In accordance with the purpose expressed in Section 1 of this act, the use of certain types of policy forms, policy provisions and annuity contracts shall be subject to the following prohibitions and regulations:

1. No life insurance policy or annuity contract containing a series of guaranteed annual endowment benefits evidenced by coupons, passbooks or similar devices generally identified with investment or banking operations shall be approved for use, and no such policy or contract heretofore approved shall be issued or delivered in this state after January 15, 1974;

2. No life insurance policy or annuity contract containing a series of guaranteed annual endowment benefits shall be approved for use and no such policy or contract heretofore approved shall be issued or delivered in this state after January 15, 1974, unless the following requirements are satisfied:

a. the gross premium for the guaranteed annual endowment benefit shall be shown conspicuously and separately in the policy, distinct from the gross premium for the life insurance benefits and, unless the gross premium is so prominently and separately shown on the schedule of benefits and premiums page in the policy, the language shall be sub stantially in the following form: "The premium shown includes an additional (annual, semiannual, quarterly, monthly, etc.) premium of $_____ for endowment benefits,"

b. the insured shall be entitled to withdraw the guaranteed annual endowment benefits not less frequently than at the end of each policy year. The number of one-year guaranteed endowment benefits shall equal the number of annual premiums for such benefits unless the insurance contract clearly and distinctly provides otherwise,

c. payment of any guaranteed annual endowment benefits shall not be made contingent on the payment of premiums falling due on or after the time the guaranteed annual endowment benefit has matured,

d. the separately stated gross premium for the series of guaranteed annual endowment benefits shall be based on reasonable assumptions, consistent with the basic policy form as to interest, mortality and expense,

e. the guaranteed annual endowment benefit shall be expressed in dollars, both in the policy and in any sales or advertising material relating thereto, and not as a percentage of any premium or benefit,

f. no guaranteed annual endowment benefit shall be described, either in the policy or in any sales or advertising material, as anything other than a guaranteed benefit for which a premium is being paid by the policyholder, and

g. at the time the policy form is filed with the Insurance Department for approval, said policy form shall be accompanied by all sales, advertising or other material which the insurer proposes to use in connection with the sale of such policy; such sales, advertising or other material shall be approved by the State Insurance Commissioner.

Nothing in this subsection shall apply to any policy in which the amount of any endowment or periodic benefit or benefits payable during any policy year is greater than the total annual premium for such year;

3. No coupon policy shall be approved or issued in this state after the effective date of this act, nor shall any coupon policy heretofore approved be issued or delivered in this state after January 15, 1974;

4. No profit-sharing policy shall be approved for use in this state after the effective date of this act, nor shall any profit- sharing policy heretofore approved be issued or delivered in this state after January 15, 1974. Nothing contained in this section shall apply to variable annuity contracts to the extent that such are permitted under the laws of this state.

This subsection shall not be construed to restrict or prohibit the sale in this state of any participating life insurance policy where the dividend or abatement of premium is derived solely from the profits of that class of participating business;

5. No charter, founders or coupon policy or policy with a name of similar connotation shall be approved for use in this state after the effective date of this act and no charter, founders or coupon policy or policy with a name of similar connotation heretofore approved shall be issued or delivered in this state after January 15, 1974; and

6. No annual endowment shall be described as being a guaranteed dividend, nor as earnings on the premium investment. Nothing in this section shall be construed to prohibit a representation that a holder of a participating life insurance policy or annuity contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurer.

Laws 1972, c. 223, § 3, operative Jan. 15, 1974.