J. MILLARD TAWES, Governor                     1173

have the right, at his option, to have the dividend arising from such
participation (1) paid in cash, or (2) applied to the payment of
premium, if any then be due, or (3) applied to provide paid-up addi-
tions to the policy, or (4) left to accumulate at a rate of interest not
less than that specified in the policy; provided, however, that in the
case of a term policy the policy need not provide options (3) or (4).
The policy shall further provide that a specified option shall become
effective if the party entitled thereto fails to notify the insurer in
writing of his election not later than thirty (30) days following the
date on which any dividend is payable.

(b)   In a participating industrial life insurance policy, there shall
be a provision that the insurer shall annually ascertain and appor-
tion any divisible surplus under the policy which will accrue on the
policy anniversary or other dividend date specified in the policy, and
that dividends arising from such apportionment shall be credited
annually beginning not later than the end of the fifth policy year.
The payment of any dividend payable on or after the end of the fifth
policy year shall not be made contingent upon the payment of any
premium due on or after the date when such dividend becomes pay-
able. The policy shall provide that payment of the dividend shall be
made in one of the following ways: (1) paid in cash, or '(2.) applied
to the payment of premium, if any then be due, or (3) applied to
provide paid-up additions to the policy, or (4) left to accumulate at
a rate of interest not less than that specified in the policy.

(c)   If a participating policy provides that the benefit under any
paid-up nonforfeiture provision is to be participating, it may pro-
vide that any divisible surplus apportioned while the insurance is
in force under such nonforfeiture provision shall be applied in any
manner specified in the policy.

(d)   This section shall not preclude the granting by the insurer to
the party entitled thereto, the right to elect other dividend options
as may be provided by the insurer in addition to those required by
this section, whether or not such additional options are specified in
the policy.

(e)   This section shall not prohibit the payment of additional divi-
dends on default of payment of premiums or on termination of the
policy.

394. Policy Loan.

There shall be a provision that after three (3) full years' pre-
miums have been paid and after the policy has a cash surrender
value and while no premium is in default beyond the grace period
for payment, the insurer will advance, on proper assignment or
pledge of the policy and on the sole security thereof, at a specified
rate of interest not exceeding an effective rate of six percent (6%)
per annum, an amount equal to or, at the option of the party entitled
thereto, less than the loan value of the policy. The loan value of the
policy shall be at least equal to the cash surrender value at the end
of the then current policy year, provided that the insurer may de-
duct, either from such loan value or from the proceeds of the loan,
any existing indebtedness not already deducted in determining such
cash surrender value including any interest then accrued but not due,
any unpaid balance of the premium for the current policy year, and
interest on the loan to the end of the current policy year. The policy