2010 New York Code
ISC - Insurance
Article 32 - (3201 - 3239) INSURANCE CONTRACTS - LIFE, ACCIDENT AND HEALTH, ANNUITIES
3203 - Individual life insurance policies; standard provisions as to contractual rights and responsibilities of policyholders and insurers.

§  3203. Individual life insurance policies; standard provisions as to
  contractual rights and responsibilities of policyholders  and  insurers.
  (a)  All  life  insurance  policies,  except as otherwise stated herein,
  delivered or issued  for  delivery  in  this  state,  shall  contain  in
  substance   the   following   provisions,   or   provisions   which  the
  superintendent deems to be more favorable to policyholders:
    (1) that, for policies in which the amount and frequency  of  premiums
  may  vary,  after  payment  of  the  first  premium, the policyholder is
  entitled to a sixty-one day grace period, beginning on the day when  the
  insurer  determines  that  the  policy's  net  cash  surrender  value is
  insufficient to pay the total charges necessary to keep  the  policy  in
  force  for  one  month  from  that  day,  within which to pay sufficient
  premium to keep the policy in force for three months from the  date  the
  insufficiency  was  determined. For all other policies, after payment of
  the first premium, the policyholder is  entitled  to  a  thirty-one  day
  grace  period  or of one month following any subsequent premium due date
  within which to make payment of the premium then due. During such  grace
  period, the policy shall continue in full force;
    (2)  that  if  the death of the insured occurs within the grace period
  provided in the policy, the insurer may deduct from the policy  proceeds
  the  portion  of any unpaid premium applicable to the period ending with
  the last day of the policy month in which such death  occurred,  and  if
  the  death  of  the insured occurs during a period for which the premium
  has been paid, the insurer shall add to the policy proceeds a refund  of
  any  premium  actually  paid for any period beyond the end of the policy
  month in which such death occurred, provided such premium was not waived
  under  any  policy  provision  for  waiver  of  premiums  benefit.  This
  paragraph shall not apply to single premium or paid-up policies;
    (3) that the policy shall be incontestable after being in force during
  the  life  of  the  insured  for  a period of two years from its date of
  issue, and that, if a policy provides that the death benefit provided by
  the policy may be increased, or other policy  provisions  changed,  upon
  the  application  of  the policyholder and the production of evidence of
  insurability, the policy with respect to each such  increase  or  change
  shall  be  incontestable after two years from the effective date of such
  increase or change, except in each case for nonpayment  of  premiums  or
  violation  of policy conditions relating to service in the armed forces.
  At the option of the insurer, provisions relating to benefits for  total
  and  permanent  disability  and additional benefits for accidental death
  may also be excepted;
    (4) that the policy, together with the application therefor if a  copy
  of  such  application  is  attached  to  the  policy  when issued, shall
  constitute the entire contract between the parties; but in the  case  of
  policies  that provide that the death benefit or other policy provisions
  may be changed by written  application  or  by  the  written  notice  of
  exercise of one or more options provided in the policy, or automatically
  by the terms of the policy, the policy may also contain a provision that
  when  such  written  application  or  notice of exercise of an option is
  accepted by the insurer or a notice of  any  change  is  issued  by  the
  insurer  and,  in  each  case,  a  copy of such application or notice is
  returned by mail or delivered to the policyholder at the  policyholder's
  last  post  office  address  known  to  the insurer, such application or
  notice shall become part of the entire contract between the parties;
    (5) that if the age of the insured  has  been  misstated,  any  amount
  payable  or  benefit  accruing  under  the  policy  shall be such as the
  premium would have purchased at the correct age;
    (6) that the  insurer  shall  annually  ascertain  and  apportion  any
  divisible surplus accruing on the policy;

(7)  (A) that, in the case of policies which provide for the crediting
  of additional  amounts  pursuant  to  subsection  (b)  of  section  four
  thousand  two  hundred  thirty-two  of  this chapter or under which cash
  surrender  values  are  adjusted  in  accordance  with  a   market-value
  adjustment  formula  or  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,
  specifies  the  mortality  table,  interest  rate  and  method  used  in
  calculating cash surrender values and any paid-up nonforfeiture benefits
  available under the policy;
    (B) that, in the case  of  all  other  policies,  specifies  the  cash
  surrender  values and other options available in the event of default in
  a premium payment after premiums have been paid for a specified  period,
  together  with a table showing, in figures, all options available during
  each of the policy's first twenty years. Such options shall comply  with
  the  requirements of subsection (a) of section four thousand two hundred
  twenty or section four thousand two hundred twenty-one of this chapter;
    (8) (A) that the policyholder shall be entitled to a loan at any  time
  the  policy  is  in force in an amount not exceeding the loan value, and
  under the conditions, specified in section  four  thousand  two  hundred
  twenty-two  of  this  chapter,  provided three full years' premiums have
  been paid or, in the case of policies that provide that the policyholder
  may vary the amount and frequency of premiums to be paid to the insurer,
  after three years from the issue of the policy, if the policy is not  in
  default;
    (B)  that the sole security for the loan shall be assignment or pledge
  of the policy;
    (C) that, unless the policy provides for the crediting  of  additional
  amounts  pursuant to subsection (b) of section four thousand two hundred
  thirty-two of this chapter or provides for the adjustment of the  policy
  loan  value  in  accordance  with  a  market-value adjustment formula or
  causes on a basis  guaranteed  in  the  policy  unscheduled  changes  in
  benefits  or  premiums  or provides an option for changes in benefits or
  premiums other than a change to a new policy, the policy shall contain a
  table showing the loan values, if any,  available  during  each  of  the
  policy's first twenty years;
    (D)  that, in making a loan, the insurer may reduce the loan value (in
  addition to the indebtedness deducted in determining such value) by  any
  unpaid premium balance for the current policy year;
    (E)  that,  if  the  loan  is  made or repaid on a date other than the
  anniversary of the policy, the insurer  may  collect  interest  for  the
  portion of the current policy year on a pro rata basis;
    (F)  that,  at the option of the insurer, the loan shall bear interest
  (i) at a maximum rate of not more than seven and four-tenths per  centum
  per  annum  if  payable  in  advance or the equivalent effective rate of
  interest if otherwise payable, or (ii) at a rate not  in  excess  of  an
  adjustable  maximum rate established from time to time by the insurer as
  permitted by law. If the policy provides for  an  adjustable  rate,  the
  policy shall specify the regular intervals at which the interest rate is
  to  be  determined  which shall be at least once every twelve months but
  not more frequently than once in any three month period;
    (G) the policy may further provide: (i) that if the  interest  on  the
  loan  is  not paid when due, it shall be added to the existing loan, and
  shall bear interest at the applicable rate or rates payable on the  loan
  determined  in  accordance  with  the provisions of the policy, and (ii)
  subject to subsection (e) of section three thousand two hundred  six  of
  this  article  that when the total indebtedness on the policy, including
  interest due or accrued, equals or exceeds the amount  of  the  policy's

loan  value  and  if  at least thirty days' prior notice shall have been
  given in the manner provided  in  section  three  thousand  two  hundred
  eleven of this article, then the policy shall terminate and become void;
    (H)  any policy which provides for the crediting of additional amounts
  pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred
  thirty-two  of this chapter may also provide that if any indebtedness is
  owed to the insurer on any part of the loan value which would  otherwise
  be  credited  with  additional  amounts,  such additional amounts may be
  reduced so that the total amounts credited on such part are so  credited
  at  a  rate that is up to two percent per annum less than the applicable
  loan interest rate charged or at such other rate as the  superintendent,
  upon the insurer's demonstrating justification therefor, may allow;
    (I) this paragraph eight shall not apply to term insurance;
    (J)  this  paragraph eight shall not apply to any policy qualified for
  special tax treatment under subsection (b) of section four hundred three
  of the Internal Revenue Code of 1986, as amended,  to  the  extent  such
  application would prevent such qualification;
    (9)  a  table  showing  the  amounts  of the applicable installment or
  annuity payments, if the policy proceeds are payable in installments  or
  as an annuity;
    (10)  that  the  policy  shall  be reinstated at any time within three
  years from the date of default, unless the cash surrender value has been
  exhausted or the period  of  extended  insurance  has  expired,  if  the
  policyholder  makes  application,  provides  evidence  of  insurability,
  including good health, satisfactory to the  insurer,  pays  all  overdue
  premiums  with interest at a rate not exceeding six per centum per annum
  compounded  annually,  and  pays  or   reinstates   any   other   policy
  indebtedness with interest at a rate not exceeding the applicable policy
  loan   rate   or  rates  determined  in  accordance  with  the  policy's
  provisions. This provision shall be required only if the policy provides
  for termination or lapse in the event of a default in making a regularly
  scheduled premium payment;
    (11) that upon surrender  of  the  policy,  together  with  a  written
  request  for  cancellation,  to  the insurer during a period of not less
  than ten days nor more than thirty days from the  date  the  policy  was
  delivered  to  the policy owner, the insurer shall refund either (i) any
  premium paid for the policy, including any policy fees or other  charges
  or  (ii) if the policy provides for the adjustment of the cash surrender
  benefit in accordance with a market-value adjustment formula and if  the
  policy  or  a  notice attached to it so provides, the amount of the cash
  surrender benefit provided under the policy as so adjusted  assuming  no
  surrender  charge plus the amount of all fees and other charges deducted
  from any premium paid or from the policy value; provided, however,  that
  a  policy  sold  by  mail  order must contain a provision permitting the
  policy owner a thirty day period for such surrender. A provision to this
  effect shall appear in the policy or in a notice attached to it;
    (12) in any policy under which  additional  amounts  may  be  credited
  pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred
  thirty-two of this  chapter,  that  states  the  guaranteed  factors  of
  mortality,  expense  and interest, and a statement of the method used by
  the insurer in calculating actual policy values;
    (13) in any policy under which  additional  amounts  may  be  credited
  pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred
  thirty-two of this  chapter,  that  such  additional  amounts  shall  be
  nonforfeitable  after  the  effective date of their crediting except for
  any charges imposed under the policy which are not  greater  than  those
  allowed  under  subsection  (n-1)  or  any  market value adjustment made

pursuant to subsection  (n-2)  of  section  four  thousand  two  hundred
  twenty-one of this chapter; and
    (14)  in any policy under which additional amounts may be credited for
  any period pursuant to subsection  (b)  of  section  four  thousand  two
  hundred  thirty-two  of this chapter, that states that the insurer shall
  credit any such amount no less  frequently  than  annually  during  such
  period.
    (15) that states on the policy data or policy specifications page of a
  participating  cash  value  policy that dividends are not guaranteed and
  the insurer has the right  to  change  the  amount  of  dividend  to  be
  credited  to  the  policy which may result in lower dividend cash values
  than were illustrated, or, if applicable, require more  premiums  to  be
  paid than were illustrated.
    (16) that states on the policy data or policy specifications page of a
  life insurance policy subject to subsection (b) of section four thousand
  two  hundred  thirty-two of this chapter, to the extent applicable, that
  additional amounts are not guaranteed and the insurer has the  right  to
  change  the  amount of interest credited to the policy and the amount of
  cost of insurance or other expense charges  deducted  under  the  policy
  which  may  require  more premium to be paid than was illustrated or the
  cash values may be less than those illustrated.
    (17) that states on the policy data or policy specification  page  the
  minimum  guarantee interest rate used to determine the guaranteed policy
  values.
    (b) (1) A life insurance policy delivered or issued  for  delivery  in
  this  state  may  exclude  or  restrict  liability in the event of death
  occurring while the insured is resident in a specified  foreign  country
  or   countries,  but  shall  not  contain  any  provision  excluding  or
  restricting liability  in  the  event  of  death  caused  in  a  certain
  specified manner, except as a result of:
    (A)  conditions  specified  in  subsection  (c) hereof, subject to the
  terms of such subsection;
    (B) suicide within two years from the date of issue of the policy;
    (C) aviation under conditions specified in the policy;
    (D) hazardous occupations specified  in  the  policy,  provided  death
  occurs within two years from the date of issue of the policy.
    (2)   The   superintendent  may  approve  provisions  that  vary  from
  subparagraphs (A) through (D) of paragraph one hereof and subsection (c)
  hereof, whenever he deems such substitute provisions to be substantially
  the same or more favorable to policyholders.
    (3) If a death occurs that is subject to an exclusion  or  restriction
  pursuant  to this subsection or subsection (c) hereof, the insurer shall
  pay the reserve on the face amount of the policy, computed according  to
  the  mortality table and interest rate specified in the policy, together
  with the reserve for any paid-up additions thereto,  and  any  dividends
  standing  to  the  credit  of  the  policy, less any indebtedness to the
  insurer on the policy, including interest due or accrued; provided  that
  if  the policy shall have been in force for not more than two years, the
  insurer shall pay the amount of the gross premiums charged on the policy
  less dividends paid in cash or used in the payment of  premiums  thereon
  and  less  any  indebtedness  to  the  insurer  on the policy, including
  interest due or accrued.
    (c) (1) A life insurance policy delivered or issued  for  delivery  in
  this  state may contain provisions excluding or restricting liability in
  the event of death as a result of:
    (A) war or an act of war, if the  cause  of  death  occurs  while  the
  insured  is  serving  in  any armed forces or attached civilian unit and

death occurs no later than six months  after  the  termination  of  such
  service;
    (B)  the  special  hazards  incident to service in any armed forces or
  attached civilian unit, if the cause of death occurs during  the  period
  of such service while the insured is outside the home area, and if death
  occurs  outside  the  home area or within six months after the insured's
  return to the home area while in such service or within six months after
  the termination of such service, whichever is earlier;
    (C) war or an act of war, within two years from the date of  issue  of
  the  policy,  if  the cause of death occurs while the insured is outside
  the home area but is  not  serving  in  any  armed  forces  or  attached
  civilian  unit,  and  death  occurs  outside the home area or within six
  months after the insured's return to the home area.
    (2)  The  superintendent  may,  by  regulation,  prescribe  reasonable
  conditions  relating to the use of provisions permitted by paragraph one
  hereof. The provisions of subsection  (b)  hereof  shall  apply  to  any
  policy containing any provision permitted by this subsection.
    (3) As used in this subsection, the term:
    (A) "armed  forces"  means  the  military, naval, or air forces of any
  country, international organization, or combination of countries;
    (B) "attached civilian  unit"  means  a  civilian  non-combatant  unit
  serving with any armed forces;
    (C) "home  area"  means  the  fifty  states  of the United States, the
  District of Columbia, and Canada;
    (D) "war"  includes  any  war  declared  or  undeclared,   and   armed
  aggression resisted by any armed forces;
    (E) "act  of  war"  means  any act peculiar to military, naval, or air
  operations in time of war; and
    (F) "special hazards incident  to  service",  includes  those  hazards
  resulting  in  the  insured's  death  being  presumed by reason of being
  missing, in action, or otherwise, or the insured's death from disease or
  injury, accidental or otherwise, to which a person serving in, or  with,
  any  armed  forces  or attached civilian units is exposed in the line of
  duty.
    (4) In permitting war exclusions, it is the  legislative  intent  that
  such  exclusions  are  not  to be construed or interpreted as exclusions
  because of the status of the insured as a member of any armed forces  or
  attached  civilian units, or because of the presence of the insured as a
  civilian in a combat area or area  adjacent  thereto.  Such  permissible
  exclusions  shall  be  construed  and  interpreted according to the fair
  import of their terms so as not to exclude deaths  due  to  diseases  or
  accidents  which  are  common  to  the  civilian  population and are not
  attributable to special hazards to which a person serving in such forces
  or units is exposed in the line of duty.
    (5) Any such war exclusion shall terminate six months after the end of
  the war in which the insured was engaged or the war  which  the  insured
  was  likely  to  engage  in  at the time of application for this policy,
  after the discharge, release or separation of the  insured  from  active
  military  service, after the demobilization of the insured, or after the
  insured permanently leaves the war area, whichever occurs first. The end
  of war shall be determined by an order of the president  of  the  United
  States  or  by  federal law or shall be deemed to occur on the effective
  date of an agreement or declaration to end  all  hostilities  which  has
  been adopted or accepted by all armed forces involved therein, or in the
  absence  of  such  an  agreement  or  declaration  at  the end of ninety
  continuous days from the end of all hostilities.

(d) (1) Subsections  (b)  and  (c)  hereof  shall  not  apply  to  any
  provision  in  a  life  insurance  policy for additional benefits in the
  event of accidental death.
    (2)  If  a  policy provides that the death benefit may be increased or
  other policy provisions changed upon the application of the policyholder
  and the production of evidence of  insurability,  the  policy  may  also
  provide that the two-year exclusions permitted under subparagraph (B) or
  (D)  of  paragraph  one  of subsection (b) hereof or subparagraph (C) of
  paragraph one of subsection (c) hereof shall run from the date of  issue
  of  the  policy except that it shall run from the effective date of each
  subsequent increase or change with respect  to  each  such  increase  or
  change.
    (e)  Any  of  the  provisions  of  this  section, or portions thereof,
  exclusive of paragraph eleven of subsection (a) of this section, that do
  not apply to a single premium, nonparticipating, or term  policy,  shall
  to  that  extent  not be incorporated in such policy. This section shall
  not apply to group life insurance.