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 dividend 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 stated in the policy and approved by the superintendent.
B. 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 thirty (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 Paragraph (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 one year from the date of apportionment; however, interest will not be added to the dividend but shall be paid out annually.
C. If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under such nonforfeiture provision shall be applied in the manner set forth in the policy.
D. In participating industrial life insurance policies, in lieu of the provision required otherwise in this section, 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.
History: Laws 1984, ch. 127, § 373.