1178                           LAWS OF MARYLAND                      [CH. 553

charged against the current or next succeeding payment or payments
to be made by the insurer under the contract.

407.    Dividends—Annuities.

(a)   In a participating contract, there shall be a provision that the
insurer shall annually ascertain and apportion any divisible surplus
under the contract which will accrue on the contract anniversary or
other dividend date specified in the contract, and that dividends
arising from such apportionment shall be credited annually begin-
ning not later than the end of the third contract year. The payment
of any dividend payable on or after the end of the third contract
year shall not be made contingent upon the payment of any con-
sideration due on or after the date when such dividend becomes pay-
able. The contract shall provide that the party entitled thereto shall
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 any
consideration then due; provided, however, that in the case of any
deferred annuity contract such contract need not provide for partici-
pation in surplus after the commencement of annuity payments.

(b)   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 contract.

(c)   The contract 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.

408.    Reinstatement—Annuities.

There shall be a provision that the contract may be reinstated at
any time within one year from the default in making stipulated pay-
ments to the insurer, unless the cash surrender value had been paid,
but all overdue stipulated payments and any indebtedness to the
insurer on the contract shall be paid or reinstated with interest
thereon at a rate to be specified in the contract but not exceeding
six percent (6%) per annum payable annually, and in cases where
applicable the insurer may also include a requirement of evidence
of insurability satisfactory to the insurer.

408A. Nonforfeiture Benefits—Annuities.

(a)   In the case of annuities other than those covered by sub-
section (b), there shall be a provision that, in the event of default
in premium payments after three full years' premiums have been
paid, the annuity shall, without any further act or stipulation, be
converted into a paid-up annuity for such proportion of the original
annuity as the number of completed years' premiums paid bears to
the total number of premiums required under the contract.

(b)   In the case of annuities under which the period of premium
payments extends beyond the date of commencement of annuity pay-
ments and in the case of any other annuities for which the require-
ment of subsection (a) is in the opinion of the Commissioner in-
equitable, there shall be a provision for a nonforfeiture benefit, in