40 Pa. Stat. § 510a

Current through Pa Acts 2024-53, 2024-56 through 2024-92

Section 510a - Uniform provisions for contracts of annuities and pure endowment contracts

No annuity or pure endowment contract shall be delivered in this Commonwealth, except policies of industrial insurance where the premiums are payable monthly or oftener, and except in the case of a reversionary annuity, otherwise called a survivorship annuity, or an annuity contracted by an employer in behalf of his employes, unless it contains in substance the following provisions:

(a) A provision that there shall be a period of grace, either of thirty days or of one month, within which any stipulated payment to the company, falling due after the first year, may be made, subject, at the option of the company, to an interest charge thereon at a rate to be specified in the contract, but not exceeding eight per centum per annum, for the number of days of grace elapsing before such payment, during which period of grace the contract shall continue in full force, but in case a claim arises under the contract on account of death during the said period of grace before the overdue payment to the company or the deferred payments of the current year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement; if the contract contains a loan provision, the rate of interest for contracts issued prior to the effective date of section four hundred and ten F may not exceed eight per centum per annum;

(b) If statements, other than those relating to age and identity, are required as a condition of issuing the contract, a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or each of the persons as to whom such statements are required for a period of two years from its date of issue, except where stipulated payments to the company have not been made, and except for violation of the conditions of the contract relating to military or naval service in time of war, and, at the option of the company, provisions relative to benefits in the event of total and permanent disability, and provisions which grant insurance specifically against death by accident may also be excepted;

(c) A provision that such contract shall constitute the entire contract between the parties, but if the company desires to make the application a part of the contract, it may do so, provided a copy of such application shall be indorsed upon or attached to such contract when issued, and in such case, such contract shall contain a provision that it, together with the application therefor, shall constitute the entire contract between the parties;

(d) A provision that, if the age of the person or persons upon whose life or lives the contract is based, or of any of them, has been misstated, the amount payable under the contract shall be such as the stipulated payments to the company would have purchased at the correct age or ages. Any overpayment or overpayments by the company on account of misstatement of age shall, with interest thereon at a rate to be specified in the contract, but not exceeding six per centum per annum, to be charged against the current or next succeeding payment or payments to be made by the company under the contract;

(e) If the contract is participating, a provision that the divisible surplus shall be apportioned annually, and dividends shall be payable in cash or shall be applicable to any stipulated payment or payments to the company under the contract;

(f) A provision specifying the options available upon cessation of payment of considerations under the contract.

(1) In the case of contracts issued prior to the effective date of this amendatory act July 3, 1980, such provision shall specify that, if the contract, after having been in force for three full years, shall by its terms lapse or become forfeited because any stipulated payment to the company shall not have been made, the reserve on such contract, computed according to the standard adopted by said company in accordance with section three hundred and one of this act shall, after deducting one-fifth of the said entire reserve and any indebtedness to the company under the contract, be applied as a net single payment according to said standard for the purchase of a paid up annuity or pure endowment contract, which may be nonparticipating and which shall be payable by the company under the same terms and conditions, except as to amount of the original contract. A company may provide, in lieu of said paid up values, for a paid up annuity or pure endowment contract in an amount bearing the same proportion to the original annuity or pure endowment contract as the number of stipulated payments, which shall have been made to the company, shall bear to the total number of stipulated payments required to be made to the company under the contract, and if there be any indebtedness to the company under the contract, the amount of such paid up annuity or pure endowment shall be reduced by an amount bearing the same proportion to such paid up annuity or pure endowment as such indebtedness bears to the reserve on such paid up annuity or pure endowment, computed according to the standard adopted by said company in accordance with section three hundred and one of an act, approved the seventeenth day of May, one thousand nine hundred and twenty-one (Pamphlet Laws, seven hundred and eighty-nine), as amended;

(2) In the case of contracts issued on or after the effective date of this amendatory act, such provisions shall be in accordance with section 410C.

(g) A provision that the contract may be reinstated at any time within one year from the date of default in making stipulated payments to the company, provided that all overdue stipulated payments shall be made or paid with interest thereof at a rate to be specified in the contract, but not exceeding eight per centum per annum, and any indebtedness to the company on the contract shall be paid with interest at a rate or rates determined in accordance with section four hundred and ten F, compounded annually. In cases where applicable, a company may also include a requirement of evidence of insurability satisfactory to the company.

No contract for a reversionary annuity shall be so issued or delivered unless it contains in substance the following provisions:

(1) Provisions (a), (b), (c), and (e) of this section, except that under provision (a) the company may, at its option, provide for an equitable reduction of the amount of the annuity payments in settlement, or an overdue or deferred payments in lieu of providing for a deduction of such payments from any amount payable upon a settlement under the contract.

(2) A provision that, if the age of any of the persons upon whose lives the contract is based, has been misstated, the amount payable under the contract shall be such as the stipulated payments to the company would have purchased at the correct ages.

(3) A provision that the contract may be reinstated at any time within three years from the date of default in making stipulated payments to the company upon production of evidence of insurability satisfactory to the company, provided that all overdue payments shall be made or paid with interest thereon at a rate to be specified in the contract, but not exceeding eight per centum per annum, any indebtedness to the company shall be paid with interest thereon at a rate or rates determined in accordance with section four hundred and ten F, compounded annually.

Any of the foregoing provisions, or portions thereof, not applicable to nonparticipating contracts nor to contracts for which a single stipulated payment to the company is made, shall to that extent not be incorporated therein, and any such contract may be delivered in this Commonwealth, which, in the opinion of the Insurance Commissioner, contains provisions, on any one or more of the several foregoing requirements, more favorable to the holder of the contract than hereinbefore required.

Nothing herein contained shall be construed to prevent a life insurance corporation, which issues life insurance on a participating basis, from issuing annuities, reversionary annuities, or pure endowments on a nonparticipating basis.

Any such contract or any application, endorsement or rider form used in connection therewith, issued in violation of this section shall, nevertheless, be held valid, but shall be construed as provided in this section, and when any provision in such contract, application, endorsement, or rider is in conflict with any provision of this section or with any other statutory provision, the rights, duties, and obligations of the company, of the holder of the contract, and of the beneficiary or annuity thereunder shall be governed by the provisions of this section. The provisions of this section shall not apply to contracts of reinsurance, nor to contracts for deferred annuities or reversionary annuities included in life insurance policies.

40 P.S. § 510a

1921, May 17, P.L. 682, art. IV, § 410B, added 1935, July 17, P.L. 1116, § 1. Amended 1951, July 19, P.L. 1100, § 10; 1980, July 1, P.L. 336, No. 84, § 2, effective 7/1/1980; 1980, July 3, P.L. 351, No. 89, § 1, imd. effective; 1982, April 8, P.L. 297, No. 84, § 2, imd. effective.