Ch. 11

1996 LAWS OF MARYLAND

16-107. CONTESTABILITY AND LIABILITY OF REINSTATED POLICIES AND
CONTRACTS.                                           

(A)     LIMITATION ON CONTESTABILITY.

A REINSTATED POLICY OF LIFE INSURANCE OR REINSTATED ANNUITY
CONTRACT MAY BE CONTESTED ON ACCOUNT OF FRAUD OR MISREPRESENTATION
OF FACTS MATERIAL TO THE REINSTATEMENT ONLY FOR THE SAME PERIOD AFTER
REINSTATEMENT AND WITH THE SAME CONDITIONS AND EXCEPTIONS AS THE
POLICY OR ANNUITY CONTRACT PROVIDES WITH RESPECT TO CONTESTABILITY
AFTER ORIGINAL ISSUE.

(B)     LIMITATION OF LIABILITY.

(1)     A REINSTATED POLICY OF LIFE INSURANCE OR REINSTATED
ANNUITY CONTRACT MAY EXCLUDE OR RESTRICT LIABILITY TO THE SAME EXTENT
THAT LIABILITY MIGHT HAVE BEEN OR WAS EXCLUDED OR RESTRICTED WHEN THE
POLICY OR ANNUITY CONTRACT ORIGINALLY WAS ISSUED.

(2)     THE EXCLUSION OR RESTRICTION IS EFFECTIVE AS OF THE DATE OF
REINSTATEMENT.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 412.

In subsection (a) of this section, the reference to the conditions and
exceptions as the policy or "annuity contract"' provides is added for
consistency within the section.

Defined terms': "Annuity contract" § 1-101
"Life insurance" § 1-101
"Policy" § 1-101

16-108. HOLDING PROCEEDS.

(A)     IN GENERAL.

A LIFE INSURER MAY HOLD UNDER AGREEMENT THE PROCEEDS OF A POLICY
ISSUED BY IT ON THE TERMS AND RESTRICTIONS AS TO REVOCATION BY THE
POLICYHOLDER AND CONTROL BY BENEFICIARIES, AND WITH THE EXEMPTIONS
FROM THE CLAIMS OF CREDITORS OF BENEFICIARIES OTHER THAN THE
POLICYHOLDER, AS SET FORTH IN THE POLICY OR AS AGREED TO IN WRITING BY
THE LIFE INSURER AND THE POLICYHOLDER.

(B)     UNDER AGREEMENT WITH BENEFICIARIES.

IF A POLICYHOLDER HAS NOT MADE AN AGREEMENT DESCRIBED IN
SUBSECTION (A) OF THIS SECTION, ON MATURITY OF THE POLICY THE LIFE INSURER
MAY HOLD THE PROCEEDS OF THE POLICY UNDER AN AGREEMENT WITH THE
BENEFICIARIES.

(C)     SEGREGATION OF FUNDS NOT REQUIRED.

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