§ 10-7-107 — Nonforfeiture benefits - applicability

Colorado § 10-7-107

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Life Insurance

Text

(1) In the event of default in
the payment of any premium due on any policy issued after March 28, 1945, except
term or convertible term policies, if not less than three full years' premiums have
been paid thereon, there shall be secured to the insured, without action on his part,
as specified in the policy, either paid-up insurance or extended insurance. The net
value applied to such paid-up insurance or extended insurance shall be at least
equal to the amount which would constitute the then reserve on the policy,
including dividend additions, if any, calculated, with the privilege of one year
preliminary term, upon the mortality table and rate of interest used in the policy as
a basis for the calculation of such nonforfeiture benefits under the policy, less two
and one-half percent of the amount insured by the policy and dividend additions, if
any, or one-fifth of such reserve, and less any outstanding indebtedness to the
company on the policy at time of default; but the mortality table and rate of interest
used as a basis for the calculation of such nonforfeiture benefits shall be
designated in the policy and shall be a mortality table and an interest rate
acceptable for the valuation of such policy pursuant to section 10-7-101 (2).

(2) If the mortality table so designated in any such policy is other than the
American experience table of mortality, a rate of mortality not more than one
hundred thirty percent of the rate of mortality according to the table designated
may be assumed in calculating any extended insurance, with accompanying pure
endowment, if any, offered as a nonforfeiture benefit.

(3) There shall be secured to the insured the right to surrender the policy to
the company at its home office within one month after date of default for the cash
value otherwise available for paid-up insurance or extended insurance, but the right
to cash dividends or to cash surrender value, provided by this section and section
10-3-205, may be specifically waived in the policy.

(4) Nothing in this section shall be construed to prohibit the company from
including in its policies a provision for automatic premium loans to prevent premium
default.

(5) No agreement between the company and the policyholder or applicant
for insurance shall be held to waive any of the provisions of this section and section
10-3-205, except as provided in this section.

(6) Subsections (1) to (5) of this section shall not apply to any policy issued
on or after the operative date of the Standard Nonforfeiture and Valuation Act. As
to any such policy the provisions of sections 10-7-302 to 10-7-308 shall be
applicable.

Legislative History

Source: L. 13: p. 353, � 50. C.L. � 2523. CSA: C. 87, � 65. L. 45: p. 414, � 2. CRS 53: � 72-3-12. L. 61: p. 465, � 11. C.R.S. 1963: � 72-3-12.