Chapter 16 - Life Insurance And Annuity Contracts
CHAPTER 16 - LIFE INSURANCE AND ANNUITY CONTRACTS
ARTICLE 1 - POLICY AND CONTRACT PROVISIONS
26-16-101. Scope and applicability of chapter.
Thischapter, except W.S. 26-16-118 and 26-16-120, applies only to contracts of lifeinsurance and annuities, other than reinsurance, group life insurance and groupannuities.
26-16-102. Standard provisions required.
(a) No life insurance policy, other than group and pureendowments with or without return of premiums or of premiums and interest,shall be delivered or issued for delivery in this state unless it containsprovisions conforming in substance to each of the applicable provisionsspecified in W.S. 26-16-103 through 26-16-114. This section does not apply toannuity contracts nor to any provisions of a life insurance policy, or contractsupplemental thereto, relating to disability benefits or to additional benefitsin case of death by accident or accidental means.
(b) Any of the provisions or portions thereof not applicable tosingle premium or term policies, to that extent, shall not be incorporated inthe policy.
26-16-103. Grace period.
Agrace period of thirty (30) days, or, at the insurer's option, of one (1) monthof not less than thirty (30) days, or of four (4) weeks in the case ofindustrial life insurance policies the premiums for which are payable morefrequently than monthly, shall be allowed within which the payment of anypremium after the first may be made. The policy shall continue in full forceduring the grace period, which shall be counted from the premium due datespecified in the policy. The insurer may impose an interest charge not toexceed six percent (6%) per annum for the number of days of grace elapsingbefore the payment of the premium, and, whether or not the interest charge isimposed, if a claim arises under the policy during the grace period the amountof any premium due or overdue, together with interest and any deferredinstallment of the annual premium, may be deducted from the policy proceeds.
26-16-104. Incontestability.
Thepolicy, exclusive of provisions relating to disability benefits or toadditional benefits in case of death by accident or accidental means, isincontestable, except for nonpayment of premiums, after it is in force duringthe insured's lifetime for a period of two (2) years from its date of issue.
26-16-105. Policy and application constitutes entire contract;statements deemed representations.
Thepolicy, or the policy and the application therefor if a copy of the applicationis endorsed upon or attached to the policy when issued, constitutes the entirecontract between the parties and statements contained in the application, inthe absence of fraud, are representations and not warranties.
26-16-106. Misstatement of age.
Ifthe age of the insured or of any other person whose age is considered indetermining the premium or benefit is misstated, any amount payable or benefitaccruing under the policy shall be in an amount as the premium would purchaseat the correct age.
26-16-107. Dividends.
(a) In participating policies, beginning not later than the endof the third policy year, the insurer shall annually ascertain and apportionthe divisible surplus, if any, that will accrue on the policy anniversary orother dividend date specified in the policy, provided the policy is in forceand all premiums to that date are paid. Except as otherwise provided in thissection, any dividend payable, at the option of the party entitled to elect theoption, shall be either payable in cash or applied to any of the other dividendoptions provided by the policy. If any other dividend options are provided, thepolicy shall further state which option is automatically effective if the partydoes not elect some other option. If the policy specifies a period within whichthe other dividend option may be elected, the period shall be not less thanthirty (30) days following the date on which the dividend is due and payable.The annually apportioned dividend is payable in cash within the meaning of thecash option specified in this subsection even though the policy provides thatpayment of the dividend is to be deferred for a specified period, provided theperiod does not exceed six (6) years from the date of apportionment and thatinterest will be added to the dividend at a specified rate.
(b) Renewable term policies of ten (10) years or less mayprovide that:
(i) The surplus accrued to the policies shall be determined andapportioned each year after the second policy year and accumulated during eachrenewal period;
(ii) At the end of the renewal period, on the insured's renewalof the policy, the insurer shall apply the accumulated surplus as an annuityfor the next succeeding renewal term in reducing premiums.
(c) In participating industrial life insurance policies,instead of the provision required in subsection (a) of this section, thereshall be a provision that beginning not later than the end of the fifth policyyear, the policy shall participate annually in the divisible surplus, if any,in the manner set forth in the policy.
(d) This section does not apply to insurance issued inconsideration of lapsed or surrendered policies.
26-16-108. Policy loans.
(a) As used in this section:
(i) "Policy" includes certificates issued by afraternal benefit society and annuity contracts which provide for policy loans;
(ii) "Policyholder" includes the owner of the policyor the person designated to pay premiums as shown on the records of the lifeinsurer;
(iii) "Policy loan" includes any premium loan madeunder a policy to pay one (1) or more premiums not paid to the life insurerwhen due;
(iv) "Published monthly average" means:
(A) Moody's Corporate Bond Yield Average-Monthly AverageCorporates as published by Moody's Investors Service, Inc. or any successor; or
(B) If the Moody's Corporate Bond Yield Average-Monthly AverageCorporates is no longer published, a substantially similar average establishedby regulation of the commissioner.
(v) "The rate of interest on policy loans" authorizedunder this section includes the interest rate charged on reinstatement ofpolicy loans for the period during and after any lapse of a policy.
(b) After three (3) full years premiums are paid and after thepolicy has a cash surrender value and while no premium is in default beyond thegrace period, the insurer will advance, on proper assignment or pledge of thepolicy and on the sole security of the policy, at a specified rate of interest,an amount equal to or at the option of the entitled party less than thepolicy's loan value. The policy loan value shall be at least equal to the cashsurrender value at the end of the then current policy year, provided that theinsurer may deduct from the loan value or from the loan proceeds, any existingindebtedness not already deducted in determining the cash surrender valueincluding any interest then accrued but not due, any unpaid balance of thepremium for the current policy year and interest on the loan to the end of thecurrent policy year.
(c) The policy may also provide that:
(i) If interest on any indebtedness is not paid when due, itshall be added to the existing indebtedness and shall bear interest at the samerate; and
(ii) If the total indebtedness on the policy, including interestdue or accrued, equals or exceeds the amount of the policy loan value, thepolicy terminates and is void after notice is mailed by the insurer within atleast thirty (30) days to the last address of record with the insurer of theinsured or other policy owner and of any assignee of record at the insurer'shome office.
(d) The policy shall reserve the insurer's right to defer thegranting of a loan, other than for the payment of any premium to the insurer,for six (6) months after application. The provision shall also contain a tableindicating in writing the loan values each year during the first twenty (20)years of the policy or during the term of the policy, whichever is shorter.
(e) The policy, at the insurer's option, may provide forautomatic premium loan.
(f) This section does not apply to:
(i) Term policies;
(ii) Term insurance benefits provided by rider or supplementalpolicy provisions; or
(iii) Industrial life insurance policies.
(g) Policies issued on or after July 1, 1983 shall provide forpolicy loan interest rates as follows:
(i) A provision permitting a maximum interest rate of not morethan eight percent (8%) per year; or
(ii) A provision permitting an adjustable maximum interest rateestablished from time to time by the life insurer as authorized by law.
(h) The rate of interest charged on a policy loan made underparagraph (g)(ii) of this section shall not exceed the higher of the publishedmonthly average for the calendar month ending two (2) months prior to the dateon which the rate is determined or the rate used to compute the cash surrendervalues under the policy during the applicable period plus one percent (1%) peryear.
(j) The policy shall contain a provision stating the frequencyat which the rate is to be determined for that policy. The maximum rate foreach policy shall be determined at regular intervals at least once every twelve(12) months but not more than once every three (3) months. At the intervalsspecified in the policy:
(i) The rate charged may be increased if the increasedetermined under subsection (h) of this section increases the rate by one-halfpercent (1/2%) or more per year; and
(ii) The rate charged shall be reduced if the reductiondetermined under subsection (h) of this section decreases the rate by one-halfpercent (1/2%) or more per year.
(k) The life insurer shall:
(i) Notify the policyholder of the initial rate of interest onthe loan at the time a cash loan is made;
(ii) Notify the policyholder of the initial rate of interest ona premium loan as soon as reasonably practical after making the initial loan.No notice is required if an additional premium loan is added except as providedin paragraph (iii) of this subsection;
(iii) Provide policyholders having loans reasonable advancenotice of any rate increase; and
(iv) Include in notices to policyholders required by thissubsection the substance of the pertinent provisions of subsections (g) and (j)of this section.
(m) The loan value of the policy shall be determined inaccordance with W.S. 26-16-202(a)(vi). No policy shall terminate in a policyyear as the sole result of a change in the interest rate during that policyyear. The life insurer shall maintain coverage during that policy year untilthe time at which it would otherwise have terminated if there had been no interestrate change during that policy year.
(n) The substance of the pertinent provisions of subsections(g) and (j) of this section shall be stated within the policies to which theyapply.
(o) No other provision of law shall apply to policy loan interestrates unless made specifically applicable to such rates.
26-16-109. Table of installments required.
Incase the policy provides that the proceeds are payable in installments whichare determinable at issue of the policy, there shall be a table showing theamounts of the guaranteed installments.
26-16-110. Reinstatement of policies.
(a) Unless the policy has been surrendered for its cashsurrender value, or its cash surrender value has been exhausted, or the paid-upterm insurance, if any, has expired, the policy will be reinstated at any timewithin three (3) years, or two (2) years in the case of industrial lifeinsurance policies, from the date of premium default upon:
(i) Written application therefor;
(ii) The production of evidence of insurability satisfactory tothe insurer;
(iii) The payment of all premiums in arrears;
(iv) The payment or reinstatement of any other indebtedness tothe insurer upon the policy; and
(v) The payment of interest at a rate not exceeding six percent(6%) per annum compounded annually on all payments required for reinstatement.
26-16-111. Time and place of payment of premiums.
Thetime and place of payment of premiums shall be specified.
26-16-112. Payment of claims.
Ifthe benefits under the policy are payable because of the death of the insured,settlement shall be made upon receipt of proof of death and, at the insurer'soption, surrender of the policy or proof of the interest of the claimant, orboth. Benefits shall be paid within the time requirements of W.S. 26-15-124 andshall include interest accrued from the date of death until date of payment.The interest rate shall be not less than the rate of interest payable on deathproceeds left on deposit with the insurer. For purposes of this section, dateof payment shall include the date of the postmark stamped on an envelopeproperly addressed and postage prepaid, containing the payment. The provisionsof this section requiring the payment of interest shall not apply to variablecontracts which provide for insurance or annuity benefits which may varyaccording to the investment experience of any separate account or accountsmaintained by the insurer as to such contract.
26-16-113. Beneficiaries of industrial life insurance policies.
(a) An industrial life insurance policy shall have the name ofthe beneficiary designated thereon, or in the application or other form ifattached to the policy, with a reservation of the right to designate or changethe beneficiary after the issuance of the policy, unless the beneficiary isirrevocably designated.
(b) The policy may also provide that:
(i) No designation or change of beneficiary is binding on theinsurer until endorsed on the policy by the insurer;
(ii) The insurer may refuse to endorse the name of any proposedbeneficiary who does not appear to the insurer to have an insurable interest inthe insured's life;
(iii) If the beneficiary designated in the policy does not make aclaim under the policy or does not surrender the policy with proof of deathwithin the period stated in the policy, which shall not be less than thirty(30) days after the insured's death, or if the beneficiary is the estate of theinsured, or is a minor, or dies before the insured, or is not legally competentto give a valid release, the insurer may make any payment thereunder to theinsured's executor or administrator, or to any relative of the insured by bloodor legal adoption or connection by marriage, or to any person appearing to theinsurer to be equitably entitled thereto because of having been namedbeneficiary or having incurred expense for the insured's maintenance, medicalattention or burial.
(c) The policy may also include a provision similar to that inparagraph (b)(iii) of this section applicable to any other payment due underthe policy.
26-16-114. Title on policy.
Thereshall be a title on the policy briefly describing the policy.
26-16-115. Excluded or restricted coverage under incontestabilityclause.
Aclause in any life insurance policy providing that the policy is incontestableafter a specified period precludes only a contest of the policy's validity anddoes not preclude the assertion at any time of defenses based upon provisionsin the policy which exclude or restrict coverage, whether or not therestrictions or exclusions are excepted in the clause.
26-16-116. Annuity and pure endowment contracts; standard provisions.
(a) No annuity or pure endowment contract, other thanreversionary, survivorship or group annuities and except as stated in thissection, shall be delivered or issued for delivery in this state unless itcontains provisions conforming in substance to each of the provisions specifiedin W.S. 26-16-117. Any of the provisions not applicable to single premiumannuities or single premium pure endowment contracts, to that extent, shall notbe incorporated in the policy.
(b) This section does not apply to contracts for deferredannuities included in or upon the lives of beneficiaries under life insurancepolicies.
26-16-117. Annuity and pure endowment contracts; provisions to becontained.
(a) Any annuity or pure endowment contract, other than areversionary, survivorship or group annuity, shall contain provisions asspecified in this section.
(b) There shall be a grace period of one (1) month, but notless than thirty (30) days, within which any stipulated payment to the insurerfalling due after the first may be made, subject at the option of the insurerto an interest charge thereon at a rate to be specified in the contract but notexceeding six percent (6%) per annum for the number of days of grace elapsingbefore the payment. The contract shall continue in full force during the graceperiod. If a claim arises under the contract because of death prior to expirationof the grace period before the overdue payment to the insurer or the deferredpayments of the current contract year, if any, are made, the amount of thepayments, with interest on any overdue payments, may be deducted from anyamount payable under the contract in settlement.
(c) If any statements, other than those relating to age, sexand identity, are required as a condition to issuing an annuity or pureendowment contract, and subject to subsection (e) of this section the contractis incontestable after it is in force during the lifetime of the person or ofeach of the persons as to whom the statements are required, for a period of two(2) years from its date of issue, except for nonpayment of stipulated paymentsto the insurer. At the insurer's option the contract may also except anyprovisions relative to benefits in case of disability and any provisions whichgrant insurance specifically against death by accident or accidental means.
(d) The contract constitutes the entire contract between theparties, or if a copy of the application is endorsed upon or attached to thecontract when issued, the contract and the application therefor constitute theentire contract between the parties.
(e) If the age or sex of any person upon whose life the contractis made is misstated, the amount payable or benefits accruing under thecontract shall be in an amount as the stipulated payment to the insurer wouldpurchase according to the correct age or sex. If the insurer overpays becauseof any such misstatement, the amount of overpayment with interest at the rateto be specified in the contract, but not exceeding six percent (6%) per annum,may be charged against the current or next succeeding payment the insurer makesunder the contract.
(f) In a participating contract the insurer shall annuallyascertain and apportion any divisible surplus accruing on the contract.
(g) The contract may be reinstated at any time within one (1)year from the default in making stipulated payments to the insurer, unless thecash surrender value has been paid. Any overdue stipulated payments and anyindebtedness to the insurer on the contract shall be paid or reinstated withinterest thereon at a rate to be specified in the contract but not exceedingsix percent (6%) per annum payable annually. In applicable cases the insurermay also require evidence of insurability to its satisfaction.
26-16-118. Standard provisions for reversionary annuities.
(a) Except as otherwise provided in this section, no contractfor a reversionary annuity shall be delivered or issued for delivery in thisstate unless it contains in substance:
(i) The provisions specified in W.S. 26-16-117, except thatunder W.S. 26-16-117 the insurer, at its option, may provide for an equitablereduction of the amount of the annuity payments in settlement of an overduepayment instead of providing for deduction of the payments from an amountpayable upon settlement under the contract; and
(ii) A provision that the contract may be reinstated at any timewithin three (3) years from the date of default in making stipulated paymentsto the insurer, upon production of evidence of insurability satisfactory to theinsurer, and upon condition that all overdue payments and any indebtedness tothe insurer because of the contract be paid, or, within the limits permitted bythe then cash values of the contract, reinstated with interest as to bothpayments and indebtedness at a rate to be specified in the contract but notexceeding six percent (6%) per annum compounded annually.
(b) This section does not apply to group annuities or toannuities included in life insurance policies, and any of those provisions notapplicable to single premium annuities, to that extent, shall not beincorporated in the policies.
26-16-119. Provisions limiting liability in life insurance policiesprohibited; exceptions.
(a) No life insurance policy shall be delivered or issued fordelivery in this state if it contains any provision:
(i) Limiting the time within which an action at law or inequity may be commenced on the policy to less than three (3) years after thecause of action has accrued;
(ii) Which excludes or restricts liability for death caused in acertain specified manner or occurring while the insured has a specified status,except that a policy may contain provisions excluding or restricting coverageas specified therein in case of death under any of the following circumstances:
(A) Death as a result, directly or indirectly, of war, declaredor undeclared, or of any act or hazard of a war or action;
(B) Death as a result of aviation or any air travel or flight;
(C) Death as a result of a specified hazardous occupation. Service in the military, naval or air forces or in civilian forces auxiliarythereto shall not be a specified hazardous occupation under this subparagraph;
(D) Death while the insured is a resident outside [the]continental United States and Canada; or
(E) Death within two (2) years from the date of issue of thepolicy as a result of suicide, while sane or insane.
(b) A policy which contains any exclusion or restrictionpursuant to subsection (a) of this section shall also provide that in case ofdeath under the circumstances to which the exclusion or restriction applies,the insurer shall pay an amount not less than a reserve determined according tothe commissioners' reserve valuation method upon the basis of the mortalitytable and interest rate specified in the policy for the calculation ofnonforfeiture benefits, or if the policy does not provide for such benefits,computed according to a mortality table and interest rate determined by theinsurer and specified in the policy, with adjustment for indebtedness ordividend credit.
(c) This section does not apply to group life insurance, disabilityinsurance, reinsurance or annuities, or to any provision in a life insurancepolicy or contract supplemental thereto relating to disability benefits or toadditional benefits in case of death by accident or accidental means.
(d) Nothing in this section prohibits any provision which inthe commissioner's opinion is more favorable to the policyholder than aprovision permitted by this section.
26-16-120. Prohibited provisions generally in life insurance policiesand industrial life insurance policies.
(a) No life insurance policy, other than industrial insurance,shall be issued or delivered in this state, or be issued by any domesticinsurer, if it contains any provision:
(i) By which the policy purports to be issued or to take effectmore than one (1) year before the original application for the insurance ismade, if thereby the insured would rate at an age more than one (1) yearyounger than his insuring age at date when application is made;
(ii) For any mode of settlement at maturity of the policy ofless value than the amount insured under the policy, plus dividend additions,if any, less any indebtedness to the insurer on or secured by the policy andless any premium that, by the terms of the policy, may be deducted. Thisparagraph does not apply to any nonforfeiture provisions which employ the cashvalue less indebtedness, if any, to purchase automatic paid-up or extendedinsurance, nor does it apply to graded death benefits in juvenile policies atages one (1) to sixteen (16) years.
(b) No industrial life insurance policy shall contain anyprovision:
(i) By which the insurer may deny liability under the policyfor the reason that the insured previously obtained other insurance from thesame insurer;
(ii) Giving the insurer the right to declare the policy voidbecause the insured:
(A) Has had any disease or ailment, whether specified or not,or because the insured has received institutional, hospital, medical orsurgical treatment or attention, except a provision which gives the insurer theright to declare the policy void if the insured, within two (2) years prior tothe issuance of the policy, received institutional, hospital, medical orsurgical treatment or attention and if the insured or claimant under the policyfails to show that the condition occasioning that treatment or attention wasnot of a serious nature or was not material to the risk;
(B) Has been rejected for insurance, unless the right isconditioned upon the insurer showing that knowledge of the rejection would haveled to the insurer's refusal to make the contract.
ARTICLE 2 - STANDARD NONFORFEITURE LAW
26-16-201. Short title; policy issue date.
(a) This article is known as the Standard Nonforfeiture Law forLife Insurance.
(b) For the purpose of this article the date of issue of apolicy is the date on which the insured's rated age is determined.
26-16-202. Policy provisions.
(a) No life insurance policy, except as stated in W.S.26-16-212, shall be delivered or issued for delivery in this state unless itcontains provisions conforming in substance to each of the followingprovisions, or corresponding provisions which the commissioner determines areat least as favorable to the defaulting or surrendering policyholder as are theminimum requirements specified in this subsection and are essentially incompliance with W.S. 26-16-210:
(i) In case of default in any premium payment the insurer willgrant, upon proper request not later than sixty (60) days after the due date ofthe premium in default, a paid-up nonforfeiture benefit on a plan stipulated inthe policy, effective as of the due date, in an amount as is specified in thisarticle. Instead of the stipulated paid-up nonforfeiture benefit, the insurer,upon proper request not later than sixty (60) days after the due date of thepremium in default, may substitute an actuarially equivalent alternativepaid-up nonforfeiture benefit which provides a greater amount or longer periodof death benefits or, if applicable, a greater amount or earlier payment ofendowment benefits;
(ii) Upon surrender of the policy within sixty (60) days afterthe due date of any premium payment in default after premiums have been paidfor at least three (3) full years in the case of ordinary insurance or five (5)full years in the case of industrial insurance, the insurer will pay, insteadof any paid-up nonforfeiture benefit, a cash surrender value in an amount as isspecified in this article;
(iii) A specified paid-up nonforfeiture benefit is effective asspecified in the policy unless the person entitled to make the election electsanother available option not later than sixty (60) days after the due date ofthe premium in default;
(iv) If the policy is paid-up by completion of all premiumpayments or if it is continued under any paid-up nonforfeiture benefit whichbecame effective on or after the third policy anniversary in the case ofordinary insurance or the fifth policy anniversary in the case of industrialinsurance, the insurer, upon surrender of the policy within thirty (30) daysafter any policy anniversary, will pay a cash surrender value in an amount asis specified in this article;
(v) In the case of policies which cause on a basis guaranteedin the policy unscheduled changes in benefits or premiums, or which provide anoption for changes in benefits or premiums other than a change to a new policy,a statement of the mortality table, interest rate and method of use incalculating cash surrender values and the paid-up nonforfeiture benefits under thepolicy. All other policies shall contain a statement of the mortality table andinterest rate used in calculating the cash surrender values and the paid-upnonforfeiture benefits available under the policy, together with a tableshowing the cash surrender value, if any, and paid-up nonforfeiture benefit, ifany, available under the policy on each policy anniversary either during thefirst twenty (20) policy years or during the term of the policy, whichever isshorter, those values and benefits to be calculated upon the assumption thatthere are no dividends or paid-up additions credited to the policy and thatthere is no indebtedness to the insurer on the policy;
(vi) A statement:
(A) That the cash surrender values and the paid-upnonforfeiture benefits available under the policy are not less than the minimumvalues and benefits required by or pursuant to the insurance law of the statein which the policy is delivered;
(B) Explaining the manner in which the cash surrender valuesand the paid-up nonforfeiture benefits are altered by the existence of anypaid-up additions credited to the policy or any indebtedness to the insurer onthe policy;
(C) That the method of computation has been filed with theinsurance supervisory official of the state in which the policy is delivered,if a detailed statement of the method of computation of the values and benefitsshown in the policy is not stated in the policy; and
(D) Of the method to be used in calculating the cash surrendervalue and paid-up nonforfeiture benefit available under the policy on anypolicy anniversary beyond the last anniversary for which the values andbenefits are consecutively shown in the policy.
(b) Any provision or part thereof set forth in paragraphs(a)(i) through (vi) of this section, not applicable by reason of the insuranceplan, to the extent inapplicable, may be omitted from the policy.
26-16-203. Cash surrender values.
(a) The insurer may reserve the right to defer the payment ofany cash surrender value for a period of six (6) months after demand thereforwith surrender of the policy.
(b) Cash surrender value shall be as follows:
(i) Any cash surrender value available under the policy in caseof default in a premium payment due on any policy anniversary, whether or notrequired by W.S. 26-16-202, shall be an amount not less than the excess, ifany, of the present value, on the anniversary of the future guaranteedbenefits, including any existing paid-up additions, which would have beenprovided for by the policy if there had been no default, over the sum of:
(A) The then present value of the adjusted premiums as definedin W.S. 26-16-205 through 26-16-209 corresponding to premiums which would havefallen due on and after the anniversary; and
(B) The amount of any indebtedness to the insurer on thepolicy.
(ii) For any policy issued on or after the operative date ofW.S. 26-16-209, which provides supplemental life insurance or annuity benefitsat the insured's option and for an identifiable additional premium by rider orsupplemental policy provision, the cash surrender value referred to inparagraph (i) of this subsection shall be an amount not less than the sum ofthe cash surrender value as defined in that paragraph for an otherwise similarpolicy issued at the same age without the rider or supplemental policyprovision and the cash surrender value as defined in that paragraph for apolicy which provides only the benefits otherwise provided by the rider orsupplemental policy provision;
(iii) For any family policy issued on or after the operative dateof W.S. 26-16-209, which defines a primary insured and provides term insuranceon the life of the spouse of the primary insured expiring before the spouse'sage seventy-one (71), the cash surrender value referred to in paragraph (i) ofthis subsection shall be an amount not less than the sum of the cash surrendervalue as defined in that paragraph for an otherwise similar policy issued atthe same age without the term insurance on the life of the spouse and the cashsurrender value as defined in the paragraph for a policy which provides onlythe benefits otherwise provided by the term insurance on the life of thespouse;
(iv) Any cash surrender value available within thirty (30) daysafter any policy anniversary under any policy paid-up by completion of allpremium payments or any policy continued under any paid-up nonforfeiturebenefit, whether or not required by W.S. 26-16-202(a), shall be an amount notless than the present value, on the anniversary, of the future guaranteedbenefits provided for by the policy, including any existing paid-up additions,decreased by any indebtedness to the insurer on the policy.
26-16-204. Paid-up nonforfeiture benefits.
Anypaid-up nonforfeiture benefit available under the policy in case of default ina premium payment due on any policy anniversary shall be such that its presentvalue as of the anniversary shall be at least equal to the cash surrender valuethen provided by the policy or, if none is provided, that cash surrender valuewhich would have been required by this article in the absence of the conditionthat premiums be paid for at least a specified period.
26-16-205. Section applicability; adjusted premiums.
(a) This section does not apply to policies issued on or afterthe operative date of W.S. 26-16-209.
(b) Except as provided in W.S. 26-16-207, the adjusted premiumsfor any policy shall be calculated on an annual basis and shall be such uniformpercentage of the premiums specified in the policy for each policy year,excluding any extra premiums charged because of impairment or special hazards,that the present value, at the date of issue of the policy, of all the adjustedpremiums shall be equal to the sum of:
(i) The then present value of the future guaranteed benefitsprovided by the policy;
(ii) Two percent (2%) of the amount of insurance, if theinsurance is uniform in amount, or of the equivalent uniform amount, asotherwise defined in this article, if the amount of insurance varies withduration of the policy;
(iii) Forty percent (40%) of the adjusted premium for the firstpolicy year;
(iv) Twenty-five percent (25%) of either the adjusted premiumfor the first policy year or the adjusted premium for a whole life policy ofthe same uniform or equivalent uniform amount with uniform premiums for thewhole of life issued at the same age for the same amount of insurance,whichever is less, except that in applying the percentages specified inparagraph (iii) of this subsection and this paragraph, no adjusted premium isdeemed to exceed four percent (4%) of the amount of insurance or uniform amountequivalent thereto.
26-16-206. Varying amount of insurance based on policy duration;uniform equivalent.
(a) In the case of a policy providing an amount of insurancevarying with duration of the policy, the equivalent uniform amount thereof forthe purpose of W.S. 26-16-205 is the uniform amount of insurance provided by anotherwise similar policy, containing the same endowment benefits, if any,issued at the same age and for the same term, the amount of which does not varywith duration and the benefits under which have the same present value at thedate of issue as the benefits under the policy.
(b) In the case of a policy providing a varying amount ofinsurance issued on the life of a child under age ten (10) the equivalentuniform amount may be computed as though the amount of insurance provided bythe policy prior to the attainment of age ten (10) were the amount provided bythe policy at age ten (10).
26-16-207. Adjustment of premiums for benefits provided by rider orsupplemental policy provision.
(a) The adjusted premiums for any policy providing terminsurance benefits by rider or supplemental policy provision shall be equal to:
(i) The adjusted premiums for an otherwise similar policyissued at the same age without the term insurance benefits, increased, duringthe period for which premiums for the term insurance benefits are payable, by;
(ii) The adjusted premiums for the term insurance. Paragraphs(a)(i) and (ii) of this section shall be calculated separately and as specifiedin W.S. 26-16-205 and 26-16-206, except that for the purposes of W.S.26-16-205(b)(ii), (iii) and (iv), the amount of insurance or equivalent uniformamount of insurance used in the calculation of the adjusted premiums referredto in this paragraph shall be equal to the excess of the corresponding amountdetermined for the entire policy over the amount used in the calculation of theadjusted premiums in paragraph (a)(i) of this section.
26-16-208. Section applicability; calculation of certain adjustedpremiums.
(a) This section does not apply to ordinary policies issued onor after the operative date of W.S. 26-16-209. All adjusted premiums and presentvalues referred to in this article, for all policies of ordinary insurance,shall be calculated on the basis of the commissioners' 1958 standard ordinarymortality table, except that for any category of ordinary insurance issued onfemale risks, adjusted premiums and present values may be calculated accordingto an age not more than six (6) years younger than the insured's actual age.
(b) Calculations for all policies of industrial insurance shallbe made on the basis of the commissioners' 1961 standard industrial mortalitytable.
(c) All calculations shall be made on the basis of the rate ofinterest specified in the policy for calculating cash surrender values andpaid-up nonforfeiture benefits. The rate of interest shall not exceed three andone-half percent (3 1/2%) per annum, except that a rate of interest notexceeding four percent (4%) per annum may be used for policies issued on orafter July 1, 1975 and prior to May 20, 1981 and a rate of interest notexceeding five and one-half percent (5 1/2%) per annum may be used for policiesissued on or after May 20, 1981.
(d) In calculating the present value of any paid-up terminsurance with accompanying pure endowment, if any, offered as a nonforfeiturebenefit, the rates of mortality assumed may be not more than those shown in thecommissioners' 1958 extended term insurance table in the case of ordinaryinsurance, and the commissioners' 1961 industrial extended term insurance tablein the case of industrial policies.
(e) For insurance issued on a substandard basis, thecalculation of any adjusted premiums and present values may be based on anymortality table the insurer specifies and the commissioner approves.
26-16-209. Section applicability; premium adjustment for any policy;annual calculation; exception.
(a) This section applies to policies issued on or after theoperative date in subsection (n) of this section.
(b) Except as provided in subsection (h) of this section, theadjusted premiums for any policy shall be calculated on an annual basis andshall be the uniform percentage of the premiums specified in the policy foreach policy year, excluding:
(i) Amounts payable as extra premiums to cover impairments orspecial hazards; and
(ii) Any uniform annual contract charge or policy fee specifiedin the policy in a statement of the method to be used in calculating the cashsurrender values and paid-up nonforfeiture benefits, that the present value, atthe date of issue of the policy, of all adjusted premiums shall be equal to thesum of:
(A) The then present value of the future guaranteed benefitsprovided by the policy;
(B) One percent (1%) of either the amount of insurance, if theinsurance is uniform in amount, or the average amount of insurance at thebeginning of each of the first ten (10) policy years; and
(C) One hundred twenty-five percent (125%) of the nonforfeiturenet level premium as otherwise defined in this section; and
(D) In applying the percentage specified in subparagraph (C) ofthis paragraph no nonforfeiture net level premium is deemed to exceed fourpercent (4%) of either the amount of insurance, if the insurance is uniform inamount, or the average amount of insurance at the beginning of each of thefirst ten (10) policy years.
(c) The nonforfeiture net level premium shall be equal to thepresent value, at the date of issue of the policy, of the guaranteed benefitsprovided by the policy divided by the present value, at the date of issue ofthe policy, of an annuity of one (1) per annum payable on the date of issue ofthe policy and on each policy anniversary on which a premium falls due.
(d) For policies which cause on a basis guaranteed in thepolicy unscheduled changes in benefits or premiums, or which provide an optionfor changes in benefits or premiums other than a change to a new policy, theadjusted premiums and present values shall initially be calculated on theassumption that future benefits and premiums do not change from thosestipulated at the date of policy issue. At the time of any such change in thebenefits or premiums the future adjusted premiums, nonforfeiture net levelpremiums and present values shall be recalculated on the assumption that futurebenefits and premiums do not change from those stipulated by the policy immediatelyafter the change.
(e) Except as provided in subsection (h) of this section therecalculated future adjusted premiums for any such policy shall be the uniformpercentage of the future premiums specified in the policy for each policy year,excluding amounts payable as extra premiums to cover impairments and specialhazards, and also excluding any uniform annual contract charge or policy feespecified in the policy in a statement of the method to be used in calculatingthe cash surrender values and paid-up nonforfeiture benefits, that the presentvalue, at the time of change to the newly defined benefits or premiums, of allthe future adjusted premiums shall be equal to the excess of: The sum of thethen present value of the then future guaranteed benefits provided for by thepolicy and the additional expense allowance, if any, over the then cashsurrender value, if any, or present value of any paid-up nonforfeiture benefitunder the policy.
(f) The additional expense allowance, at the time of the changeto the newly defined benefits or premiums, shall be the sum of:
(i) One percent (1%) of the excess, if positive, of the averageamount of insurance at the beginning of each of the first ten (10) policy yearsafter the change over the average amount of insurance prior to the change atthe beginning of each of the first ten (10) policy years after the time of themost recent previous change, or, if there has been no previous change, the dateof issue of the policy; and
(ii) One hundred twenty-five percent (125%) of the increase, ifpositive, in the nonforfeiture net level premium.
(g) The recalculated nonforfeiture net level premium shall beequal to the result obtained by dividing (i) by (ii) where:
(i) Equals the sum of:
(A) The nonforfeiture net level premium applicable prior to thechange times the present value of an annuity of one (1) per annum payable oneach anniversary of the policy on or after the date of the change on which apremium would have fallen due had the change not occurred; and
(B) The present value of the increase in future guaranteedbenefits provided for by the policy; and
(ii) Equals the present value of an annuity of one (1) per annumpayable on each policy anniversary on or after the date of change on which a premiumfalls due.
(h) Notwithstanding any provision of this section, for a policyissued on a substandard basis which provides reduced graded amounts ofinsurance so that, in each policy year, the policy has the same tabularmortality cost as an otherwise similar policy issued on the standard basiswhich provides higher uniform amounts of insurance, adjusted premiums andpresent values may be calculated as if the policy were issued to provide thehigher uniform amounts of insurance on the standard basis.
(j) All adjusted premiums and present values referred to inthis article shall be calculated for all policies of ordinary insurance on thebasis of the commissioners' 1980 standard ordinary mortality table or, at theelection of the company for any one (1) or more specified life insurance plans,the commissioners' 1980 standard ordinary mortality table with ten-year selectmortality factors; for all industrial insurance policies on the basis of thecommissioners' 1961 standard industrial mortality table; and for all policiesissued in a particular calendar year on the basis of a rate of interest notexceeding the nonforfeiture interest rate as defined in this section forpolicies issued in that calendar year, except that:
(i) At the insurer's option, calculations for all policiesissued in a particular calendar year may be made on the basis of a rate ofinterest not exceeding the nonforfeiture interest rate, as defined in thissubsection, for policies issued in the immediately preceding calendar year;
(ii) Under any paid-up nonforfeiture benefit, including anypaid-up dividend additions, any cash surrender value available, whether or notrequired by W.S. 26-16-202(a), shall be calculated on the basis of themortality table and rate of interest used in determining the amount of thepaid-up nonforfeiture benefit and paid-up dividend additions, if any;
(iii) A company may calculate the amount of any guaranteedpaid-up nonforfeiture benefit including any paid-up additions under the policyon the basis of an interest rate not lower than that specified in the policyfor calculating cash surrender values;
(iv) In calculating the present value of any paid-up terminsurance with accompanying pure endowment, if any, offered as a nonforfeiturebenefit, the rates of mortality assumed shall not be more than those shown inthe commissioners' 1980 extended term insurance table for policies of ordinaryinsurance and not more than the commissioners' 1961 industrial extended terminsurance table for policies of industrial insurance;
(v) For insurance issued on a substandard basis, thecalculation of the adjusted premiums and present values may be based onappropriate modifications of the tables specified in this subsection;
(vi) Any ordinary mortality tables the National Association ofInsurance Commissioners adopts after 1980, that are approved by regulation thecommissioner promulgates, for use in determining the minimum nonforfeiturestandard, may be substituted for the commissioners' 1980 standard ordinary mortalitytable with or without ten-year select mortality factors or for thecommissioners' 1980 extended term insurance table;
(vii) Any industrial mortality tables the National Association ofInsurance Commissioners adopts after 1980, that are approved by regulation thecommissioner promulgates, for use in determining the minimum nonforfeiturestandard, may be substituted for the commissioners' 1961 standard industrialmortality table or the commissioners' 1961 industrial extended term insurancetable.
(k) The nonforfeiture interest rate per annum for any policyissued in a particular calendar year is equal to one hundred twenty-fivepercent (125%) of the calendar year statutory valuation interest rate for suchpolicy as defined in the standard valuation law rounded to the nearerone-fourth percent (1/4%).
(m) Notwithstanding any other provision in this code to thecontrary, any refiling or nonforfeiture values or their methods of computationfor any previously approved policy form which involves only a change in theinterest rate or mortality table used to compute nonforfeiture values shall notrequire refiling of any other provisions of that policy form.
(n) After the effective date of this section, any insurer mayfile with the commissioner a written notice of its election to comply with thissection after a specified date before January 1, 1989, and the date specifiedis the operative date of this section for the insurer, except that if aninsurer does not make the election, the operative date of this section for theinsurer is January 1, 1989. Before that date the election may be made on aproduct-by-product basis.
26-16-210. Determination of specified life insurance plan premiums andbenefits.
(a) For any life insurance plan which provides for futurepremium determination, the amounts of which are to be determined by the insurerbased on the then estimates of future experience, or for any life insuranceplan which is of such a nature that minimum values cannot be determined by themethods described in W.S. 26-16-202 through 26-16-209, the commissioner shallbe satisfied that:
(i) The benefits provided under the plan are substantially asfavorable to policyholders and insureds as the minimum benefits otherwiserequired by W.S. 26-16-202 through 26-16-209;
(ii) The benefits and the pattern of premiums of that plan arenot such as to mislead prospective policyholders or insureds.
(b) The cash surrender values and paid-up nonforfeiturebenefits provided by the plan shall not be less than the minimum values andbenefits required for the plan computed by a method consistent with theprinciples of this article for life insurance, as determined by regulations thecommissioner promulgates.
(c)(i) This subsection, in addition to all other applicablesubsections of this section, applies to all policies issued on or after January1, 1986. Any cash surrender value available under the policy in the event ofdefault in a premium payment due on any policy anniversary shall be in anamount which does not differ by more than two-tenths of one percent (.2%) ofeither the amount of insurance, if the insurance is uniform in amount, or theaverage amount of insurance at the beginning of each of the first ten (10)policy years, from the sum of (A) the greater of zero and the basic cash valueas specified in this subsection and (B) the present value of any existingpaid-up additions less the amount of any indebtedness to the insurer under thepolicy;
(ii) The basic cash value shall be equal to the present value,on such anniversary, of the future guaranteed benefits which would have beenprovided for by the policy, excluding any existing paid-up additions and beforededuction of any indebtedness to the insurer, if there had been no default,less the then present value of the nonforfeiture factors, as specified inparagraph (iii) of this subsection, corresponding to premiums which would havefallen due on and after such anniversary. However, the effects on the basiccash value of supplemental life insurance or annuity benefits or of familycoverage, as described in W.S. 26-16-203 or 26-16-207, whichever is applicable,shall be the same as are the effects specified in W.S. 26-16-203 or 26-16-207,whichever is applicable on the cash surrender values defined in thatsubsection;
(iii) The nonforfeiture factor for each policy year shall be anamount equal to a percentage of the adjusted premium for the policy year, asdefined in W.S. 26-16-205, 26-16-206 and 26-16-207 or in W.S. 26-16-209,whichever is applicable. Except as is required by subparagraph (A) of thisparagraph, such percentage:
(A) Must be the same percentage for each policy year betweenthe second policy anniversary and the later of (1) the fifth policy anniversaryand (2) the first policy anniversary at which there is available under thepolicy a cash surrender value in an amount, before including any paid-upadditions and before deducting any indebtedness, of at least two-tenths of onepercent (.2%) of either the amount of insurance, if the insurance be uniform inamount, or the average amount of insurance at the beginning of each of thefirst ten (10) policy years; and
(B) Must be such that no percentage after the later of the two(2) policy anniversaries specified in subparagraph (A) of this paragraph mayapply to fewer than five (5) consecutive policy years.
(iv) No basic cash value may be less than the value which wouldbe obtained if the adjusted premiums for the policy, as defined in W.S.26-16-205, 26-16-206 and 26-16-207 or in W.S. 26-16-209, whichever isapplicable, were substituted for the nonforfeiture factors in the calculationof the basic cash value;
(v) All adjusted premiums and present values referred to inthis subsection, for a particular policy, shall be calculated on the samemortality and interest bases as are used in demonstrating the policy'scompliance with the other subsections of this section. The cash surrendervalues referred to in this subsection shall include any endowment benefitsprovided for by the policy;
(vi) Any cash surrender value available other than in the eventof default in a premium payment due on a policy anniversary, and the amount ofany paid-up nonforfeiture benefit available under the policy in the event ofdefault in a premium payment shall be determined in manners consistent with themanners specified for determining the analogous minimum amounts in W.S.26-16-202, 26-16-203, 26-16-204, 26-16-209, and 26-16-211. The amounts of anycash surrender values and of any paid-up nonforfeiture benefits granted inconnection with additional benefits such as those listed as paragraphs (i)through (vi) of this subsection shall conform with the principals of thissection.
26-16-211. Calculating cash surrender and paid-up nonforfeiturebenefits for premium default other than on policy anniversary.
(a) Any cash surrender value and any paid-up nonforfeiturebenefit, available under the policy in case of default in a premium payment dueat any time other than on the policy anniversary, shall be calculated withallowance for the lapse of time and the payment of fractional premiums beyondthe last preceding policy anniversary. All values referred to in W.S.26-16-203(b) through 26-16-209 may be calculated upon the assumption that anydeath benefit is payable at the end of the policy year of death. The net valueof any paid-up additions, other than paid-up term additions, shall not be lessthan the amounts used to provide the additions. Notwithstanding W.S.26-16-203(b), the following additional benefits payable shall be disregarded inascertaining cash surrender values and nonforfeiture benefits required by thisarticle and are not required to be included in any paid-up nonforfeiturebenefits:
(i) In case of death or dismemberment by accident or accidentalmeans;
(ii) In case of total and permanent disability;
(iii) As reversionary annuity or deferred reversionary annuitybenefits;
(iv) As term insurance benefits provided by a rider orsupplemental policy provision to which, if issued as a separate policy, thissection would not apply;
(v) As term insurance on the life of a child provided in apolicy on the life of a parent of the child, if the term insurance expiresbefore the child's age is twenty-six (26), is uniform in amount after the child'sage is one (1) and is not paid-up because of the death of a parent of thechild; and
(vi) As o