§936.  Standard nonforfeiture law for life insurance

A.(1)  This Section shall be known as the "Standard Nonforfeiture Law for Life Insurance".  In the case of policies issued on and after the effective date of this Section, as defined in Subsection L of this Section, no policy of life insurance, except as stated in Subsection K of this Section shall be delivered or issued for delivery in this state unless it shall contain in substance the following provisions, or corresponding provisions which in the opinion of the commissioner are at least as favorable to the defaulting or surrendering policyholder as are the minimum requirements hereinafter specified in Subsection J of this Section:

(a)  That, after premiums have been paid for more than one year, 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 hereinafter specified.  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.

(b)  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 shall pay in lieu of any paid-up nonforfeiture benefit a cash surrender value of such amount as may be hereinafter specified.

(c)  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.

(d)  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 hereinafter specified.

(e)  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.

(f)  A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated 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 on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.

(2)(a)  Any of the provisions of Paragraph (1) of this Subsection not applicable because of the structure of the plan of insurance may, to the extent inapplicable, be omitted from the policy.

(b)  Notwithstanding any other provisions to the contrary, the insurer shall reserve the right to defer the payment of any cash surrender value for a period not to exceed six months after demand therefor with surrender of the policy.  Notwithstanding this provision, if payment is not made within thirty days after demand therefor with surrender of the policy, the insurer shall pay, in addition to the cash surrender value, interest on the cash surrender value at the judicial interest rate set by R.S. 9:3500 commencing from the date of surrender until the cash surrender value is paid in full within the six-month period.

B.(1)  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 Subsection A of this Section, 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 Subsections D, E, F, and G of this Section 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.

(2)  However, for any policy issued on or after the effective date of Subsection G of this Section as defined therein, 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 Paragraph (1) of this Subsection shall be an amount not less than the sum of the cash surrender value as defined in such Paragraph for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as defined in such Paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.

(3)  However, for any family policy issued on or after the effective date of Subsection G of this Section as defined therein, 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 of seventy-one years, the cash surrender value referred to in Paragraph (1) of this Subsection shall be an amount not less than the sum of the cash surrender value as defined in such Paragraph for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value as defined in such Paragraph for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.

(4)  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 Subsection A of this Section, 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.

C.  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 this Section in the absence of the condition that premiums shall have been paid for at least a specified period.

D.(1)(a)  This Subsection shall not apply to policies issued on or after the effective date of Subsection G of this Section as defined therein.  Except as provided in Paragraph (3) of this Subsection, 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 extra premiums on substandard policies, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of all of the following:

 (i)  The then present value of the future guaranteed benefits provided for by the policy.

(ii)  Two percent of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy.

(iii)  Forty percent of the adjusted premium for the first policy year.

(iv)  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.

(b)  In applying the percentages specified in Items (a)(iii) and (iv) of this Paragraph, 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 this Subsection shall be the date from which the first policy anniversary is computed.

(2)  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 this Subsection 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;  however, 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.

(3)  Whenever a term benefit is added as a rider or as a supplemental policy provision, the adjusted premiums for such added benefit may be calculated as though it were separate and independent from the policy.  In all other respects the term benefit shall conform to the provisions of this Section.

(4)  Except as otherwise provided in Subsections E, F, and G of this Section, all adjusted premiums and present values referred to in this Section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1941 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 three years younger than the actual age of the insured and such calculations for all policies of industrial insurance, as defined in R.S. 22:141, shall be made on the basis of the 1941 Standard Industrial Mortality Table.  All calculations shall be made on the basis of the rate of interest, not exceeding three and one-half percent per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits; 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 may be not more than one hundred thirty percent of the rates of mortality according to such applicable table;  however, 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 commissioner.

E.(1)  This Subsection shall not apply to ordinary policies issued on or after the effective date of Subsection G of this Section as defined therein.  In the case of ordinary policies issued on or after the effective date of this Subsection as defined herein and in Subsection L of this Section, all adjusted premiums and present values referred to in this Section shall be calculated on the basis of the Commissioner's 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits provided that such rate of interest shall not exceed four percent per annum for policies issued prior to September 7, 1979, and such rate of interest shall not exceed five and one-half percent per annum for policies issued on or after September 7, 1979. However, 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;  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 may be not more than those shown in the Commissioner's 1958 Extended Term Insurance Table. However, 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 commissioner.

(2)  After July 27, 1960, any insurer may file with the commissioner a written notice of its election to comply with the provisions of this Subsection after a specified date with respect to the policies specified in the notice.  After the filing of such notice, then upon such specified date which shall be the effective date of this Subsection for such insurer with respect to such policies, this Subsection shall become effective with respect to such policies specified in such notice and thereafter issued by such insurer.

F.(1)  This Subsection shall not apply to industrial policies issued on or after the effective date of Subsection G of this Section as defined therein.  In the case of industrial policies issued on or after the effective date of this Subsection as defined herein and in Subsection L of this Section, all adjusted premiums and present values referred to in this Section shall be calculated on the basis of the Commissioner's 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, but such rate of interest shall not exceed four percent per annum for policies issued prior to September 7, 1979, and such a rate of interest shall not exceed five and one-half percent per annum for policies issued on or after September 7, 1979.  In addition, 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 1961 Industrial Extended Term Insurance Table;  however, for insurance issued on a substandard basis, the calculations 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 commissioner.

(2)  After September 7, 1979, any insurer may file with the commissioner a written notice of its election to comply with the provisions of this Subsection after a specified date with respect to the policies specified in the notice.  After the filing of such notice, then upon such specified date, which shall be the effective date of the Subsection for such insurer with respect to such policies, this Subsection shall become effective with respect to the industrial policies specified in such notice and thereafter issued by such insurer.

G.(1)(a)  This Subsection shall apply to all policies issued on or after the effective date of this Subsection as defined herein.  Except as provided in Paragraph (7) of this Subsection, 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 shall be equal to the sum of the following three factors:

(i)  The then present value of the future guaranteed benefits provided for by the policy.

(ii)  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.

(iii)  One hundred twenty-five percent of the nonforfeiture net level premium as hereinafter defined.

(b)  However, in applying the percentage specified in Item (a)(iii) of this Paragraph, no nonforfeiture net level premium shall 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 Subsection shall be the date as of which the rated age of the insured is determined.

(2)  The nonforfeiture net level premium shall be 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 such policy on which a premium falls due.

(3)  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, 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 vary from those stipulated by the policy immediately after the change.

(4)  Except as otherwise provided in Paragraph (7) of this Subsection, 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 such future adjusted premiums shall be equal to the excess of (A) the sum of (a) the then present value of the then future guaranteed benefits provided for by the policy and (b) 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.

(5)  The additional expense allowance at the time of the change to the newly defined benefits or premiums shall be the sum of (a) 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 (b) one hundred twenty-five percent of the increase, if positive, in the nonforfeiture net level premium.

(6)  The recalculated nonforfeiture net level premium shall be equal to the result obtained by dividing (A) by (B) where (A) equals the sum of: (a) 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 (b) 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.

(7)  Notwithstanding any other provisions of this Subsection 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, such 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 the substandard policy were issued to provide such higher uniform amounts of insurance on the standard basis.

(8)  All adjusted premiums and present values referred to in this Section shall be 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; shall be calculated for all policies of industrial insurance on the basis of the Commissioner's 1961 Standard Industrial Mortality Table; and shall be 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 Subsection for policies issued in that calendar year;  however,

(a)  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 Subsection, for policies issued in the immediately preceding calendar year.

(b)  Under any paid-up nonforfeiture benefit including any paid-up dividend additions, any cash surrender value available, whether or not required by Subsection A of this Section shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.

(c)  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.

(d)  In calculating the present value of any paid-up term life 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 life insurance.

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

(f)  For policies issued prior to the operative date of the valuation manual, any ordinary life mortality tables, adopted after 1980, by the National Association of Insurance Commissioners that are approved by the commissioner 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.

(g)  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 commissioner 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, then that minimum nonforfeiture standard shall supersede the minimum nonforfeiture standard provided by the valuation manual.

(h)  For policies issued prior to the operative date of the valuation manual, any industrial life mortality tables adopted after 1980 by the National Association of Insurance Commissioners that are approved by the commissioner 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.

(i)  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 1961 Standard Industrial Mortality Table or the Commissioner's 1961 Industrial Extended Term Insurance Table.  If the commissioner 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 operative date of the valuation manual, then that minimum nonforfeiture standard shall supersede the minimum nonforfeiture standard provided by the valuation manual.

(9)(a)  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 shall be equal to one hundred and twenty five percent of the interest rate used in determining the minimum standard for the valuation of such policy as defined in the R.S. 22:753, rounded to the nearer one quarter of one percent.

(b)  For policies issued on or after the operative date of the valuation manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the valuation manual.

(10)  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 shall not require refiling of any other provisions of that policy form.

(11)  After the effective date of this Subsection, any insurer may file with the commissioner a written notice of its election to comply with the provisions of this Section after a specified date before January 1, 1989, which shall be the effective date of this Subsection for such insurer.  If an insurer makes no such election, the effective date of this Subsection for such insurer shall be January 1, 1989.

H.  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 Subsections A, B, C, D, E, F, or G of this Section, then the commissioner shall be satisfied that the benefits provided under the plan are substantially as favorable to policyholders and insureds as the minimum benefits otherwise required by Subsections A, B, C, D, E, F, or G of this Section.  The commissioner shall be satisfied that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insureds.  The cash surrender values and paid-up nonforfeiture benefits provided by such plan shall not be less than the minimum values and benefits required for the plan computed by a method consistent with the principles of this Section as determined by the commissioner.

I.(1)  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 Subsections B through G of this Section 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, shall not be less than the amounts used to provide such additions.  Notwithstanding the provisions of Subsection B of this Section, additional benefits payable in any of the following shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this Section:

(a)  In the event of death or dismemberment by accident or accidental means.

(b)  In the event of total and permanent disability.

(c)  As reversionary annuity or deferred reversionary annuity benefits.

(d)  As term insurance benefits, whether or not provided by a rider or supplemental policy provision to which, if issued as a separate policy, this Section shall not apply.

(e)  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.

(f)  As other policy benefits additional to life insurance and endowment benefits and premiums for all such additional benefits.

(2)  No such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.

J.(1)  All applicable Subsections of this Section shall apply 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:  (a) the greater of zero and the basic cash value hereinafter specified and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the insurer under the policy.

(2)  The basic cash value shall be equal to the present value, on such 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 Subsection B or Subsection D of this Section, whichever is applicable, shall be the same as are the effects specified in such Subsection B or Subsection D of this Section, whichever is applicable on the cash surrender values defined in that Subsection.

(3)(a)  The nonforfeiture factor for each policy year shall be an amount equal to a percentage of the adjusted premium for the policy year, as defined in Subsection D or Subsection G of this Section, whichever is applicable.  Except as is required by Subparagraph (b) of this Paragraph, such percentage shall be the same percentage for each policy year between the second policy anniversary and the later of the fifth policy anniversary and that of 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.

(b)  No percentage after the later of the two policy anniversaries specified in Subparagraph (a) of this Paragraph shall 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 Subsection D or G of this Section, whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.

(4)  All adjusted premiums and present values referred to in this Subsection 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 subsections of this Section.

(5)  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 shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in Subsections A, B, C, G, and I of this Section.  The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as Subparagraphs (I)(1)(a) through (f) of this Section shall conform with the principles of this Subsection.

(6)  The cash surrender values referred to in this Subsection shall include any endowment benefits provided for by the policy.

(7)  The operative date of the valuation manual as used in this Section shall be the date determined according to R.S. 22:753(C)(2).

K.(1)  This Section shall not apply to any of the following:

(a)  Reinsurance.

(b)  Group insurance.

(c)  Pure endowment.

(d)  Annuity or reversionary annuity contract.

(e)  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.

(f)  Term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits on which each adjusted premium calculated as specified in Subsections D, E, F, and G of this Section, 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.

(g)  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 Subsections B through G of this Section, exceeds two and one-half percent of the amount of insurance at the beginning of the same policy year.

(h)  Policy which shall be delivered outside this state through a producer or other representative of the insurer issuing the policy.

(i)  Policy on the life of an individual residing outside of the continental United States.

(j)  Policy issued in accordance with Subparts D or E of Part I of Chapter 2 of this Title, unless the insurer issuing such policy elects to comply with the provisions of this Section.

(2)  For purposes of determining the applicability of this Section, the age at expiry for a joint term life insurance policy shall be the age at expiry of the oldest life.

L.  Any insurer may, at its option, file with the commissioner of insurance a written notice of its election to comply with the provisions of this Section after a specified date with respect to the policies specified in the notice.  After the filing of such notice, then upon such specified date, which shall be the effective date for such insurer with respect to such policies, this Section shall become operative with respect to the policies specified in such notice and thereafter issued by such insurer.  The insurer may issue participating and nonparticipating policies under the same plan of insurance and either or both, at its option, subject to the provisions of R.S. 22:935.

Acts 1958, No. 125.  Amended by Acts 1958, No. 92, §1, eff. Jan.  1, 1959 at 12:00 Noon; Acts 1960, No. 286, §1; Acts 1964, No. 155, §1; Acts 1974, No. 4, §1; Acts 1975, No. 261, §2; Acts 1979, No. 370, §3; Acts 1982, No. 464, §1; Acts 1991, No. 951, §1; Redesignated from R.S. 22:168 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2011, No. 94, §1, eff. Jan. 1, 2012; Acts 2013, No. 349, §1, eff. Jan. 1, 2014.