Ch. 11

1996 LAWS OF MARYLAND

EACH CONTRACT ALSO SHALL CONTAIN A PROVISION THAT IF THE INSURER
MAKES OR HAS MADE AN OVERPAYMENT BECAUSE OF A MISSTATEMENT OF AGE OR
SEX, THE AMOUNT OF THE OVERPAYMENT, WITH INTEREST AT A RATE SPECIFIED IN
THE CONTRACT BUT NOT EXCEEDING 6% PER YEAR, MAY BE CHARGED AGAINST
THE CURRENT OR NEXT PAYMENT OR PAYMENTS TO BE MADE BY THE INSURER
UNDER THE CONTRACT.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 406.

In subsection (a) of this section, the references to an "individual" or
"individuals" are substituted for the former references to a. "person" or
"persons" because only individuals, and not the other entities included in the
defined term "person", have lifetimes subject to annuity and pure endowment
contracts.

Defined terms: "Annuity contract" § 1-101
"Insurer" § 1-101

16-406. DIVIDENDS.

(A)     IN GENERAL.

(1)      EACH PARTICIPATING ANNUITY CONTRACT AND EACH
PARTICIPATING PURE ENDOWMENT CONTRACT SHALL CONTAIN A PROVISION
THAT:

(I)       EACH YEAR THE INSURER SHALL DETERMINE AND
APPORTION ANY DIVISIBLE SURPLUS UNDER THE CONTRACT THAT WILL ACCRUE
ON THE CONTRACT ANNIVERSARY OR OTHER DIVIDEND DATE SPECIFIED IN THE
CONTRACT; AND

(II)     THE DIVIDENDS ARISING FROM THE APPORTIONMENT SHALL
BE CREDITED EACH YEAR BEGINNING NOT LATER THAN THE END OF THE THIRD
CONTRACT YEAR.

(2)      THE PAYMENT OF ANY DIVIDEND PAYABLE ON OR AFTER THE END
OF THE THIRD CONTRACT YEAR MAY NOT BE MADE CONTINGENT ON THE PAYMENT
OF ANY CONSIDERATION DUE ON OR AFTER THE DATE WHEN THE DIVIDEND
BECOMES PAYABLE.

(B)      PAYMENT OPTIONS.

(1)      EACH CONTRACT SHALL CONTAIN A PROVISION THAT THE PARTY
ENTITLED TO THE DIVIDEND MAY ELECT TO HAVE THE DIVIDEND PAID IN CASH OR
APPLIED TO THE PAYMENT OF ANY CONSIDERATION THEN DUE.

(2)      EACH CONTRACT SHALL CONTAIN A PROVISION THAT A SPECIFIED
OPTION BECOMES EFFECTIVE UNLESS THE PARTY ENTITLED TO THE DIVIDEND
NOTIFIES THE INSURER IN WRITING OF ELECTION OF A DIFFERENT OPTION WITHIN
30 DAYS AFTER THE DATE ON WHICH THE DIVIDEND IS PAYABLE.

(C)     DEFERRED ANNUITY CONTRACTS.

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