Page:United States Statutes at Large Volume 48 Part 1.djvu/1185

 73d C ONGRESS. SESS. II. CH. 672 . JUNE 19, 1934 . may also provide that each dividend shall be paid subject to the payment of the premium for the next ensuing year ; and 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 which of said options shall be effective if the insured shall not elect any such other option on or before the expiration of the period of grace allowed for the payment of the premium. This provision shall not apply to any form of paid-up insurance or temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies, or to nonparticipating policies. (6) A provision that after the policy has been in force three full years 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 secu rity ther eof, at a specifie d rate of interest, a sum e qual to, or at the option of the insured less than the reserve at the end of the cur rent p olicy year o n the policy and on the d ividen d addi tions thereto, if any, exclusive of the reserve on account of return premium insurance and of total and permanent disability and additional acci- dental death benefits, less a sum not more than 21/2 per centum of the amount insured by the policy and of any dividend additions thereto ( the polic y to spec ify the m ortality table and rate of interest adopted for computing such reserve) ; and that the company will deduct from s uch lo an val ue any exist ing ind ebtedn ess on the p olicy and 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 ; which provision may further provide that such loan may be deferred for not exceeding six months after the appli- cation therefor is made. A company may, in lieu of the provision hereinabove permitted for the deduction from a loan on the policy of a sum not more than 21/2 per centum of the amount insured by the policy and of any dividend additions thereto, insert in the policy a provision that one fifth of the said reserve may be deducted in case of a loan under the policy, or may provide therein that the deduction may be the said 21/2 per centum or the one fifth of the said reserve at the option of the company. This provision shall not be required in term insurance, nor shall it apply to temporary insurance or pure endowment insurance, issued or granted in exchange for lapsed or surrendered policies. The policy may further provide that if the interest on the loan is not paid when due it shall be added to the existing loan and shall bear interest at the same rate. (7) A provision that in event of default in premium payments, after premiums shall have been paid for three years, the insured shall be entitled to a stipulated form of insurance, effective from the due date of the defaulted premium, the net value of which shall be at least equal to the reserve at the date of default on the policy and on divide nd add itions there to, if any, e xclusi ve of the re serve on account of return premium insurance and on total and permanent disability and additional accidental death benefits (the policy to specify the mortality table and rate of interest adopted for com- puting such reserve) ; less a spe cifie d pe rcent age ( not more than two and one half) of the amount insured by the policy and of exist- ing dividend additions thereto, if any, and less any existing indebt- edness to the company on or secured by the policy : Provided, That a company may, in lieu of the provision herein permitted for the deduction from the reserve of a sum not more than 21/2 per centum of the amount insured by the policy, and of any dividend additions thereto, insert in the policy a provision that one fifth of said reserve may be deducted, or may provide therein that a deduction may be 1159 Right of payment in cash. Other divide nd op- tions. Limitation on appli- cation of provisions. Loans . Amount. Deduc tion of e xisti ng ind ebtedness. Period may be de- ferred. Deduction of part of reserve. Provision not appli- ca ble to term insur- ance. Interest. Defau lt i n pr emium pa yments. Entit leme nt o f in- s ured to new form of insurance. Provisos. De ductions.