(a) If provided in its articles of incorporation, a domestic stock or domestic mutual insurer may issue any or all of its policies with or without participation in profits, savings, or unabsorbed portions of premiums, may classify policies issued on a participating and nonparticipating basis, and may determine the right to participate and the extent of participation of a class or classes of policies. The classification or determination shall be reasonable, and may not unfairly discriminate between policyholders within the same classifications. A life insurer may issue both participating and nonparticipating policies only if the right or absence of right to participate is reasonably related to the premium charged. A domestic insurer that, before July 1, 1966, has been issuing all or part of its policies on a participating basis without specific authorization in its articles of incorporation may continue to issue the policies on a basis not inconsistent with this section.
(b) After the third policy year a dividend otherwise earned may not be made contingent upon the payment of renewal premium on the policy.