§ 10-7-302 — Compulsory policy provisions

(1) On and after the operative date
of this part 3, no policy of life insurance, except as stated in section 10-7-307, shall
be delivered or issued for delivery in this state by any foreign or domestic life
insurance company unless it contains in substance the following provisions or
corresponding provisions which, upon findings of fact by the commissioner, are at
least as favorable to the defaulting or surrendering policyholder as are the
minimum requirements specified in this section, and are essentially in compliance
with section 10-7-306.1:

(a) That, in the event of default in any premium payment after premiums
have been paid for at least one full year, the company will grant, upon proper
election and notice thereof to the company 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 such due date, of such amount as may be specified in
this part 3. In lieu of such stipulated paid-up nonforfeiture benefit, the company
may substitute, upon proper request not 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 company will pay, in lieu of any paid-up nonforfeiture benefit, a cash
surrender value of such amount as may be specified in this part 3;

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

(d) That, if the policy becomes 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
company will pay, upon surrender of the policy within thirty days after any policy
anniversary, a cash surrender value of such amount as may be specified in this part
3;

(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 benefits, 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 company 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 laws of the state 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 company 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 such method of
computation has been filed with the insurance supervisory official of the state 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;

(g) A notice prominently printed on the first page of the policy or attached
thereto stating in substance that the policyholder shall have the right to return the
policy within fifteen days of its delivery and to have any premium refunded if, after
examination of the policy, the policyholder is not satisfied for any reason and, in the
case of a variable life insurance policy, the amount refunded shall be the account
value calculated as of the date the policy is returned plus any policy fee or charge
deducted from the policy. Any refund made pursuant to this paragraph (g) shall be
paid directly to the policyholder by the insurer in a timely manner.

(2) Any of the foregoing provisions or portions of this section not applicable
by reason of the plan of insurance, to the extent inapplicable, may be omitted from
the policy.

(3) The company 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.

Legislative History

Source: L. 61: p. 460, � 2. CRS 53: � 72-20-2. C.R.S. 1963: � 72-19-2. L. 77: (1)(f) R&RE and (2) amended, p. 523, �� 1, 2, effective July 1. L. 81: IP(1), (1)(a), and (1)(e) amended, p. 542, � 1, effective July 1. L. 92: (1)(g) added, p. 1564, � 76, effective May 20. L. 99: (1)(g) amended, p. 1007, � 2, effective August 4.