2023 Laws of Puerto Rico › TITLE TWENTY-SIX - Insurance (§§ 101 — 10377) › Subtitle 1 - Insurance Generally (§§ 101 — 4513) › Chapter 13A - Life Insurance and Annuities (§§ 1336 — 1379) › § 1366 - Nonforfeiture law

(1) No policy of life insurance, except as stated in subsection (6) of this section, shall be underwritten or delivered in Puerto Rico unless it contains in substance the following clauses, or corresponding provisions which in the opinion of the Commissioner are at least as favorable to the defaulting or surrendering policyholder:
(a) That, in the event of default in any premium after premiums have been paid for at least three (3) full years in the case of ordinary insurance, the insurer shall grant, upon proper request not later than sixty (60) days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such value as may be hereinafter specified in this Code.
(b) That, upon surrender of the policy within sixty (60) days, after the due date of any premium payment in default after premiums have been paid for at least three (3) full years in the case of ordinary insurance, the insurer shall pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter provided in this Code.
(c) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than sixty (60) days after the due date of the premium in default.
(d) That, if the policy shall have become paid-up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of ordinary insurance, the company will pay, upon surrender of the policy within thirty (30) days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified in this Code.
(e) A table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first twenty (20) policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the insurer on the policy.
(2) Any of the clauses, or portions thereof, of subsection (1) of this section applicable by reason of the plan of insurance may, up to the extent they are rendered inapplicable, be omitted from the policy. The insurer shall reserve the right to defer the payment of any cash surrender value for a period of six (6) months after demand therefor with surrender of the policy.
(3) Cash surrender values and paid-up or extended non-forfeiture benefits shall be computed on the basis as may be approved by the Commissioner, or as may be required as a minimum basis pursuant to rules and regulations promulgated by the Commissioner, consistent with recognized applicable actuarial principles and with the minimum non-forfeiture requirements formulated or approved by the National Association of Insurance Commissioners.
Notwithstanding the provisions of the previous paragraph of this subsection, in ascertaining the surrender values and the non-forfeiture benefits required in this section, the additional benefits and premiums paid for them shall be disregarded, nor shall it be required that said additional benefits be included in the paid-up non-forfeiture insurance benefits in any of the following events:
(a) In the event of death or dismemberment by accident or accidental means;
(b) in the event of total or permanent disability;
(c) as reversionary annuity or deferred reversionary annuity benefits;
(d) as fixed term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply;
(e) as other policy benefits additional to life insurance and endowment benefits, and
(f) any other additional benefit specified in the rules and regulations promulgated by the Commissioner.
(4) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy.
(5) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of the time and payment of fractional premiums beyond the last preceding policy anniversary.
(6) This section shall not apply to any reinsurance, group insurance, pure endowment, annuity or reversionary annuity contract, nor to any term policy, nor to any policy which shall be delivered outside Puerto Rico through an agent or other representative of the insurer issuing the policy.
(7) In construing the provisions of this section, “ordinary insurance” or “insurance upon the ordinary plan” shall be considered to be insurance that may be paid for by a single premium, by annual premiums or by semi-annual or quarterly or other installments thereon at the option of the insurer.
(8) Any condition or stipulation in the insurance policy or elsewhere contrary to the provisions of this section, and any waiver of such provisions by the insured, shall be void.
(9) The policy shall contain a clause stating that the owner may surrender the policy for its cash surrender value at any time; Provided, That if the surrender application is made within thirty (30) days after a policy anniversary, the available value shall not be less than the value as of the date of the anniversary.
(10) In construing the provisions of this section, “ordinary insurance” or “insurance upon the ordinary plan” shall be considered to be insurance that may be paid for by a single premium, by annual premiums or by semi-annual or quarterly or other installments thereon at the option of the insurer.
History —Ins. Code, added as § 13.320 on Nov. 9, 2007, No. 165, § 1, eff. 90 days after Nov. 9, 2007.