KRS 304.15-100: Dividends.

(1) There shall be a provision in participating policies that, beginning not later than the

end of the third policy year, the insurer shall annually ascertain and apportion the

divisible surplus, if any, that will accrue on the policy anniversary or other divi dend

date specified in the policy provided the policy is in force and all premiums to that

date are paid. Except as hereinafter provided, any dividend becoming payable shall

at the option of the party entitled to elect such option be either:

(a) Payable in cash, or

(b) Applied to any one (1) of such other dividend options as may be provided by

the policy. If any such other dividend options are provided, the policy shall

further state which option shall be automatically effective if such party shall

not have elected some other option. If the policy specifies a period within

which such other dividend option may be elected, such period shall be not less

than thirty (30) days following the date on which such dividend is due and

payable. The annually apportioned dividend shall be deemed to be payable in

cash within the meaning of paragraph (a) of this subsection even though the

policy provides that payment of such dividend is to be deferred for a specified

period, provided such period does not exceed six (6) years from the date of

apportionment and that interest will be added to such dividend at a specified

rate.

(2) Renewable term policies of ten (10) years or less may provide that the surplus

accrued to such policies shall be determined and apportioned each year after the

second policy year, and accumulated during each renewal period, and that at the end

of the renewal period, on renewal of the policy by the insured, the insurer shall

apply the accumulated surplus as an annuity for the next succeeding renewal term in

the reduction of premiums.

(3) In participating industrial life insurance policies, in lieu of the provision required in

subsection (1) of this section, there shall be a provision that, beginning not later

than the end of the fifth policy year, the pol icy shall participate annually in the

divisible surplus, if any, in the manner set forth in the policy.

(4) This section does not apply as to insurance issued in consideration of lapsed or

surrendered policies.