§ 44-502 — Life or endowment policies; provisions required

Nebraska § 44-502

• Jurisdiction: Nebraska
• Ch. 44: Insurance

Text

No policy of life or endowment insurance, except policies of industrial insurance, shall be issued or delivered in this state unless it contains in substance the following provisions:
(1) A provision that all premiums shall be payable in advance either at the home office of the company or to any agent of the company upon delivery of a receipt signed by one or more of the officers who shall be named in the policy.
(2) A provision that the insured is entitled to a grace of one month within which the payment of any premium, after the first year, may be made, subject, at the option of the company, to an interest charge not in excess of six percent per annum for the number of days of grace elapsing before the payment of the premium, during which period of grace the policy shall continue in force; but in case the policy becomes a claim during the said period of grace before the overdue premium or the deferred premiums of the current policy year, if any, are paid, the amount of such premiums, with interest on any overdue premium, may be deducted from any amount payable under the policy in settlement.
(3) A provision that the policy shall constitute the entire contract between the parties; but if the company desires to make the application a part of the contract, it may do so; Provided, a copy of such application shall be endorsed upon or attached to the policy when issued, and in such case, the policy shall contain a provision that the policy and the application therefor shall constitute the entire contract between the parties.
(4) A provision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall avoid the policy unless it is contained in a written application, and a copy of such application shall be endorsed upon or attached to the policy when issued.
(5) A provision that the policy shall be incontestable after it shall have been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums and except with respect to limitations of liability which may be contained in the policy relating to (a) death resulting from war or acts of war, declared or undeclared, where such limitations shall have been found by the Director of Insurance to be in keeping with the interests of the policyholders of the company and to be not unfairly discriminatory, and (b) aeronautics other than as a fare-paying passenger of a commercial airline, and flying on a regularly scheduled route between definitely established airports; and in any such cases the liability of the company may be limited by the terms of the policy to a sum not less than the reserve on the face of the policy and the reserve on any paid-up additions thereto and any dividends standing to the credit of the policy, less any indebtedness to the company on the policy; 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 be excepted from the incontestable clause; Provided, limitations with reference to aeronautics shall not be included in any policy where an extra premium is charged to cover the aeronautic risk, nor shall any such limitations extending beyond the contestable period be included in or attached to any policy where the applicant for insurance has not elected in writing to accept a policy with such limitations, and by such election has agreed to a reduced coverage for the aviation risk.
(6) A provision that if the age of the insured has been misstated, the amount payable under the policy shall be such as the premium paid would have purchased at the correct age.
(7) A provision that the policy shall participate in the surplus of the company, and that, beginning not later than the end of the third policy year, the company shall annually ascertain and apportion the amount of divisible surplus to which all such policies, as a separate class, are entitled, which amount shall be carried as a distinct and separate liability in favor of such policies. The insured, under any annual dividend policy, shall have the right each year to have the dividend arising from such participation paid in cash, and if the policy shall provide other dividend options, it shall further provide that, if the insured shall not elect any such other options, one of such dividend options provided shall become effective as provided in the policy; but such participation and its distribution may, by contract, be deferred to a fixed or specified time, not exceeding twenty years. Upon written request of the insured the company shall furnish him or her with a statement of the amount of the surplus provisionally ascertained or set aside on such policy and held awaiting distribution at the expiration of the deferred dividend period.
(8) A provision that after three full years' premiums have been paid, the company at any time, while the policy is in force, will advance, on proper assignment or pledge of the policy, and on the sole security thereof, at a specified rate of interest determined pursuant to section 44-502.03 a sum equal to, or, at the option of the owner of the policy, less than the amount required by section 44-405 , under the conditions specified thereby, and that the company will deduct from such loan value any existing indebtedness on the policy, which has not otherwise entered into the computation of such loan value, together with any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year. Interest if payable annually in advance shall not exceed an effective rate equivalent to the specified rate of interest determined pursuant to section 44-502.03 . It shall be further stipulated in the policy that failure to repay any such advance, or to pay interest, shall not avoid the policy unless the total indebtedness thereon to the company shall equal or exceed such loan value at the time of such failure, nor until one month after notice shall have been mailed by the company to the last-known address of the insured and of the assignee, if any. No condition other than as provided herein, or in section 44-405 , shall be exacted as prerequisite to any such advance.
(9) A provision for nonforfeiture benefits and cash surrender values in accordance with the requirements of sections 44-406 to 44-407.09 .
(10) A table showing in figures the loan values, if any, and the options available under the policies each year upon default in premium payments, during at least the first twenty years of the policy.
(11) A provision that if, in the event of default in premium payments, the value of the policy shall be applied to the purchase of other insurance, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums with interest and the payment or reinstatement of any other indebtedness to the company upon such policy.
(12) A provision 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, or not later than two months after receipt of such proof.
(13) In case the proceeds of a policy are payable in installments, or as an annuity, a table showing the amounts of the installments or annuity payments.
(14) A title on the face of the policy correctly describing the same. Any of the foregoing provisions or portions of this section not applicable by reason of the plan of insurance may, to the extent of inapplicability, be omitted from the policy. Any such policy may be issued or delivered in this state which in the opinion of the Department of Insurance contains provisions on any one or more of the several foregoing requirements more favorable to the policyholder than hereinbefore required.
(15)(a) For policies issued or delivered in this state on or after January 1, 2026, a provision that, at least fifteen days prior to termination or lapse by reason of default in payment of any premium due on such policy, a notice will be sent electronically or mailed to the last-known address of the owner and any assignee on record with the company.
(b) For policies issued or delivered in this state on or after January 1, 2026, an assignee shall have the same legal standing as the owner with respect to subdivision (15)(a) of this section.

Legislative History

Source: Laws 1913, c. 154, § 101, p. 446; R.S.1913, § 3238; Laws 1919, c. 190, tit. V, art. VII, § 2, p. 626; C.S.1922, § 7837; Laws 1925, c. 121, § 1, p. 318; C.S.1929, § 44-602; Laws 1941, c. 87, § 1, p. 336; C.S.Supp.,1941, § 44-602; Laws 1943, c. 106, § 3, p. 359; R.S.1943, § 44-502; Laws 1951, c. 140, § 1, p. 575; Laws 1965, c. 262, § 12, p. 742; Laws 1969, c. 371, § 1, p. 1325; Laws 1978, LB 262, § 1; Laws 1981, LB 355, § 18; Laws 2025, LB474, § 50. Operative Date: September 3, 2025 Annotations: 1. Constitutionality 2. Incontestability 3. Extended insurance 4. Representations and warranties 5. Miscellaneous 1. Constitutionality Section is constitutional. State ex rel. Martin v. Howard, 96 Neb. 278, 147 N.W. 689 (1914). 2. Incontestability Policy may provide for contestability on the ground that death came about during military service. O'Neil v. Union Nat. Life Ins. Co., 162 Neb. 284, 75 N.W.2d 739 (1956). Incontestable provisions are exclusive, and do not permit attachment of rider restricting insurance company's liability in event of death from operating or riding in aircraft. State ex rel. Republic National Life Ins. Co. v. Smrha, 138 Neb. 484, 293 N.W. 372 (1940). Incontestability clause in policy was not applicable to a supplemental agreement providing for total disability under terms of the agreement and provisions of statute. Penn. Mutual Life Ins. Co. v. Lindquist, 130 Neb. 813, 266 N.W. 600 (1936). Incontestable clause, except as to certain matters stated, operated to exclude all defenses not within exception, and limitation of one year to contest for fraud was valid. Stratton v. Service Life Ins. Co., 117 Neb. 685, 222 N.W. 332 (1928). Where the insured had died before the contestable period of a life insurance policy had expired, the insurer could not sue for cancellation for, under the statute and terms of the policy, it could never become incontestable. Aetna Life Ins. Co. v. Kennedy, 31 F.2d 971 (8th Cir. 1929). 3. Extended insurance The period of extended insurance from date of default in payment of premium runs from the date when the premium fell due and not from the expiration of the period of grace. Burstein v. State Mutual Life Assurance Co., 140 Neb. 624, 1 N.W.2d 115 (1941). The amount of extended life insurance where assured dies during default in the payment of an annual premium, having made a loan upon his policy should be computed according to terms of contract. Rustin v. Aetna Life Ins. Co., 98 Neb. 426, 153 N.W. 548 (1915). 4. Representations and warranties Untrue answers in an application for life insurance, within the knowledge of the applicant and material to the risk, will avoid the policy. George v. Guarantee Mut. Life Co., 144 Neb. 285, 13 N.W.2d 176 (1944). Statements made by an insured in an application, in the absence of fraud, are deemed representations and not warranties. Gillan v. Equitable Life Assurance Society, 143 Neb. 647, 10 N.W.2d 693 (1943). When untrue answers are made by the agent filling out the application without the applicant having made any statement in connection therewith, the insurer is estopped to claim such representations are false. Scott v. New England Mutual Life Ins. Co., 128 Neb. 867, 260 N.W. 377 (1935). 5. Miscellaneous Insurer is entitled to satisfactory proof of insurability before reinstating life insurance policy. Ewoldt v. American Nat. Ins. Co., 190 Neb. 290, 207 N.W.2d 521 (1973). Policy on which premiums were payable monthly are not subject to requirements of this section. Robbins v. National Life & Acc. Ins. Co., 182 Neb. 749, 157 N.W.2d 188 (1968). Legislature has considered that annuities are a part of life insurance business. Bankers Life Ins. Co. v. Laughlin, 160 Neb. 480, 70 N.W.2d 474 (1955). Where life insurance company sets up property rights and benefits out of premium which it collects, the terms and conditions of such rights and benefits must comply with this section. State ex rel. Smrha v. Cosmopolitan Old Line Life Ins. Co., 137 Neb. 742, 291 N.W. 72 (1940). Where the insured has borrowed the entire loan value on a policy, and has not paid the interest thereon on the premium due the following year, no increase in loan value can accrue until the interest and premium due has been paid. Kelly v. Prudential Ins. Co., 130 Neb. 873, 266 N.W. 757 (1936). Insured was entitled to grace period of one month in which to pay semiannual installment of premium on life insurance policy regardless of provisions in the policy to the contrary. Higgins v. Old Line Ins. Co., 122 Neb. 254, 240 N.W. 275 (1932). Insured's written election was not necessary to restrict double indemnity recovery when his death resulted from flight in aircraft piloted by him. Daman v. New York Life Ins. Co., 540 F.2d 382 (8th Cir. 1976).