58-15-15.4. Insurance policy loan--Definition of terms.

For purposes of §§ 58-15-15.5 to 58-15-15.12, inclusive:

(1)    The rate of interest on policy loans permitted under §§ 58-15-15.5 to 58-15-15.12, inclusive, includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy;

(2)    The term "policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they fell due;

(3)    The term "policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer; and

(4)    The term "policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.

Source: SL 1982, ch 358, § 1.

58-15-15.5. Published monthly average defined.

For purposes of §§ 58-15-15.4 to 58-15-15.12, inclusive, the "published monthly average" means Moody's corporate bond yield average--monthly average corporates, as published by Moody's investors service, incorporated, by yearly order of the director, or in the event that Moody's corporate bond yield average--monthly average corporates is no longer published, a substantially similar average, established by rule promulgated by the director.

Source: SL 1982, ch 358, § 2; SL 1986, ch 22, § 28.

58-15-15.6. Insurance policy loan--Permitted interest rates.

Any policy issued on or after July 1, 1982, shall provide for policy loan interest rates through a provision permitting a maximum interest rate of not more than eight percent per annum or a provision permitting an adjustable maximum interest rate established from time to time by the life insurer, as permitted by law.

Source: SL 1982, ch 358, § 3.

58-15-15.7. Insurance policy loan--Allowable rate under adjustable maximum interest rate.

The rate of interest charged on a policy loan made under an adjustable maximum interest rate may not exceed the higher of the "published monthly average" for the calendar month ending two months before the date on which the rate is determined or the rate used to compute the cash surrender values under the policy during the applicable period plus one percent per year. If the maximum rate of interest is determined pursuant to § 58-15-15.6 as an adjustable maximum rate, the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.

Source: SL 1982, ch 358, § 4.

58-15-15.8. Insurance policy loan--Determination of interest under adjustable maximum interest rate.

The maximum rate of interest for each policy shall be determined at regular intervals at least once every twelve months, but not more frequently than once in any three-month period. At the intervals specified in the policy, the rate being charged may be increased whenever such increase as determined under an adjustable maximum interest rate would increase that rate by one-half percent or more per year. The rate being charged must be reduced whenever such reduction as determined under § 58-15-15.7 would decrease that rate by one-half percent or more per year.

Source: SL 1982, ch 358, § 5.

58-15-15.9. Insurance policy loan--Notice of interest rate to policyholder.

The life insurer shall notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan and shall notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except that the life insurer shall send to policyholders with loans reasonable advance notice of any increase in the rate and shall include in the required notice the substance of the pertinent provisions of §§ 58-15-15.6 and 58-15-15.7 regarding the adjustable maximum interest rate.

Source: SL 1982, ch 358, § 6.

58-15-15.10. Insurance policy loan--Loan value of policy.

The loan value of a policy shall be determined in accordance with § 58-15-16, but no policy may terminate in a policy year as the sole result of change in the interest rate during that policy year. The life insurer shall maintain coverage during that policy year until the time at which it would otherwise have terminated if there had been no change during that policy year.

Source: SL 1982, ch 358, § 7.

58-15-15.11. Insurance policy loan--Provisions of statutes required in policies.

The substance of the pertinent provisions of §§ 58-15-15.6 and 58-15-15.7 regarding the adjustable maximum interest rate shall be set forth in the policies to which they apply.

Source: SL 1982, ch 358, § 8.

58-15-15.12. Insurance policy loan--Application of statutes on interest rates to prior contracts.

The provisions of §§ 58-15-15.4 to 58-15-15.12, inclusive, do not apply to any insurance contract issued before July 1, 1982, unless the policyholder agrees in writing to the applicability of the provisions. No other provision of the law applies to policy loan interest rates unless specifically applicable to such rates.

Source: SL 1982, ch 358, § 9.

58-15-15.13. Private placement policy defined.

A private placement policy is a variable annuity contract or a variable life insurance policy that is:

(1)    Issued exclusively to a person who is an accredited investor or a qualified purchaser, as such terms are defined in the federal Securities Act of 1933 or the federal Investment Company Act of 1940, or in regulations promulgated under either such statute; and

(2)    Offered for sale and sold in a transaction that is exempt from registration under the federal Securities Act of 1933.

Source: SL 2006, ch 252, § 1; SL 2014, ch 229, § 2.

58-15-15.14. Premium defined.

Premium is the consideration for insurance by whatever name called. Any assessment, or any membership, policy, survey, inspection, service, or similar fee or other charge in consideration for an insurance contract is deemed part of the premium. For a private placement policy, with the consent of the insurer, premium may be in the form of assets to be held by the insurer in a separate account, as long as the fair value of the assets are independently verified at the time of receipt by the insurer.

Source: SL 2014, ch 229, § 3.

58-15-16. Loans on policies issued prior to the adoption of standard policy provisions--Loan value--Deferment of application--Private placement policies.

In the case of those policies issued prior to the operative date specified in § 58-15-42, the loan value referred to in § 58-15-15 is the reserve at the end of the current policy year on the policy and on any dividend additions thereto, computed according to a mortality table, interest rate, and method of valuation permitted by §§  58-26-45 to 58-26-84, inclusive, less a sum not more than two and one-half percent of the amount insured by the policy and of any dividend additions thereto. The policy may provide that such loan may be deferred for not exceeding six months after application therefor, and shall contain a table showing in figures the loan values during at least the first twenty years of the policy or during the term of the policy, whichever is the shorter. However, in the case of a private placement policy, the policy may provide that the loan, or portions thereof, may be deferred until the separate account assets, or portion thereof, comprising such loan can be, by their respective terms, converted to cash.

Source: SL 1966, ch 111, ch 23, § 30 (1); SL 2006, ch 252, § 3.

58-15-17. Loans on policies under standard policy provisions--Loan value--Deferment of application--Private placement policies.

In the case of policies issued on or after the operative date specified in § 58-15-42, the loan value referred to in § 58-15-15 shall be the cash surrender value at the end of the current policy year as required by § 58-15-33. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for six months after application of the loan. For any private placement policy, the loan value shall be equal to the portion of the cash surrender value that can immediately be converted to cash, pursuant to the policyholder's consent. A private placement policy may reserve to the insurer the right to defer the granting of a loan, or any portion of the loan, until the policy separate account assets, from which the loan is to be made, can be, by their respective terms, converted to cash.

Source: SL 1966, ch 111, ch 23, § 30 (2); SL 2001, ch 54, § 3; SL 2003, ch 245, § 3; SL 2006, ch 252, § 4; SL 2009, ch 259, § 3.

58-15-18. Loan value of policy--Indebtedness deducted.

The loan value of the policy shall be at least equal to the amount required by § 58-15-16 or 58-15-17, provided that the insurer may deduct, either from such loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining such amount including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year.

Source: SL 1966, ch 111, ch 23, § 9.

58-15-19. Delinquent interest on policy loan exceeding amount of loan value--Termination of policy, notice.

The policy may also provide that if interest on any indebtedness is not paid when due it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value thereof, then the policy shall terminate and become void but not until at least thirty days' notice shall have been mailed by the insurer to the last known address of the insured or policy owners and of any assignee of record at the home office of the insurer.

Source: SL 1966, ch 111, ch 23, § 9.

58-15-20. Policy loan provisions inapplicable to term insurance or industrial life insurance policies.

Sections 58-15-14 to 58-15-19, inclusive, shall not apply to term policies nor to term insurance benefits provided by rider or supplemental policy provisions, or to industrial life insurance policies.

Source: SL 1966, ch 111, ch 23, § 9.

58-15-21. Nonforfeiture of benefits--Cash surrender value--Provisions required in policies.

There shall be a provision for nonforfeiture benefits and cash surrender value in accordance with the requirements of § 58-15-30 or §§ 58-15-31 to 58-15-43, inclusive.

Source: SL 1966, ch 111, ch 23, § 10.

58-15-22. Reinstatement provisions required in policy.

There shall be a provision that unless:

(1)    The policy has been surrendered for its cash surrender value, or

(2)    Its cash surrender value has been exhausted, or

(3)    The paid-up term insurance, if any, has expired, the policy will be reinstated at any time within three years, or two years in the case of industrial life insurance policies, from the date of premium default upon written application therefor, the production of evidence of insurability satisfactory to the insurer, the payment of all premiums in arrears and the payment or reinstatement of any other indebtedness to the insurer upon the policy, all with interest at a rate as provided in § 58-15-15.6.

Source: SL 1966, ch 111, ch 23, § 12; SL 1982, ch 358, § 10.

58-15-23. Participating policies--Annual dividends, ascertainment, and apportionment.

There shall be a provision in participating policies that, beginning not later than the end of the third policy year, the insurer shall annually ascertain and apportion the divisible surplus, if any, that will accrue on the policy anniversary or other dividend date specified in the policy provided the policy is in force and all premiums to that date are paid.

Source: SL 1966, ch 111, ch 23, § 8 (1).

58-15-24. Participating policies--Rights of policyholder to dividends.

Except as hereinafter provided, any dividend becoming payable shall at the option of the party entitled to elect such option be either:

(1)    Payable in cash, or

(2)    Applied to any one of such other dividend options as may be provided by the policy. If any such other dividend options are provided, the policy shall further state which option shall be automatically effective if such party shall not have elected some other option. If the policy specifies a period within which such other dividend option may be elected, such period shall be not less than thirty days following the date on which such dividend is due and payable.

The annually apportioned dividend shall be deemed to be payable in cash within the meaning of subdivision (1) above even though the policy provides that payment of such dividend is to be deferred for a specified period, provided such period does not exceed six years from the date of apportionment and that interest will be added to such dividend at a specified rate. If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under such nonforfeiture provision shall be applied in the manner set forth in the policy.

Source: SL 1966, ch 111, ch 23, § 8 (1).

58-15-25. Participating industrial life insurance policies--Annual participation of policy in divisible surplus.

In participating industrial life insurance policies, in lieu of the provision required in §§ 58-15-23 and 58-15-24, there shall be a provision that, beginning not later than the end of the fifth policy year, the policy shall participate annually in the divisible surplus, if any, in the manner set forth in the policy.

Source: SL 1966, ch 111, ch 23, § 8 (2).

58-15-26. Payment of claims for benefits--Private placement policies.

There shall be a provision that when a policy becomes a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and, at the insurer's option, surrender of the policy or proof of the interest of the claimant, or both. If an insurer shall specify a particular period prior to the expiration of which settlement shall be made, such period may not exceed two months from the receipt of such proof. For any private placement policy, settlement may be made in cash or, if allowed under the policy, by distributing assets of the separate account to the claimant with the consent of the policyholder or the policyholder's designee, as long as the fair market value of the assets are independently verified at the time of disbursement by the insurer. In any private placement policy, the obligation of the insurer to settle that portion of the policy attributable to separate account assets is subject to the liquidity of such assets, and the insurer shall settle such portion of the policy as and when such assets can be, by their respective terms, either converted to cash, which may be later than two months after the insurer's receipt of due proof of death, or otherwise dispersible by the insurer.

Source: SL 1966, ch 111, ch 23, § 14; SL 2001, ch 54, § 4; SL 2003, ch 245, § 4; SL 2006, ch 252, § 5; SL 2009, ch 259, § 4; SL 2020, ch 207, § 1.

58-15-26.1. Insurers to pay interest on life insurance proceeds.

Any insurer admitted to transact life insurance in this state shall pay interest on proceeds of, or payments under, any individual or group policy of life insurance which are payable to any beneficiary under a policy issued for delivery in this state.

Source: SL 1987, ch 375, § 1.

58-15-26.2. Computation of interest.

Interest payable pursuant to § 58-15-26.1 shall be computed from the date of death of the insured until the date of payment and shall be at the rate of four percent per annum or not less than the current rate of interest on death proceeds left on deposit with the insurer under an interest settlement option, whichever rate is greater. For any private placement policy, the interest shall be computed commencing the latter of sixty days succeeding the date of death of the insured or the date proof of death has been received by the insurer in good order until the date of payment. In any private placement policy, the obligation of the insurer to pay interest on that portion of the policy attributable to separate account assets may only be computed as and when such assets are, by their respective terms, either converted to cash or otherwise dispersible by the insurer.

Source: SL 1987, ch 375, § 2; SL 2001, ch 54, § 5; SL 2003, ch 245, § 5; SL 2009, ch 259, § 5.

58-15-26.3. Interest not required where beneficiary elects to receive other than lump sum payment.

The provisions of § 58-15-26.1 do not require the payment of interest in any case in which the beneficiary elects in writing delivered to the insurer to receive the proceeds of or payments under a life insurance policy by any means other than a lump sum payment.

Source: SL 1987, ch 375, § 3.

58-15-26.4. Notice to beneficiary of interest.

In any case in which interest on the proceeds of, or payments under, any policy of life insurance becomes payable pursuant to § 58-15-26.1, the insurer shall notify the named beneficiary or beneficiaries at their last known address that interest will be paid on the proceeds of or payments under the policy. The notice shall specify the rate of interest to be paid.

Source: SL 1987, ch 375, § 4.

58-15-26.5. Application limited.

The provisions of §§ 58-15-26.1 to 58-15-26.5, inclusive, shall apply only to deaths of insureds which occur on or after July 1, 1987.

Source: SL 1987, ch 375, § 5.

58-15-27. Beneficiary to be designated in industrial life policy--Change of beneficiary--Endorsement on policy.

An industrial life insurance policy shall have the name of the beneficiary designated thereon with a reservation of the right to change the beneficiary after the issuance of the policy. The policy may also provide that no designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured.

Source: SL 1966, ch 111, ch 23, § 15.

58-15-28. Industrial life policy--Payment of benefits.

An industrial life policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which shall not be less than thirty days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment thereunder to the personal representative of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled thereto by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy.

Source: SL 1966, ch 111, ch 23, § 15; SL 1995, ch 167, § 188.

58-15-29. Installment payments--Table of guaranteed installments required.

In case the policy provides that the proceeds may be payable in installments which are determinable at the time of issuance of the policy, there shall be a table showing the amounts of the guaranteed installments.

Source: SL 1966, ch 111, ch 23, § 11.

58-15-30. Nonforfeiture benefits in policies issued prior to the adoption of standard nonforfeiture law.

This section shall apply only to policies of life insurance issued prior to the operative date specified in § 58-15-42.

The nonforfeiture benefit referred to in § 58-15-21 shall be available to the owner of the policy in event of default in premium payments, after premiums shall have been paid for three years, and shall be a stipulated form of insurance, the net value of which shall be at least equal to the reserve at the date of default on the policy and on any dividend additions thereto, computed according to a mortality table, interest rate, and method of valuation permitted by §§ 58-26-17 to 58-26-20, inclusive, less a sum not more than two and one-half percent of the amount insured by the policy and of any existing dividend additions thereto, and less any existing indebtedness to insurer on the policy. The policy shall stipulate that it may be surrendered to the insurer at its home office within one month from date of default for a specified cash value at least equal to the sum which would otherwise be available for the purchase of insurance as aforesaid and may stipulate that the insurer may defer payment for not more than six months after the application therefor is made. Provided, however, that if the benefits under the policy are calculated according to the commissioner's 1958 standard ordinary mortality table, the value of any extended term insurance, with accompanying pure endowment, if any, may be calculated according to rates of mortality not exceeding those shown in the commissioner's 1958 extended term insurance table, and that if the benefits under the policy are calculated according to any other more modern table than the American experience table of mortality, the value of any extended term insurance, with accompanying pure endowment, if any, may be calculated according to rates of mortality not exceeding one hundred thirty percent of the rates according to such more modern table. The policy shall contain a table showing in figures the options available each year upon default in premium payments during at least the first twenty years of the policy, or during the term of the policy, whichever is the shorter. This section shall not apply to term insurance of twenty years or less or to industrial life insurance policies.

Source: SL 1966, ch 111, ch 23, § 29.

58-15-31. Nonforfeiture benefits in policies issued under standard nonforfeiture law.

In the case of policies issued on or after the operative date of §§ 58-15-31 to 58-15-43, inclusive, as defined in § 58-15-42, no policy of life insurance, except as stated in § 58-15-41, may be delivered or issued for delivery in this state unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the director of the Division of Insurance are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements specified in §§ 58-15-31 to 58-15-43, inclusive, and are essentially in compliance with § 58-15-43.13:

(1)    That, in the event of default in any premium payment, the insurer will grant, upon proper request 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 § 58-15-34. In lieu of such stipulated paid-up nonforfeiture benefit, the insurer 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;

(2)    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 insurer will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be specified in § 58-15-33;

(3)    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;

(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 insurer 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 § 58-15-33;

(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 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 insurer 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 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 insurer 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 or any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

Source: SL 1966, ch 111, ch 23, § 28 (1); SL 1982, ch 357, § 1.

58-15-32. Nonforfeiture benefit provisions which may be omitted--Deferred payment of cash surrender value--Private placement policies.

Any of the provisions or portions thereof set forth in § 58-15-31 which are not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy. Except for a private placement policy, the insurer 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. In the case of a private placement policy, the insurer may reserve the right to defer the payment of cash surrender value until the separate account assets comprising such cash surrender value can be, by their respective terms, converted to cash, which may be greater than six months after the surrender of the policy and demand for payment of such cash surrender value.

Source: SL 1966, ch 111, ch 23, § 28 (2); SL 2006, ch 252, § 6.

58-15-33. Cash surrender value--Amount available under policy on default of premium--Paid-up policy.

Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by § 58-15-31 shall be an amount not less than the excess, if any, of the present value on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of the then present value of the adjusted premiums as defined in §§ 58-15-35 to 58-15-38, inclusive, and §§ 58-15-43.1 to 58-15-43.11, inclusive, corresponding to premiums which would have fallen due on and after such anniversary, and the amount of any indebtedness to the insurer on the policy. Any cash surrender value available within thirty days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by § 58-15-31, shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the policy.

However, for any policy issued on or after the operative date of §§  58-15-43.1 to 58-15-43.11, inclusive, which provides supplemental life insurance or annuity benefits at the option of the insured and for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value referred to in the first paragraph of this section shall be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without a rider or supplemental policy provision and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by a rider or supplemental policy provision.

Further, for any family policy issued on or after the operative date of §§ 58-15-43.1 to 58-15-43.11, inclusive, which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse's age seventy-one, the cash surrender value referred to in the first paragraph of this section shall be an amount not less than the sum of the cash surrender value as defined in that paragraph for an otherwise similar policy issued at the same age without term insurance on the life of the spouse and the cash surrender value as defined in that paragraph for a policy which provides only the benefits otherwise provided by term insurance on the life of the spouse.

Any cash surrender value available within thirty days after any policy anniversary under any policy paid-up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by § 58-15-31, shall be an amount not less than the present value, on such anniversary of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the insurer on the policy.

If the cash surrender value is in excess of one million dollars, the term, cash surrender value, may include payment of assets to the policyholder as well as payment of cash, if allowed under the policy, with the consent of the policyholder.

Source: SL 1966, ch 111, ch 23, § 28 (3); SL 1982, ch 357, § 2; SL 2001, ch 54, § 6; SL 2003, ch 245, § 6.

58-15-34. Paid-up nonforfeiture benefits--Default in payment of premium.

Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy or, if none is provided for, that cash surrender value which would have been required by § 58-15-33 in the absence of the condition that premiums shall have been paid for at least a specified period.

Source: SL 1966, ch 111, ch 23, § 28 (4).

58-15-35. Adjustment of premiums under nonforfeiture provisions.

Except as provided in § 58-15-37, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of:

(1)    The then present value of the future guaranteed benefits provided for by the policy;

(2)    Two percent of the amount of the insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as defined in § 58-15-36, if the amount of insurance varies with duration of the policy;

(3)    Forty percent of the adjusted premium for the first policy year;

(4)    Twenty-five percent of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less.

However, in applying the percentages specified in subdivisions (3) and (4) above, no adjusted premium shall be deemed to exceed four percent of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of §§ 58-15-35 to 58-15-38, inclusive, shall be the date as of which the rated age of the insured is determined. This section and §§ 58-15-36 to 58-15-38, inclusive, may not apply to policies issued on or after the operative date of §§ 58-15-43.1 to 58-15-43.11, inclusive.

Source: SL 1966, ch 111, ch 23, § 28 (5); SL 1982, ch 357, § 3.

58-15-36. Amount of insurance varying with duration of policy--Adjustment of premiums.

In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of §§ 58-15-35 to 58-15-38, inclusive, shall be deemed to be the uniform amount of insurance provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the date of issue as the benefits under the policy, provided, however, that in the case of a policy providing a varying amount of insurance issued on the life of a child under age ten, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age ten were the amount provided by such policy at age ten.

Source: SL 1966, ch 111, ch 23, § 28 (5).

58-15-37. Adjusted premiums--Term insurance benefits provided by rider or supplemental policy.

The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to:

(1)    The adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased during the period for which premiums for such term insurance benefits are payable, by

(2)    The adjusted premiums for such term insurance,

the foregoing items (1) and (2) being calculated separately and as specified in §§ 58-15-35 and 58-15-36 except that, for the purposes of subdivisions 58-15-35(2), (3), and (4), the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in item (2) of this section shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in item (1) of this section.

Source: SL 1966, ch 111, ch 23, § 28 (5).

58-15-38. Adjusted premiums and present values--Computation.

Except as otherwise provided in §§ 58-15-43.1 to 58-15-43.11, inclusive, all adjusted premiums and present values referred to in §§ 58-15-31 to 58-15-43, inclusive, shall for all policies of ordinary insurance be calculated on the basis of the commissioner's 1958 standard ordinary mortality table; provided that for any category of ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than six years younger than the actual age of the insured. Such calculations for all policies of industrial insurance shall be made on the basis of the 1941 standard industrial mortality table. However, any insurer may file with the director of the Division of Insurance a written notice of its election that such adjusted premiums and present values shall be calculated on the basis of the commissioner's 1961 standard industrial mortality table, after a specified date before January 1, 1968. Further, whether or not any election has been made, such commissioner's 1961 standard industrial mortality table shall be the basis for such calculations as to all policies of industrial insurance issued on or after January 1, 1968. All calculations shall be made on the basis of the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, which rate of interest may not exceed three and one-half percent per annum except that a rate of interest not exceeding four percent per annum may be used for policies issued on or after July 1, 1973, and prior to July 1, 1978, and a rate of interest not exceeding five and one-half percent per annum may be used for policies issued on or after July 1, 1978, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding six and one-half percent per annum may be used. However, in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed in the case of policies of ordinary insurance, may be not more than those shown in the commissioner's 1958 extended term insurance table, and, in the case of policies of industrial insurance, may be not more than one hundred thirty percent of the rates of mortality according to the 1941 standard industrial mortality table, except that when the commissioner's 1961 standard industrial mortality table becomes applicable, as hereinbefore provided, such rates of mortality assumed may be not more than those shown in the commissioner's 1961 industrial extended term insurance table. Further for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the insurer and approved by the director.

Source: SL 1966, ch 111, ch 23, § 28 (5); SL 1973, ch 299, § 1; SL 1977, ch 412, § 1; SL 1982, ch 357, § 4.

58-15-39. Default in payment of premium--Computation of cash surrender value and paid-up nonforfeiture benefit.

Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in §§ 58-15-33 to 58-15-39, inclusive, may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, may be not less than the amounts used to provide such additions.

Source: SL 1966, ch 111, ch 23, § 28 (6); SL 1982, ch 357, § 17.

58-15-40. Additional accident benefits--Premiums disregarded in ascertaining cash surrender value.

Notwithstanding the provisions of § 58-15-33, additional benefits payable in the event of death or dismemberment by accident or accidental means, in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, as term insurance benefits provided by a rider or supplemental policy provision to which if issued as a separate policy, §§ 58-15-31 to 58-15-43, inclusive, would not apply, as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is twenty-six, is uniform in amount after the child's age is one, and has not become paid up by reason of the death of a parent of the child, and as other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by §§ 58-15-33 and 58-15-34, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

Source: SL 1966, ch 111, ch 23, § 28 (6).

58-15-41. Nonforfeiture benefit provision inapplicable to reinsurance, group insurance, annuity contracts, or term insurance.

The provisions of §§ 58-15-31 to 58-15-43, inclusive, do not apply to any reinsurance; group insurance; pure endowment; annuity or reversionary annuity contract; term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy; term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in §§ 58-15-35 to 58-15-38, inclusive, and §§ 58-15-43.1 to 58-15-43.11, inclusive, is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of twenty years or less expiring before age seventy-one, for which uniform premiums are payable during the entire term of the policy; policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in §§ 58-15-33 to 58-15-38, inclusive, and §§ 58-15-43.1 to 58-15-43.11, inclusive, exceeds two and one- half percent of the amount of insurance at the beginning of the same policy year; nor policy which is delivered outside this state through an insurance producer or other representative of the company issuing the policy. For purposes of determining the applicability of §§ 58-15-31 to 58-15-43, inclusive, the age at expiry for a joint term life insurance policy is the age at expiry of the oldest life.

Source: SL 1966, ch 111, ch 23, § 28 (7); SL 1982, ch 357, § 19; SL 2001, ch 286, § 108.

58-15-42. Notice by company of election to comply with nonforfeiture benefit provisions--Filing with director.

After July 1, 1966, any company could file with the director a written notice of its election to comply with the provisions of §§ 58-15-31 to 58-15-43, inclusive, after a specified date before January 1, 1967. After the filing of such notice, then upon such specified date, which shall be the operative date of said sections for such company, this section became operative with respect to the policies thereafter issued by such company. If a company made no such election, the operative date of said sections for such company shall be January 1, 1967.

Source: SL 1966, ch 111, ch 23, § 28 (8).

58-15-43. Citation of standard nonforfeiture law for life insurance.

Sections 58-15-31 to 58-15-43, inclusive, shall be known as the standard nonforfeiture law for life insurance.

For purposes of §§ 58-15-31 to 58-15-43, the operative date of the valuation manual is January first of the first calendar year that the valuation manual, as defined in § 58-26-44.1, is effective.

Source: SL 1966, ch 111, ch 23, § 28; SL 1977, ch 412, § 2; SL 2015, ch 254, § 40.

58-15-43.1. Adjusted premiums--Calculation on annual basis.

Sections 58-15-43.1 to 58-15-43.11, inclusive, apply to all policies issued on or after July 1, 1982. Except as provided in § 58-15-43.7, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid up nonforfeiture benefits, that the present value, at the date of issue of the policy, of all adjusted premiums is equal to the sum of the then present value of the future guaranteed benefits provided for by the policy; one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and one hundred twenty-five percent of the nonforfeiture net level premium as hereinafter defined. However, in applying the above percentage, no nonforfeiture net level premium may be deemed to exceed four percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years. The date of issue of a policy for the purpose of this section is the date as of which the rated age of the insured is determined.

Source: SL 1982, ch 357, § 5.

58-15-43.2. Nonforfeiture net level premium determined.

The nonforfeiture net level premium is equal to the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of the policy on which a premium falls due.

Source: SL 1982, ch 357, § 6.

58-15-43.3. Initial calculation of changes in benefits or premiums--Recalculation after change.

In the case of a policy which causes, on a basis guaranteed in the policy, unscheduled changes in benefits or premiums, or which provides an option for changes in benefits or premiums other than a change to a new policy, the adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of the policy. At the time of any such change in the benefits or premiums, the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by the policy immediately after the change.

Source: SL 1982, ch 357, § 7.

58-15-43.4. Recalculated future adjusted premiums.

Except as otherwise provided in § 58-15-43.7, the recalculated future adjusted premiums for any such policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards, and also excluding any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all the future adjusted premiums is equal to the excess of (A) the sum of the then present value of the then future guaranteed benefits provided for by the policy and the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.

Source: SL 1982, ch 357, § 8.

58-15-43.5. Additional expense allowance.

The additional expense allowance, at the time of the change to the newly defined benefits or premiums, is the sum of one percent of the excess, if positive, of the average amount of insurance at the beginning of each of the first ten policy years subsequent to the change, over the average amount of insurance prior to the change at the beginning of each of the first ten policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and one hundred twenty-five percent of the increase, if positive, in the nonforfeiture net level premium.

Source: SL 1982, ch 357, § 9.

58-15-43.6. Recalculated nonforfeiture net level premium.

The recalculated nonforfeiture net level premium is equal to the result obtained by dividing (A) by (B) if (A) equals the sum of the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and the present value of the increase in future guaranteed benefits provided for by the policy, and (B) equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.

Source: SL 1982, ch 357, § 10.

58-15-43.7. Substandard policy--Calculation of adjusted premiums and present value.

Notwithstanding any other provisions of §§ 58-15-43.1 to 58-15-43.11, inclusive, to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, the policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums, and present values for such substandard policy may be calculated as if it were issued to provide the higher uniform amounts of insurance on the standard basis.

Source: SL 1982, ch 357, § 11.

58-15-43.8. Adjusted premiums and present values--Calculation--Applicable procedures and tables.

All adjusted premiums and present values referred to in §§ 58-15-31 to 58-15-43, inclusive, are calculated for all policies of ordinary insurance on the basis of the commissioner's 1980 standard ordinary mortality table or, at the election of the insurer, for any one or more specified plans of life insurance, the commissioner's 1980 standard ordinary mortality table with ten-year select mortality factors are calculated for all policies of industrial insurance on the basis of the commissioner's 1961 standard industrial mortality table; and are calculated for all policies issued in a particular calendar year on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this section for policies issued in that calendar year. However, the following procedures apply:

(1)    At the option of the insurer, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this section, for policies issued in the immediately preceding calendar year;

(2)    Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by § 58-15-31, shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of the paid-up nonforfeiture benefit and paid-up dividend additions, if any;

(3)    An insurer may calculate the amount of any guaranteed paid-up nonforfeiture benefit including any paid-up additions under the policy on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values;

(4)    In calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the commissioner's 1980 extended term insurance table for policies of ordinary insurance and not more than the commissioner's 1961 industrial extended term insurance table for policies of industrial insurance;

(5)    For insurance issued on a substandard basis, the calculation of any adjusted premiums and present values may be based on appropriate modifications of the aforementioned tables;

(6)    For policies issued prior to the operative date of the valuation manual, any commissioner's standard ordinary mortality tables, adopted after 1980 by the national association of insurance commissioners, that are approved by rules promulgated by the director for use in determining the minimum nonforfeiture standard may be substituted for the commissioner's 1980 standard ordinary mortality table with or without ten-year select mortality factors or for the commissioner's 1980 extended term insurance table. For policies issued on or after the operative date of the valuation manual, the valuation manual shall provide the commissioner's standard mortality table for use in determining the minimum nonforfeiture standard that may be substituted for the commissioner's 1980 standard ordinary mortality table with or without ten-year select mortality factors or for the commissioner's 1980 extended term insurance table. If the director approves by regulation any commissioner's standard ordinary mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual; and

(7)    For policies issued prior to the operative date of the valuation manual, any commissioner's standard industrial mortality tables, adopted after 1980 by the national association of insurance commissioners, that are approved by rules promulgated by the director for use in determining the minimum nonforfeiture standard may be substituted for the commissioner's 1961 standard industrial mortality table or the commissioner's 1961 industrial extended term insurance table. For policies issued on or after the operative date of the valuation manual the valuation manual shall provide the commissioner's standard mortality table for use in determining the nonforfeiture standard that may be substituted for the commissioner's 1961 standard industrial mortality table or the commissioner's 1962 industrial extended term insurance table. If the director approves by regulation any commissioner's standard industrial mortality table adopted by the national association of insurance commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the valuation manual then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the valuation manual.

Source: SL 1982, ch 357, § 12; SL 1986, ch 22, § 29; SL 2015, ch 254, § 41.

58-15-43.9. Nonforfeiture interest rate.

The nonforfeiture interest rate is:

(1)    For policies issued prior to the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year is equal to one hundred twenty-five percent of the calendar year statutory valuation interest rate for the policy as defined in the standard valuation law, rounded to the nearer one quarter of one percent, provided that the nonforfeiture rate may not be less than four percent;

(2)    For policies issued on or after the operative date of the valuation manual the forfeiture interest rate per annum for any policy issued in a particular calendar year is provided by the valuation manual.

Source: SL 1982, ch 357, § 13; SL 2015, ch 254, § 42.

58-15-43.10. Refiling of nonforfeiture values or methods of computation.

Notwithstanding any other provision in this code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values do not require refiling of any other provisions of that policy form.

Source: SL 1982, ch 357, § 14.

58-15-43.11. Notice of election to comply with revised nonforfeiture.

After July 1, 1982, any insurer may file with the director of the Division of Insurance a written notice of its election to comply with the provisions of §§ 58-15-43.1 to 58-15-43.11, inclusive, after a specified date before January 1, 1989, which shall be the effective date of §§ 58-15-43.1 to 58-15-43.11, inclusive, for the insurer. If an insurer makes no election, the operative date of this section for such insurer is January 1, 1989.

Source: SL 1982, ch 357, § 15.

58-15-43.12. Insurance plans to conform to minimum standards of nonforfeiture laws.

In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of any plan of life insurance which is of such a nature that minimum values cannot be determined by the methods described in §§ 58-15-31 to 58-15-38, inclusive, and §§ 58-15-43.1 to 58-15-43.11, inclusive, then the director of the Division of Insurance must be satisfied that the benefits provided under the plan are substantially as favorable to policy holders and insureds as the minimum benefits otherwise required by those sections. Further, the director must be satisfied that the benefits and the pattern of premiums of that plan do not mislead prospective policyholders or insureds. In addition the cash surrender values and paid-up nonforfeiture benefits provided by the plan may not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this chapter, as determined by regulations promulgated by the director.

Source: SL 1982, ch 357, § 16.

58-15-43.13. Default in payment of premium--Amount of cash surrender value--Amount of nonforfeiture factor--Policies issued after January 1, 1986.

This section, in addition to all other applicable sections of this chapter, applies to all policies issued on or after January 1, 1986. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than two-tenths of one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years, from the sum of the greater of zero and the basic cash value hereinafter specified and the present value of any existing paid-up additions less the amount of any indebtedness to the insurer under the policy. The basic cash value is equal to the present value, on the anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after such anniversary. However, the effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in § 58-15-33 or §§ 58-15-35 to 58-15-38, inclusive, whichever is applicable, are the same as are the effects specified in § 58-15-33 or §§ 58-15-35 to 58-15-38, inclusive, whichever is applicable on the cash surrender values defined in those sections. The nonforfeiture factor for each policy year is an amount equal to a percentage of the adjusted premium for the policy year, as defined in §§ 58-15-35 to 58-15-38, inclusive, or §§ 58-15-43.1 to 58-15-43.11, inclusive, whichever is applicable. That percentage must be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary and the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least two-tenths of one percent of either the amount of insurance, if the insurance be uniform in amount, or the average amount of insurance at the beginning of each of the first ten policy years; and must be such that no percentage after the later of the two policy anniversaries specified in the preceding may apply to fewer than five consecutive policy years. However, no basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in §§ 58-15-35 to 58-15-38, inclusive, or §§ 58-15-43.1 to 58-15-43.11, inclusive, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.

All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the policy's compliance with the other sections of this chapter. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy.

Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment are determined in manners consistent with the manners specified for determining the analogous minimum amounts in §§ 58-15-31 to 58-15-34, inclusive, §§ 58-15-39 and 58-15-40, and §§ 58-15-43.1 to 58-15-43.11, inclusive. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed in § 58-15-40 shall conform with the principles of this section.

Source: SL 1982, ch 357, § 18.

58-15-44. Dating back of application for insurance to reduce premium prohibited--Contract not invalidated.

No insurer may knowingly deliver or issue for delivery in this state any life insurance policy that purports to be issued or to take effect as of a date more than six months before the application therefor was made, if thereby the premium on the policy is reduced below the premium that would be payable thereon as determined by the insuring age of the insured at the time when such application was made. No insurance producer or other representative of an insurer may in this state prepare, submit, or accept any application for life insurance that bears a date earlier than the date when the application was made by the insured or applicant, if thereby the premium on the contract is reduced as above stated. Nothing contained in this section invalidates any contract made in violation of this section. This section does not prohibit the exchange, alteration, or conversion of any policy of life insurance.

Source: SL 1966, ch 111, ch 23, § 35; SL 2001, ch 286, § 109; SL 2021, ch 210, § 8.

58-15-45. Excluding or restricting coverage in case of death--Permissible exclusions.

No policy of life insurance may be delivered or issued for delivery in this state if it contains any provision which excludes or restricts liability for death caused in a certain specified manner or occurring while the insured has a specified status. However, a policy may contain provisions excluding or restricting coverage as specified in the policy in the event of death under any one or more of the following circumstances:

(1)    Death as a result, directly or indirectly, of war, declared or undeclared, or of action by military forces, or of any act or hazard of such war or action, or of service in the military, naval, or air forces or in civilian forces auxiliary thereto, or from any cause while a member of such military, naval, or air forces of any country at war, declared or undeclared, or of any country engaged in such military action. However, this exclusion is not enforceable unless the applicant is affirmatively advised at the time of delivery of the policy that the policy in question contains war clause exclusions;

(2)    Death as a result of aviation or any air travel or flight;

(3)    Death as a result of a specified hazardous occupation or occupations;

(4)    Death within two years from the date of issue of the policy as a result of suicide, while sane or insane;

(5)    Any other exclusion or restriction the director may adopt, by rule promulgated pursuant to chapter 1-26, if the exclusion or restriction is in the best interest of the insurance buying public.

Source: SL 1966, ch 111, ch 23, § 26 (1) (b); SL 1992, ch 346; SL 2002, ch 233, § 1.

58-15-46. Excluding or restricting coverage in case of death--Return of premiums, adjustment for indebtedness and dividend credits.

A policy which contains any exclusion or restriction pursuant to § 58-15-45 shall also provide that in the event of death under the circumstances to which any such exclusion or restriction is applicable, the insurer will return all premiums received under the policy with adjustment for indebtedness and dividend credits. If the policy is a variable policy, the insurer may, if the policy so provides, return all premiums received under the policy with adjustment for indebtedness and adjustment to reflect the investment experience of the separate account.

Source: SL 1966, ch 111, ch 23, § 26 (2); SL 2001, ch 54, § 7.

58-15-47. Prohibited policy provisions--Person soliciting insurance or annuity insurance producer of insured.

No policy of life insurance may be delivered or issued for delivery in this state if it contains any provision to the effect that the insurance producer soliciting the insurance or annuity is the insurance producer of the person covered under such contract, or making the acts or representations of such insurance producer binding upon the person so covered.

Source: SL 1966, ch 111, ch 23, § 26 (1) (f); SL 2001, ch 286, § 110.

58-15-48. Prohibited policy provisions--Construction of contract according to laws of other state or country.

No policy of life insurance shall be delivered or issued for delivery in this state if it contains any provision that the contract is to be construed according to the laws of any other state or country.

Source: SL 1966, ch 111, ch 23, § 26 (1) (c).

58-15-49. Prohibited policy provisions--Rights and obligations of insured under contract governed by law of other state.

No policy of life insurance shall be delivered or issued for delivery in this state if it contains any provision that the rights and obligations of the insured or any person claiming under such contract are to be governed by any other than the laws of this state.

Source: SL 1966, ch 111, ch 23, § 26 (1) (d).

58-15-50. Prohibited policy provisions--Depriving courts of jurisdiction of action against insurer.

No policy of life insurance shall be delivered or issued for delivery in this state if it contains any provision depriving the courts of this state of the jurisdiction of any action at law or in equity against the insurer.

Source: SL 1966, ch 111, ch 23, § 26 (1) (e).

58-15-51. Limitation of action on policy--Minimum time.

No policy of life insurance shall be delivered or issued for delivery in this state if it contains any provision limiting the time within which an action at law or in equity may be commenced on such a policy to less than six years after the cause of action shall accrue.

Source: SL 1966, ch 111, ch 23, § 26 (1) (a).

58-15-52. Prohibited policy provisions inapplicable to group life insurance, health insurance, reinsurance, annuities, and accident benefits under life insurance policy.

The provisions of §§ 58-15-45 to 58-15-51, inclusive, do not apply to health insurance, reinsurance, or annuities. The provisions of §§ 58-15-46 to 58-15-51, inclusive, do not apply to group life or to any provision in a life insurance policy or contract supplemental thereto relating to health benefits or to additional benefits in the event of death by accidental means. However, the provisions of § 58-15-45 apply to group life insurance and to any provision in a life insurance policy or contract supplemental thereto relating to health benefits or to additional benefits in the event of death by accidental means.

Source: SL 1966, ch 111, ch 23, § 26 (3); SL 2006, ch 253, § 1.

58-15-53. Use of prohibited policy provision which is more favorable to insured.

Nothing contained in §§ 58-15-45 to 58-15-51, inclusive, shall prohibit any provision which in the opinion of the director is more favorable to the policyholder than a provision permitted by said sections.

Source: SL 1966, ch 111, ch 23, § 26 (4).

58-15-54. Prohibited policy provisions in industrial life insurance--Denial of liability because of other insurance.

No policy of industrial life insurance shall contain any provision by which the insurer may deny liability under the policy for the reason that the insured has previously obtained other insurance from the same insurer.

Source: SL 1966, ch 111, ch 23, § 27 (1).

58-15-55. Prohibited policy provisions in industrial life insurance--Right to declare policy void because of disease or ailment of insured.

No policy of industrial life insurance shall contain any provision giving the insurer the right to declare the policy void because the insured has had any disease or ailment, whether specified or not, or because the insured has received institutional, hospital, medical, or surgical treatment, except a provision which gives the insurer the right to declare the policy void if the insured has, within two years prior to the issuance of the policy, received institutional, hospital, medical, or surgical treatment or attention and if the insured or claimant under the policy fails to show that the condition occasioning such treatment or attention was not of a serious nature or was not material to the risk.

Source: SL 1966, ch 111, ch 23, § 27 (2).

58-15-56. Prohibited policy provisions in industrial life insurance--Right to declare policy void because insured rejected for insurance.

No policy of industrial life insurance shall contain any provision giving the insurer the right to declare the policy void because the insured has been rejected for insurance, unless such right be conditioned upon a showing by the insurer that knowledge of such rejection would have led to a refusal by the insurer to make such contract.

Source: SL 1966, ch 111, ch 23, § 27 (3).

58-15-57. Annuity and endowment contracts--Standard provisions required, exceptions.

No annuity or pure endowment contract, other than reversionary, survivorship, or group annuities and except as stated herein or in § 58-15-58, shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions specified in §§ 58-15-59 to 58-15-64, inclusive. Any of such provisions not applicable to single premium annuities or single premium pure endowment contracts shall not, to that extent, be incorporated therein.

Source: SL 1966, ch 111, ch 23, § 18 (1).

58-15-58. Standard provisions of annuity and endowment contracts inapplicable to deferred annuities under life insurance policies.

Section 58-15-57 shall not apply to contracts for deferred annuities included in, or upon the lives of beneficiaries under, life insurance policies.

Source: SL 1966, ch 111, ch 23, § 18 (2).

58-15-59. Annuities and endowments--Entire agreement contained in contract and application.

In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that the contract shall constitute the entire contract between the parties or, if a copy of the application is endorsed upon or attached to the contract when issued, a provision that the contract and the application therefor shall constitute the entire contract between the parties.

Source: SL 1966, ch 111, ch 23, § 21.

58-15-59.1. Right of annuitant or purchaser to cancel after receipt of contract--Effect of cancellation.

Every individual annuity contract, excluding variable annuity contracts, issued for delivery in South Dakota on or after July 1, 1978, by an insurance company or fraternal benefit society, shall have printed on or attached to the annuity contract, a notice stating in substance that the person to whom the annuity contract is issued shall be permitted to return the annuity contract, with a written request for cancellation within ten days of its actual receipt by the purchaser, and to have the premium paid refunded if, after examination of the annuity contract, the purchaser is not satisfied with it for any reason. If annuitant or purchaser pursuant to the notice, returns the annuity contract to the company or fraternal benefit society at its home or branch office or to the insurance producer through whom it was purchased, it is void from the beginning and the parties are in the same position as if no annuity contract had been issued.

Source: SL 1978, ch 361, § 1; SL 2001, ch 286, § 111.

58-15-59.2. Issuance of policies by insurance company or fraternal benefit society--Delivery receipts--Certificates of mailing--Term of retention.

An insurance company or fraternal benefit society shall issue policies in this state for which an examination period is required in accordance with one of the following methods:

(1)    If the policy is delivered by an insurance producer, a receipt shall be signed by the policyowner acknowledging delivery of the policy. The receipt shall include the policy number and the date of the delivery;

(2)    If the policy is delivered by mail, it shall be sent by registered or certified mail, return receipt requested, or a certificate of mailing shall be obtained showing the date the policy was mailed to the policyowner. For policy issuances verified by a certificate of mailing, it is presumed that the policy is received by the policyowner ten days from the date of mailing.

The receipts and the certificates of mailing described in this section shall be retained by the insurer for five years. If a producer obtains the delivery receipt, the producer shall forward the signed delivery receipt to the insurer.

Source: SL 1982, ch 28, § 18; SL 1987, ch 374, § 2; SL 2001, ch 286, § 112; SL 2002, ch 232, § 2.

58-15-60. Effect of misstatement of age or sex in annuity or endowment contract.

In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that if the age or sex of the person upon whose life the contract is made, or if any of them has been misstated, the amount payable or benefits accruing under the contract shall be such as the stipulated payments to the insurer would have purchased according to the correct age or sex and that if the insurer shall make or has made any overpayment on account of any such misstatement, the amount thereof with interest at the rate to be specified in the contract but not exceeding six percent per annum, may be charged against the current or next succeeding payments to be made by the insurer under the contract.

Source: SL 1966, ch 111, ch 23, § 22.

58-15-61. Incontestability provision in annuity or endowment contract.

If any statements, other than those relating to age, sex, and identity are required as a condition to issuing an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, and subject to § 58-15-60, there shall be a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or of each of the persons as to whom such statements are required, for a period of two years from its date of issue, except for nonpayment of stipulated payments to the insurer; and at the option of the insurer such contract may also except any provisions relative to benefits in the event of disability and any provisions which grant insurance specifically against death by accidental means.

Source: SL 1966, ch 111, ch 23, § 20.

58-15-62. Grace period in annuity or endowment contract.

In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that there shall be a period of grace of not less than thirty days, within which any stipulated payment to the insurer falling due after the first payment may be made, during which period of grace the contract shall continue in full force; but in case a claim arises under the contract on account of death prior to expiration of the period of grace before the overdue payment to the insurer or the deferred payments of the current contract year, if any, are made, the amount of such payments may be deducted from any amount payable under the contract in settlement.

Source: SL 1966, ch 111, ch 23, § 19.

58-15-63. Participating annuity or endowment contract--Ascertainment and apportionment of divisible surplus.

If an annuity or pure endowment contract, other than reversionary, survivorship, or group annuity, is participating, there shall be a provision that the insurer shall annually ascertain and apportion any divisible surplus accruing on the contract.

Source: SL 1966, ch 111, ch 23, § 23.

58-15-64. Reinstatement provision required in annuity or endowment contract.

In an annuity or pure endowment contract, other than a reversionary, survivorship, or group annuity, there shall be a provision that the contract may be reinstated at any time within one year from the default in making stipulated payments to the insurer, unless the cash surrender value has been paid, but all overdue stipulated payments and any indebtedness to the insurer on the contract shall be paid or reinstated with interest thereon at a rate to be specified in the contract but not exceeding six percent per annum payable annually, and in cases where applicable, the insurer may also include a requirement of evidence of insurability satisfactory to the insurer.

Source: SL 1966, ch 111, ch 23, § 24.

58-15-65. Reversionary annuity contract--Standard provisions.

Except as stated in § 58-15-67, no contract for a reversionary annuity shall be delivered or issued for delivery in this state unless it contains in substance each of the provisions specified in §§ 58-15-59 to 58-15-63, inclusive, except that under § 58-15-62 the insurer may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue payment in lieu of providing for deduction of such payments from an amount payable upon settlement under the contract.

Source: SL 1966, ch 111, ch 23, § 25 (1) (a).

58-15-66. Reinstatement provision required in reversionary annuity contract.

Except as stated in § 58-15-67, no contract for a reversionary annuity shall be delivered or issued for delivery in this state unless it contains in substance a provision that the contract may be reinstated at any time within three years from the date of default in making stipulated payments to the insurer, upon production of evidence of insurability satisfactory to the insurer, and upon condition that all overdue payments and any indebtedness to the insurer on account of the contract be paid, or, within the limits permitted by the then cash values of the contract, reinstated, with interest as to both payments and indebtedness at a rate to be specified in the contract but not exceeding six percent per annum.

Source: SL 1966, ch 111, ch 23, § 25 (1) (b).

58-15-67. Reversionary annuity contract provisions inapplicable to group annuities or to annuities included in life insurance policies.

Sections 58-15-65 and 58-15-66 shall not apply to group annuities or to annuities included in life insurance policies, and any of such provisions not applicable to single premium annuities shall not to that extent be incorporated therein.

Source: SL 1966, ch 111, ch 23, § 25 (2).

58-15-68. Incontestability provisions after reinstatement of life insurance policy or annuity contract.

A reinstated policy of life insurance or annuity contract may be contested on account of fraud or misrepresentation of facts material to the reinstatement only for the same period following reinstatement and with the same conditions and exceptions as the policy provides with respect to contestability after original issuance.

Source: SL 1966, ch 111, ch 23, § 31 (1).

58-15-69. Reinstated life insurance policy or annuity contract--Limitation of liability.

When any life insurance policy or annuity contract is reinstated, such reinstated policy or contract may exclude or restrict liability to the same extent that such liability could have been or was excluded or restricted when the policy or contract was originally issued and such exclusion or restriction shall be effective from the date of reinstatement.

Source: SL 1966, ch 111, ch 23, § 31 (2).

58-15-70. Policy settlements by life insurer.

Any life insurer shall have the power to hold under agreement the proceeds of any policy issued by it, upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as set forth in the policy or as agreed to in writing by the insurer and the policyholder. Upon maturity of a policy, in the event the policyholder has made no such agreement, the insurer shall have the power to hold the proceeds of the policy under an agreement with the beneficiaries. The insurer shall not be required to segregate the funds so held but may hold them as part of its general assets.

Source: SL 1966, ch 111, ch 23, § 32.

58-15-71. Life insurance policy--Restrictions on issuing and delivering.

No life insurer shall hereafter deliver in this state as a part of or in combination with any insurance, endowment, or annuity contract, any agreement or plan, additional to the rights, dividends, and benefits arising out of any such insurance, endowment, or annuity contract:

(1)    Which provides for the accumulation of profits over a period of years and for payment of all or any part of such accumulated profits only to members or policyholders of a designated group or class who continue as member or policyholders until the end of a specified period of years; or

(2)    Which provides that on the death of anyone, other than a beneficiary or a person insured thereunder, the owner or beneficiary of the policy shall receive the payment or granting of anything of value.

Source: SL 1966, ch 111, ch 23, § 33.