Arkansas Code
Subchapter 1 - General Provisions
§ 23-81-108. Life insurance — Dividend provision

(a) 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 dividend date specified in the policy, provided that the policy is in force and all premiums to that date are paid. Except as provided in this section, any dividend becoming payable shall, at the option of the party entitled to elect such an option, be either:
(1) Payable in cash; or
(2)
(A) Applied to any one (1) of such other dividend options as may be provided by the policy.
(B) If other dividend options are provided, the policy shall further state which option shall be automatically effective if the party has not elected some other option.
(C) If the policy specified a period within which the other dividend option may be elected, the period shall be not less than thirty (30) days following the date on which the dividend is due and payable.
(D) The annually apportioned dividend shall be deemed to be payable in cash within the meaning of subdivision (a)(1) of this section, even though the policy provides that payment of the dividend is to be deferred for a specified period, provided that the period does not exceed six (6) years from the date of apportionment and that, if so provided in the policy, interest will be added to the dividend at a specified rate.
(E) If a participating policy provides that the benefit under any paid-up nonforfeiture provision is to be participating, it may provide that any divisible surplus becoming payable or apportioned while the insurance is in force under a nonforfeiture provision shall be applied in the manner set forth in the policy.


(b) “Divisible surplus” as used in subsection (a) of this section, subject, in the case of domestic insurers, to § 23-69-126, means that part of the insurer's total surplus which is determined by the insurer's board of directors to be available for distribution to policyholders. The matters set forth in this subsection need not be contained in the policy.

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