26                                Laws of Maryland                         [Ch. 19

policy; This provision shall not prohibit the payment of additional
dividends on termination of the policy.

(h) Notwithstanding the provisions of the second sentence of
subsection (g) above, if an insurer authorized to transact business in
this State prior to the effective date of this Act, has used a policy
form restricting the dividend options to the "Cash Deferred Accumu-
lated Basis" described below, then the policies issued thereafter by
such insurer may, in lieu of the required dividend options set forth
in said sentence of sub-section (g) above, provide that the owner of
the policy shall have the right to have the dividend arising from such
participation, paid in cash or payable on such "Cash Deferred Ac-
cumulated Basis" and such other dividend options as may be pro-
vided by the policy.

"Cash Deferred Accumulated Basis⁹' is defined as follows:

(1) The annual dividends shall be accumulated by the insurer to
the credit of the policy at such rate of interest as shall be allowed by
the insurer, and while the policy is in force, at the end of a specified
period and at the end of each such period thereafter, the period not
to exceed five years, any accumulation of dividends and interest then
to the credit of the policy shall be paid to the owner in cash, and
(2) upon the termination of the policy by maturity or upon the elec-
tion of a non-forfeiture option, or in the event the policy shall lapse
for nonpayment of premium, or in the event of the insured's death,
any accumulations of dividends and interest then to the credit of the
policy shall be paid to the person or persons entitled to such accumu-
lations in accordance with the provisions of the policy.

(i) A provision that whenever the policy shall have a cash value,
the insurer issuing the same will, at any time while the policy is in
force, other than as extended term insurance, advance, on proper
assignment or pledge of the policy and on the sole security thereof,
at a specified rate of interest, not exceeding six per cent, per annum
if payable at the end of the year, or the equivalent effective rate of
interest if payable in advance, a sum equal to, or at the option of the
person entitled thereto less than, the cash surrender value at the end
of the current policy year of the policy computed in accordance with
the provisions of Section 189, and that the insurer may deduct from
such loan value (in addition to the indebtedness deducted in deter-
mining such value) any unpaid balance of the premium for the cur-
rent policy year; and 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 at the
rate of interest specified in the policy. The policy may further pro-
vide that interest on the loan may be compounded annually and, if not
paid when due, it shall be added to the existing loan, and shall bear
interest at the same rate; and may further provide that if and when
the total indebtedness on the policy including interest due or accrued,
equals or exceeds the amount of the loan value thereof at such time,
and if at least thirty days prior notice shall have been given, then the
policy shall terminate and become void. The insurer shall provide
in the policy that the making of any such loan, except when made to
pay premiums, may be deferred for not exceeding six months after
the application therefor has been received by it. This provision shall
not apply to term insurance.