2007 California Insurance Code Article 3. Policy Provisions Required

CA Codes (ins:10150-10154)

10150.  The provisions of this article shall not apply to annuities,
industrial policies or to term contracts issued for periods of
twenty years or less.


10150.1.  This article is not applicable to life policies issued on
or after the operative date as to such policies of Article 3a,
Chapter 1, Part 2, Division 2.



10151.  Every contract or policy of life insurance (excluding
additional benefits specified therein or issued in connection
therewith for accidental death or disability) hereinafter made by any
person or corporation, with and upon the life of a resident of this
State, and delivered within this State, shall provide, in event of
default of any premium payment after three full annual premiums shall
have been paid on such policy, that without any action on the part
of the insured, the net value of such policy based upon the reserve
basis used in computing the premiums and values thereunder (the
policy to specify the mortality table and rate of interest so
adopted) which net value shall be at least equal to its entire net
reserve at the date of default, including that of dividend additions,
if any, based upon a standard not lower than the American experience
tables of mortality with interest at three and one-half per cent
yearly, less a surrender charge of not more than two and one-half per
cent of the face amount of the policy and of any existing dividend
additions thereto and less any indebtedness to the company on or
secured by the policy, shall be applied as a single premium to the
purchase of one of the following stipulated forms of insurance:
   First.  Paid-up participating or nonparticipating term insurance
in the amount of the face of the policy, plus dividend additions, if
any, for such a period as the net value outlined above will purchase
at the net single premium, at the attained age of the insured at the
time of the lapse, based upon the reserve basis described in the
policy; provided, however, that under endowment contracts the term
shall not extend beyond the endowment period named in the original
contract, and the excess value, if any, shall be applied as a net
single premium to purchase in the same manner paid-up pure endowment
insurance, payable at the end of the endowment period named in the
contract if the insured be then living, or,
   Second.  Paid-up participating or nonparticipating term insurance
in the amount of the face of the policy, plus dividend additions, if
any, and less any outstanding indebtedness, for such a period as the
net value outlined above will purchase at the net single premium, at
the attained age of the insured, based upon the reserve basis
described in the policy; provided, however, that under endowment
contracts the term shall not extend beyond the endowment period named
in the original contract, and the excess value, if any, shall be
applied as a net single premium to purchase in the same manner
paid-up pure endowment insurance, payable at the end of the endowment
period named in the contract if the insured be then living, or
   Third.  Paid-up participating or nonparticipating insurance
payable at the time and on the conditions named in the policy for
such an amount as the net value outlined above will purchase at the
net single premium, at the attained age of the insured, based upon
the reserve basis described in the policy.



10152.  In lieu of the application of the provisions for automatic
insurance upon nonpayment of premium the policy may be surrendered to
the insurer at its home office, upon due application by the legal
owner thereof, within one month after date of premium default for a
specified cash value which shall be at least equal to the sum which
would be otherwise available for the purchase of the automatic form
of insurance provided therein.  The insurer may defer payment of such
cash value for not more than six months after application therefor
is made.


10153.  No agreement between the insurer and the policy holder or
applicant for insurance contrary to the foregoing shall be held to
waive any of the provisions of sections 10151 and 10152.



10154.  Any life policy issued upon the life of a resident of this
State and delivered within this State, which does not contain an
automatic nonforfeiture value in conformity with section 10151 shall
be construed as granting the nonparticipating term insurance as
provided in paragraph first of section 10151.  Such a benefit shall
be read into the policy.