aforementioned tables;

(vi)  Any ordinary mortality tables, adoptedafter 1980 by the National Association of Insurance Commissioners, that areapproved by rule by the commissioner for use in determining the minimumnonforfeiture standard may be substituted for the Commissioners 1980 StandardOrdinary Mortality Table with or without Ten-Year Select Mortality Factors orfor the Commissioners 1980 Extended Term Insurance Table; and

(vii)  Any industrial mortality tables, adoptedafter 1980 by the National Association of Insurance Commissioners, that areapproved by rule by the commissioner for use in determining the minimumnonforfeiture standard may be substituted for the Commissioners 1961 StandardIndustrial Mortality Table or the Commissioners 1961 Industrial Extended TermInsurance Table.

(I)  The nonforfeiture interest rate per annumfor any policy issued in a particular calendar year shall be equal to onehundred twenty-five per cent of the calendar year statutory valuation interest ratefor such policy as defined in the Standard Valuation Law, rounded to the nearerone quarter of one per cent.

(J)  Notwithstanding any other provision inthis code to the contrary, any refiling of nonforfeiture values or theirmethods of computation for any previously approved policy form that involvesonly a change in the interest rate or mortality table used to computenonforfeiture values shall not require refiling of any other provisions of thatpolicy form.

(K)  After the effective date of this paragraph,any company may file with the commissioner a written notice of its election tocomply with this paragraph after a specified date before January 1, 1989, whichshall be the operative date of this paragraph for such company.  If a companymakes no such election, the operative date of this paragraph for such companyshall be January 1, 1989.

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

(i)  The commissioner shall be satisfied thatthe benefits provided under the plan are substantially as favorable topolicyholders and insureds as the minimum benefits otherwise required bysubsections (b), (c), (d), and (e);

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

(iii)  The cash surrender values and paid-upnonforfeiture benefits provided by such plan shall not be less than the minimumvalues and benefits required for the plan computed by a method consistent withthe principles of this Standard Nonforfeiture Law for Life Insurance, asdetermined by rules adopted by the commissioner.

(f)  Calculation of values - life:  Any cashsurrender 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 atany time other than on the policy anniversary, shall be calculated withallowance for the lapse of time and the payment of fractional premiums beyondthe last preceding policy anniversary.  All values referred to in subsections(c), (d), and (e) may be calculated upon the assumption that any death benefitis payable at the end of the policy year of death.  The net value of anypaid-up additions, other than paid-up term additions, shall be not less thanthe amounts used to provide such additions.  Notwithstanding subsection (c),additional benefits payable:

(1)  In the event of death or dismemberment byaccident or accidental means;

(2)  In the event of total and permanent disability;

(3)  As reversionary annuity or deferred reversionaryannuity benefits;

(4)  As term insurance benefits provided by a rider orsupplemental policy provision to which, if issued as a separate policy, thissection would not apply;

(5)  As term insurance on the life of a child or onthe lives of children provided in a policy on the life of a parent of thechild, if such term insurance expires before the child's age is twenty-six, isuniform in amount after the child's age is one, and has not become paid up byreason of the death of a parent of the child; and

(6)  As other policy benefits additional to lifeinsurance and endowment benefits, and premiums for all such additionalbenefits,

shall be disregarded in ascertaining cash surrendervalues and nonforfeiture benefits required by this section, and no suchadditional benefits shall be required to be included in any paid-upnonforfeiture benefits.

(g)  This subsection, in addition to all otherapplicable subsections of this section, shall apply to all policies issued onor after January 1, 1985.  Any cash surrender value available under the policyin the event of default in a premium payment due on any policy anniversaryshall be in an amount that does not differ by more than two-tenths of one 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 tenpolicy years, from the sum of the greater of zero and the basic cash valuehereinafter specified, and the present value of any existing paid-up additionsless the amount of any indebtedness to the company under the policy.

The basic cash value shall be equal to thepresent value, on such anniversary, of the future guaranteed benefits thatwould have been provided for by the policy, excluding any existing paid-upadditions and before deduction of any indebtedness to the company, if there hadbeen no default, less the then present value of the nonforfeiture factors, ashereinafter defined, corresponding to premiums that would have fallen due onand after such anniversary.  The effects on the basic cash value ofsupplemental life insurance or annuity benefits or of family coverage, asdescribed in subsection (c) or (e)(1), (2), (3), (4), and (5), whichever isapplicable, 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 surrendervalues defined in that subsection.

The nonforfeiture factor for each policy yearshall be an amount equal to a percentage of the adjusted premium for the policyyear, 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 succeedingsentence of this paragraph, such percentage:

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

(A)  The fifth policy anniversary; and

(B)  The first policy anniversary at whichthere is available under the policy a cash surrender value in an amount, beforeincluding any paid-up additions and before deducting any indebtedness, of atleast two-tenths of one per cent of either the amount of insurance, if theinsurance be uniform in amount, or the average amount of insurance at thebeginning of each of the first ten policy years; and

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

No basic cash value may be less than the value thatwould be obtained if the adjusted premiums for the policy, as defined insubsection (e)(1), (2), (3), (4), and (5) or subsection (e)(8), whichever isapplicable, were substituted for the nonforfeiture factors in the calculationof the basic cash value.

All adjusted premiums and present valuesreferred to in this subsection shall for a particular policy be calculated onthe same mortality and interest bases as are used in demonstrating the policy'scompliance with the other subsections of this section.  The cash surrendervalues referred to in this subsection shall include any endowment benefitsprovided for by the policy.

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

(h)  Exceptions.  This section shall not applyto 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 noguaranteed nonforfeiture or endowment benefits, or renewal thereof, of twentyyears or less expiring before age seventy-one for which uniform premiums arepayable during the entire term of the policy;

(6)  Term policy of decreasing amount, which providesno guaranteed nonforfeiture or endowment benefits, issued at the same age andfor the same initial amount of insurance and for a term of twenty years or lessexpiring before age seventy-one, for which uniform premiums are payable duringthe entire term of the policy;

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

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

For purposes of determining the applicabilityof this section, the age at expiry for a joint term life insurance policy shallbe 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 tocomply with the provisions of this section after a specified date within sixmonths from January 1, 1956.  After the filing of such notice, then upon suchspecified date (which shall be the operative date for such insurer), thissection shall become operative with respect to the policies thereafter issuedby such insurer.  If an insurer makes no such election, the operative date ofthis section for such insurer shall be six months from January 1, 1956. [L1987, c 347, pt of §2; am L 2003, c 212, §86; am L 2004, c 122, §45]