§ 27-1-12-5 — Required provisions of policies between July 1, 1935, and transition date or January 1, 1948

Indiana § 27-1-12-5

• Jurisdiction: Indiana
• Title 27: INSURANCE
• Art. 1: DEPARTMENT OF INSURANCE
• Ch. 12: Life Insurance Company Powers and Policy

Text

(a) No policy of life insurance, other than
industrial insurance, group life insurance, or reinsurance, bearing a
date of issue not earlier than July 1, 1935, nor later than a transition
date to be selected by the company pursuant to section 12 of this
chapter, such transition date in no event to be later than January 1,
1948, shall be delivered or issued for delivery in this state or issued by
a company organized under the laws of this state unless the same shall
provide the following:
(1) That all premiums shall be payable in advance, either at the
home office of the company, or to an agent of the company, upon
delivery of a receipt signed by one (1) or more of the officers who
shall be designated in the policy.
(2) For a grace of not less than thirty (30) days for the payment of
every premium after the first premium, which may be subject to
an interest charge, during which period the insurance shall
continue in force; provided, that if the insured shall die within
such period of grace the unpaid premium for the current policy
year may be deducted in any settlement under the policy.
(3) That the policy, together with the application therefor, a copy
of which application shall be attached to the policy and made a
part thereof, shall constitute the entire contract between the
parties and shall be incontestable after it shall have been in force
during the lifetime of the insured for two (2) years from its date,
or, at the option of the company after it shall have been in force
for two (2) years from its date, except for nonpayment of
premiums, and except for violation of the conditions of the policy
relating to naval and military service in time of war, and at the
option of the company provisions relative to benefits in the event
of total and permanent disability and provisions which grant
additional insurance specifically against death by accident may
also be excepted.
(4) That if the age of the insured and/or the beneficiary, if that age
enters into the determination of the premiums charged or benefits
promised, has been misstated, the amount payable under the
policy shall be such as the premium would have purchased at the
correct age of the insured and/or beneficiary.
(5) That all statements made by the insured in the application
shall, in the absence of fraud, be deemed representations and not
warranties.
(6) That, in the case of participating policies, the policy shall
participate in the surplus of the company as apportioned by the
board of directors of the company, and that, beginning not later
than the end of the fifth policy year, the company will determine
and account for the portion of the divisible surplus so ascertained
accruing on the policy, and that the owner of the policy shall have
the right to have the current dividends arising from such
participation paid in cash, and that at periods of not more than
five (5) years, such accounting and payment at the option of the
policyholder shall be had. The owner of the policy may elect to
take any of the other dividend options in the policy. If the owner
of the policy shall not elect any of the other dividend options
provided in the policy, the apportioned dividends shall be held to
the credit of the policy and be payable in cash at maturity of the
policy or be withdrawable in cash at an anniversary of its date;
provided, however, if the policy shall contain a provision for an
apportionment of the surplus at the end of the first policy year and
annually thereafter, then and in that event said policy may provide
that each dividend shall be paid subject to the payment of the
premium of the next ensuing year.
(7) A table showing in figures the loan values and the cash,
paid-up and extended insurance options upon surrender, or
available under the policy each year, upon default in premium
payment during at least the first twenty (20) years of the policy,
beginning at the end of the third policy year, which values shall
be equal to the full reserve on the policy, except the reserve for
permanent mental or physical disability, or for accidental death,
and/or other supplemental benefits, less not to exceed two and
one-half percent (2 1/2%) of the sum insured; following this table
there shall be a clause specifying the mortality table and rate of
interest adopted for computing the reserve and specifying the
basis for the values and options after the period covered by the
table. The provisions of this subdivision shall not apply to term
policies nor to any form of paid-up insurance issued or granted in
exchange for lapsed or surrendered policies.
(8) Policies issued by companies doing business in this state may
provide for not more than one (1) year preliminary term insurance
by incorporating therein the following clause immediately
following the table of options and statement of basis therefor, as
provided for in subdivision (7): "The first year's insurance under
this policy is term insurance, purchased by the whole or part of
the premium to be received during the first policy year and the
policy shall be valued according to its terms and the laws of the
state of Indiana".
(9) That after three (3) full years' premiums shall have been paid,
the company, at any time while the policy is in force, will loan, on
the execution of a proper assignment of the policy and on the sole
security thereof, at a specified rate of interest, a sum equal to, or
at the option of the insured, less than the amount stated in the
table of options to be loaned at the end of the current policy year
plus the value of the reserve on any dividend additions to the
policy, and that the company will deduct from such loan value any
existing indebtedness on or secured by the policy and any unpaid
balance of the premiums for the current policy year, and may
collect interest in advance on the loan to the end of the current
policy year, and may further provide that such loan may be
deferred for not exceeding six (6) months after the application
therefor is made. It shall be further stipulated in the policy that
failure to repay any such loan or pay interest thereon shall not
void the policy unless such total indebtedness to the company
shall equal or exceed such loan value at the time of such failure,
nor until thirty (30) days after notice shall have been mailed by
the company to the last known address of the insured and to the
assignee, if any, if such assignee has notified the company of his
address. No condition other than as provided in this subdivision
shall be exacted as a prerequisite to any such loan. The provisions
of this subdivision shall not be required in term policies nor shall
they apply to paid-up insurance issued or granted in exchange for
lapsed or surrendered policies.
(10) That in the event of default of premium payment after
premiums have been paid for not less than three (3) years, the
insured shall be entitled to the extended insurance shown in the
table of values and options for the end of the last year for which
full annual premiums shall have been paid; provided, that if there
be any unpaid note given for a premium or any indebtedness to
the company on account of or secured by the policy, the amount
of extended insurance shall be reduced in the ratio of such
indebtedness to the net value of such extended insurance, or the
amount of such indebtedness shall be deducted from the net value
of the extended insurance otherwise available and the balance
shall be applied as a net single premium to purchase extended
insurance for an amount equal either to the face of the policy or
to the face of the policy less the amount of such indebtedness; and
provided further, that the policy may be surrendered to the
company at its home office within one (1) month from the due
date of the unpaid premium for a specified cash value at least
equal to the sum which would otherwise be available for the
purchase of extended insurance as provided in this subdivision;
and provided further, that the company may defer payment for not
more than six (6) months after the application therefor is made.
The provisions of this subdivision shall not be required in term
insurance of twenty (20) years or less.
(11) That, should there have been default in premium payment,
and the value of the policy applied to the extension of the
insurance, and such insurance be in force and the original policy
not surrendered to the company and cancelled, the policy may be
reinstated within three (3) years from such default, upon evidence
of insurability satisfactory to the company and payment of arrears
of premiums with interest.
(12) That when a policy shall become a claim by the death of the
insured, settlement shall be made upon receipt of due proof of
death and of the interest of the claimant and not later than two (2)
months after receipt of such proof.
(13) A title on the face and on the back of the policy describing
the same.
(b) Any of the provisions of subsection (a) not applicable to single
premium policies shall to that extent not be incorporated therein. The
provisions of subsection (a) shall not apply to policies issued on
substandard, underaverage, or impaired risks. Any policy may be
issued or delivered in this state which in the opinion of the department
contains provisions on any one (1) or more of the several requirements
of subsection (a) more favorable to the policyholder than those required
in subsection (a).
Formerly: Acts 1935, c.162, s.151; Acts 1943, c.189, s.1. As
amended by P.L.252-1985, SEC.60.