2015 ORS 743.221¹
Cash surrender values upon default in premium payment

(1) This section shall apply to all life insurance policies issued on or after January 1, 1986.

(2) Any cash surrender value available in the event of default in a premium payment due on any policy anniversary under a life insurance policy to which this section applies shall be in an amount which does not differ, by more than two-tenths of one percent of the amount of insurance, if uniform, or the average of the amounts of insurance at the beginning of each of the first 10 policy years, from A plus B minus C, where these amounts are defined as follows:

(a) "A" equals the basic cash value on such anniversary as defined in subsection (3) of this section.

(b) "B" equals the present value on such anniversary of any existing paid-up additions.

(c) "C" equals the amount of any indebtedness to the insurer under the policy on such anniversary.

(3)(a) The basic cash value referred to in subsection (2) of this section shall equal the present value, on a particular subject policy anniversary, of the future guaranteed benefits which would have been provided for by the policy if there had been no premium default, excluding any existing paid-up additions and before deduction of any indebtedness to the insurer, less the present value on such anniversary of the nonforfeiture factors, as defined in subsection (4) of this section, corresponding to premiums which would have fallen due on and after such anniversary. The basic cash value shall be taken as zero if this calculation produces a negative result.

(b) Supplemental life insurance or annuity benefits and family coverage, as described in ORS 743.210 (Determination of cash surrender values) or 743.216 (Adjusted premiums), whichever is applicable to the policy, shall affect the basic cash value in the same manner as is provided in ORS 743.210 (Determination of cash surrender values) or 743.216 (Adjusted premiums) for their effect on the cash surrender values.

(4)(a) Except as provided in paragraph (b) of this subsection, the nonforfeiture factor referred to in subsection (3) of this section shall for each policy year equal a percentage of the adjusted premium for that policy year as defined in ORS 743.215 (Calculation of adjusted premiums) or 743.216 (Adjusted premiums), whichever is applicable to the policy. This percentage must:

(A) Be uniform for each policy year between the second policy anniversary and the later of:

(i) The fifth policy anniversary; and

(ii) The first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, at least equal to two-tenths of one percent of the amount of insurance, if uniform, or of the average of the amounts of insurance at the beginning of each of the first 10 policy years; and

(B) Be such that no percentage after the later policy anniversary defined in subparagraph (A) of this paragraph applies to fewer than five consecutive policy years.

(b) No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy as defined in ORS 743.215 (Calculation of adjusted premiums) or 743.216 (Adjusted premiums), whichever is applicable to the policy, were substituted for the nonforfeiture factors defined in this subsection in the calculation of the basic cash value.

(5) All adjusted premiums and present values referred to in this section shall for a particular policy be calculated on the same mortality and interest bases as are used in demonstrating the compliance of the policy with the Standard Nonforfeiture Law for Life Insurance. The cash surrender values referred to in this section shall include any endowment benefits provided for by the policy.

(6)(a) Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment, shall be determined in a manner consistent with the manner specified for determining the analogous minimum amounts under the Standard Nonforfeiture Law for Life Insurance.

(b) The amounts of any cash surrender values and any paid-up nonforfeiture benefits granted in connection with additional benefits such as those described in ORS 743.222 (Policy benefits and premiums that shall be disregarded in calculating cash surrender values and paid-up nonforfeiture benefits) shall conform with the principles of this section. [1981 c.609 §21]


1 Legislative Counsel Committee, CHAPTER 743—Health and Life Insurance, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors743.­html (2015) (last ac­cessed Jul. 16, 2016).
 
2 OregonLaws.org contains the con­tents of Volume 21 of the ORS, inserted along­side the per­tin­ent statutes. See the preface to the ORS An­no­ta­tions for more information.
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.