§ 27-4.3-2. Nonforfeiture benefits.
(a) Policies issued on and after January 1, 1994, except as stated in § 27-4.3-9, shall not be delivered or issued for delivery in this state unless they shall contain
in substance the following provisions, or corresponding provisions which in the opinion
of the commissioner of insurance are at least as favorable to the defaulting or surrendering
policyholder as are the minimum requirements specified in this chapter and are essentially
in compliance with § 27-4.3-8:
(1) That in the event of default in any premium payment, the insurance company will grant,
upon proper request not later than sixty (60) 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 the due date, of the amount as specified in this chapter. In lieu of the stipulated
paid-up nonforfeiture benefit, the insurance company may substitute, upon proper request
not later than sixty (60) 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;
(2) That upon surrender of the policy within sixty (60) days after the due date of any
premium payment in default after premiums have been paid for at least three (3) full
years in the case of ordinary insurance or five (5) full years in the case of industrial
insurance, the insurance company will pay, in lieu of any paid-up nonforfeiture benefit,
a cash surrender value of an amount as specified in this chapter;
(3) That a specified paid-up nonforfeiture benefit shall become effective as specified
in the policy unless the person entitled to make an election elects another available
option not later than sixty (60) days after the due date of the premium in default;
(4) That if the policy shall have become 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 insurance company
will pay, upon surrender of the policy within thirty (30) days after any policy anniversary,
a cash surrender value of an amount as specified in this chapter;
(5) 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
benefit, if any, available under the policy on each policy anniversary either during
the first twenty (20) policy years or during the term of the policy, whichever is
shorter; the 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 insurance company on the policy; and
(6) 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 law 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 insurance 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 in the policy, a statement that the 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
a paid-up nonforfeiture benefit available under the policy on any policy anniversary
beyond the last anniversary for which the values and benefits are consecutively shown
in the policy.
(b) Any of the provisions of subsection (a) not applicable by reason of the plan of insurance
may, to the extent inapplicable, be omitted from the policy.
(c) The insurance company shall reserve the right to defer the payment of any cash surrender
value for a period of six (6) months after demand for the payment with surrender of
the policy.